How Urbanization Affects Supply Chain Management

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How has urbanization affected supply chain management?
Saneesh Kolenchery Raju:
University of Hertfordshire:
SRN No.- ________
Abstract
The rate of growth of the urbanization population has
outpaced the suburban growth for the first time in the
history of 100 years. Americans are moving to the urban
areas in great numbers, particularly the young workers or
say, the millennial, for whom the city living is equal to
reducing the commuting time and expenses of
transportation. This urbanization is also influencing how
the customers shop today, their preferred products as well
as the delivery of the goods and products to them.
However, it is also to note that urbanization has also driven
the total spending in the logistics and supply chain. The
shippers today need to get more personalized product
deliveries to the customers and that too, quicker. This has
also led to more spending on the parcel deliveries. Supply
chain has become a more agile and leaner for keeping up
with the customer expectations and their large range of
connected devices that is making it possible to order
products from anywhere in the world.
Urbanization and Shopping
A
B
Logistics and Supply Chain
Urbanization is believed to be driving more spending in the
field of logistics. The shippers today need to get more
personalized product deliveries to the customers and that
too, quicker. As the millennials have a very strong
preference for city living in contemporary world, high
propensity for renting their housing and an indifferent
attitude towards owning own cars, businesses are simply
pondering the strategies of marketing the younger cohort. It
is to note that U.S.A is not the one and only place where the
demographics are changing and taking place. In fact, as
claimed by Govindan and Hasanagic (2018), the buying
power and the population of the middle class customers are
also shifting to the Asia from the Western Nations.
According to Gustavsson, Bengtsson and Eriksson (2017),
there are about nine global consumer groups that should be
taken into consideration as they are expected to generate the
three-quarters of the global growth of urban consumption.
These nine groups are- China (15 – 59 years old), North
America, Latin America, Western Europe, China (60+
years), Northeast Asia, Southeast Asia and the elderly and
retiring. As opined by Shaw and Graham (2017), businesses
in the contemporary market need to build their brands on a
global scale. The customers all around the world now have
the access to follow different brands of their choice and
purchase products from any parts of the world online. Due
to this, a greater access to different brands all over the globe
is granted to the consumers faster than ever before.
Urbanization and Technologies
The technologies like RFID tags, road sensors, predicting
tools, geo-fencing and location tracking, bar codes, GPS
devices etc. have helped the companies all around the world
to optimize their trips and ensure that they are going
according to their planning. Today, in the cases of any kind
of unexpected disruptions, the onboard vehicle telematics
allow the deliveries of the products and commodities to be
rescheduled and redirected for the customers. Hence,
customers no longer have to sit in confusion whether their
product is on the way, or when it will be reaching to their
door steps (Seifert, Kunz and Gold 2018). They are
provided with the tracking IDs and links where they can
easily put their product IDs and track their products.
Apart from this, as a result of urbanization, more money is
been spent on the high speed rail projects today, both in the
developed and the developing countries. The likelihood
would be an ever increased usage of railways for freight
deliveries. It is to note that these railway freight deliveries
would positively decreased the road congestion and at the
same time, would cut down the cost of delivery. Hence, can
be used as a cost effective options for the same day or next
day deliveries world-wide.
In order to ensure continuous prosperity, all the members of
the supply chain are going to have to adapt to different
changes. For instance, if considering Coca Cola, one of the
most famous beverage brands in the world, the very first is
that of making the supply chain to become more agile in the
present business environment. It is to note the most of the
global supply chains were engineered for managing some
stable, high volume production by means of capitalizing on
the opportunities of labor arbitrage that are available in the
low cost nations. Such approach is basically dying with the
ever significant growth of urbanization in the recent years.
