After A Bruising Year, Logistics And Supply Chains Are Ripe For Technology Disruption
Players in the logistics industry have long experimented with the Internet of Things, blockchain, artificial intelligence, drones, and more, in a bid to improve productivity. Last year emphasized this investment, as supply chain shortages and an e-commerce boom made better visibility into operations critical. In the following article, Forbes explains why the current state of play will create more opportunities for logistics companies to improve the way goods and services are delivered.
The COVID-19 crisis opened many eyes across the world to the importance of adding as much intelligence as possible to our supply chain and logistics networks. Supply chains were stretched to their limits and hindered by delays, and logistics providers were overbooked and overworked. Somehow, fortunately, the system held together.
What we’ve learned is this is an area that is begging for disruption. Technology initiatives such as the Internet of Things, mobile apps, artificial intelligence, and potentially blockchain technology promise to remake the logistics sector.
In short, as with everyone else, logistics companies are becoming software and data companies. This means lots of opportunities for technology professionals as well as entrepreneurs seeking to make their own imprints on the way goods and services are delivered.
Scott Surredin, North America CEO of DHL Supply Chain, has been watching these opportunities unfold firsthand and agrees this is a sector ripe for major disruption. The industry, “has attracted a lot of attention from entrepreneurs, innovators and technology investors who are looking at opportunities to disrupt the industry,” he says. “Logistics is an industry that has huge potential to benefit from technology, due to the fact that many companies still employ a lot of manual processes in their operations,” he says. In addition, “there is a huge amount of data generated — often processed inefficiently — and there is a lot of inefficiencies, both in the utilization of capacity and in areas such as the last-mile.”
While disrupting an industry with massive fleets of trucks, trains, planes, and ships is not an overnight process — “we do not think that it will be easy to fundamentally disrupt the sector with technology — due to cost pressure and the vast number of variables in any supply chain,” Surredin says — technology will certainly upend the traditional ways business has been done. “We strongly believe in the power of technology to significantly boost productivity, increase efficiency and give companies better visibility and forecasting ability,” he says.
DHL itself has made a commitment to invest more than $300 million in emerging technologies in North America alone, Surredin adds. Technologies such as cloud, AI, digital will help boost businesses in this space. “Artificial Intelligence can impact companies’ supply chains both directly and indirectly,” he says. “Directly, it can enable them to better analyze the vast amounts of data that are generated within any supply chain and provide enhanced forecasting ability, which in turn allows them to optimize inventory levels and reduce exceptions. Indirectly, it can provide the platform on which new technologies — such as collaborative robotics and autonomous vehicles — can operate and continuously improve their performance and effectiveness.”
There isn’t just one particular technology that will be changing logistics and supply chains — there are at least 14, Surredin adds. Areas with the highest level of productivity improvements for DHL are collaborative robotics, autonomous vehicles, and artificial intelligence, he notes. “Collaborative robotics, in particular, has already allowed us to achieve meaningful productivity improvements in our customers’ operations, reducing time spent by associates on routine or physically demanding tasks and moving around warehouses, which also improves safety.” Additional benefits include, “decreasing manual errors, increasing pick rates and even bringing onboarding times for new hires down from a few weeks to just two days.”
DHL has also expanded its use of LocusBots, which are autonomous robots capable of heavy lifting, and planned to have more than 1,000 in operation across 12 sites in North America, he continues.
The sector is also seeing new types of business models evolving as well. “One of the biggest drivers of change within our sector is e-commerce, both in terms of retail and also the use of e-commerce in other sectors,” Surredin says. “For example, in industrial sectors, where some manufacturers are starting to bypass distributors and other intermediaries with direct-to-consumer offerings.”
This is reshaping the supply chain, “with the profile of SKUs changing — usually becoming smaller and more varied — and customers being challenged to implement omnichannel strategies to serve their customers via different channels,” he continues. He also is seeing the rise of digital freight platforms, “which have the potential to increase the efficiency of freight transport by connecting more available capacity with shippers and improving utilization.”
The supply chain and logistics sectors are already significantly different from 3–5 years ago,” Surredin says. “We see higher rates of deployment of technology across all sectors, and this is being accelerated by the fact that various technologies are becoming more advanced, more accessible, and better integrated with other technologies. This means that more solutions are becoming interoperable, such as collaborative robotics that can communicate with each other across different activities.”
E-commerce, “has also changed the profile of shipments, reduced average batch sizes, and changed transportation networks — by increasing the amount of direct-to-consumer orders and challenging companies to embrace omnichannel,” he adds. “This has made technology even more of an imperative, as companies seek to make their supply chains more flexible, responsive and efficient, while also addressing the challenge of the labor shortage that we have seen in the warehousing and transportation sectors.”