The main advantage of all these would be for the
organizations that would be able to make the products in
different quantities and at different locations on the basis of
demands. This will make the products and commodities
available to the customers more easily and the delivery
process would also be faster than before. Furthermore,
organizations should not skimp on the technology. They
should invest in the field of technology for optimizing the
process of supply chain. They should use this opportunities
for collaborating with the other partners of supply chain in
order to make the services and products available all around
the globe (Ziim and Klumpp 2016). They should work
towards gaining a market share from the above mentioned 9
global groups of customers who will generate about 3/4th of
the global urban growth of consumption from the year 2015
to 2030.
Urban Logistics Activities
The city logistics enables the mobility of the urban freights
by means of transportation of the goods by the commercial
entities and for the commercial entities taking places in the
urban area. It can be considered as a strategy to ensure
some effective freight movements and the innovative
responses for urban customers and the business demands. It
is to note that as an emerging field of investigation, the city
or urban logistics was brought by the challenges of
massification and commodification of consumption and
production. Today, in the cases of any kind of unexpected
disruptions, the onboard vehicle telematics allow the
deliveries of the products and commodities to be
rescheduled and redirected for the customers. The urban
logistics offer some unique tailor made solutions for the
transpiration of the goods in the cities by means of
rationalizing and consolidating the prevailing logistic
platforms and creating some innovative solutions for the
future by means of using information and some
communication technologies.
Megatrends- Urbanisation
Conclusion
Urbanization and the other changes in the demographics
would have a notable impact on how the goods and
products are been bought by the customers and how they
are sold to them along with the way they are delivered in
the coming years. All these trends would become a
significant challenge for the supply chain and logistics of
the global organization that supply products and
commodities world-wide and at the same time, will also
bring in some significant opportunities for the trucking
related businesses in the coming future. Hence,
organizations should be ready and well prepared to tacking
this situation. They should not skimp on the technology.
They should invest in the field of technology for
optimizing the process of supply chain. Today, company
needs to understand the ways in which the shifting
demographics would influence the footprint of the
organization. Knowing about the specifics regarding where
the potential customers are living and working is therefore,
very critical for success of the businesses and would
significantly influence the environmental changes as well.
The main advantage of all these would be for the
organizations that would be able to make the products in
different quantities and at different locations on the basis of
demands. With the same, this will make the products and
commodities available to the customers more easily and the
delivery process would also be faster than before.
The rate of urbanization has increased than ever before.
There is a significant variation in the data depicting the
growth and development of urbanization and the gradually
diminishing ruralization. It is assumed that by the year
20150, about 70% of the total world’s population will live
in the major urban regions of the world. At the forefront of
the trend of urbanization, the development of the megacities
would be seen. These megacities will have a population that
will exceed a population of 10 million inhabitants.
The growth of urbanization increases along with the
increase in the economic development and therefore, it is
not that surprising to know that about 90% of the total
growth of urban population come from the developing
economies, particularly China and India. As such
economies grow; the number of houses, offices, cars,
bridges, factors, all need insurance. The increasing rate of
incomes as well as the newly accumulated wealth would
increase the opportunities for the life insurance products
and services. At the same time, urbanization has also
changed the way people shop today. Right from choosing
their desired products to selecting the mode of getting the
delivery of their products, urbanization has greatly
influenced everything. Today, company needs to
understand the ways in which the shifting demographics
would influence the footprint of the organization. Knowing
about the specifics regarding where the potential customers
are living and working is therefore, very critical for success
of the businesses and would significantly influence the
environmental changes as well. Companies also need to
define several strategies which would help them in
navigating through the most diverse markets of customers
in the history and manage the parallel channels and
products for increasingly disparate groups of customers.
As per the data revealed by UN, the total percentage of the
world’s urban population was about 54% in the year 2014
and it was expected to reach to about 66% by the year 2050.
However, the largest increases would most likely to come
from the low income nations like Africa and Asia.
Moreover, according to Shaw and Graham (2017), every
three out of five people will live in the cities and therefore,
the above mentioned trends (table 1) will be observed
because of urbanization in the near future.
Table 1
Source: Created by the author
Graph 1
Source: (Wall, Koppelhuber and Hofstadler 2017)
Chart 1
Source: Created by the author