Technology and the Changing Nature of Logistics

Stephen DeAngelis

August 19, 2020

There has been a lot written and spoken about supply chain operations during the coronavirus pandemic. Supply chain operations are complex — encompassing a broad array of processes and operations. The staff at Interlake Mecalux defines supply chain operations this way: “The supply chain encompasses the planning, execution, and control of all the activities related to material and information flows. It spans the purchase of raw materials to the final delivery of the merchandise to the customer, including the intermediate processing of the goods. Consequently, the supply chain can be defined as the set of steps and networks that come into play from the product’s origin to its arrival in the hands of the end customer.”[1]

One of the activities within supply chain operations is logistics. The Interlake Mecalux staff explains, “Logistics forms part of the supply chain. It’s a discipline centered on the storage, transportation, and distribution of products. … Supply chains are shifting towards a logistics environment that’s faster and more flexible, personalized, accurate, and efficient.” The new environment in which logistics activities are taking place emerged with the dawning of the Information Age and the start of a new industrial revolution often referred to as Industry 4.0. The Interlake Mecalux staff explains, “Industry 4.0 , i.e., the fourth industrial revolution, is characterized by the major role played by hyper-connectivity and new information technologies in processes and ways of working, inevitably shaped by globalization and the internationalization of companies. Logistic 4.0 as a concept is based on these same principles and refers to logistics management defined by interconnection, digitalization of information and cloud based computer applications.”[2]

Logistics 4.0 and the technologies driving it

According to the Interlake Mecalux staff, “The future presents a series of challenges that must be resolved if digitization is to extend into all areas of product storage and distribution.” They identify five such challenges. They are:

1. Reducing response times with tighter productions.
2. Relying on intelligent logistics
3. Enabling real omnichannelity
4. Anticipating customer needs
5. Controlling end-to-end process tracking

Most of those challenges are directly impacted by an increase in online sales — a trend that has accelerated as a result of pandemic store closures. Mark Broadly explains, “As eCommerce continues to reshape the market, logistics capabilities are more crucial than ever for getting products to the customer intact and on time. And, as commerce gets smarter and expands into more channels, supply chains are turning to IoT-based smart solutions.”[3] Broadly suggests companies ask a series of questions that will help them determine what technologies are best-suited to help them solve current challenges. Those questions are: Where does your supply chain need faster and more accurate data collection? Are there outdated technologies in your supply chain? Which data metrics are most relevant to your demand forecasting? Which specific geographic and logistics factors will affect your supply chain? As you can see from those questions, most solutions begin with data. Identifying the kind of data you need to analyze is critical. As the staff at Modum note, “You can’t control what you don’t know. For years, this has been one of the global logistics industry’s greatest challenges.”[4] Once the right data is identified, the following technologies are likely to play a role in bringing your logistics activities into the Information Age.

The Internet of Things (IoT). The IoT, sometimes called the Industrial Internet of Things (IIoT), is really an ecosystem consisting of sensors at one end providing data, advanced analytics at the other end analyzing that data, with the IoT providing connectivity between them. Broadly notes, “Like most technologies, the results that IoT generates for a business depend on its quality of implementation.”

Cognitive Technologies. Cognitive technologies are often lumped together under the artificial intelligence (AI) umbrella. They include technologies like cognitive computing and machine learning. The Modum staff notes, “AI streamlines the supply chain process by leveraging historical data to identify and analyze trends.” In fact, cognitive technologies can do much more than simply identify historical trends. Simone Puorto (@puortosimone), founder of Travel Singularity explains, “The use of predictive analysis to estimate and prevent bottlenecks in the supply chain is crucial, especially in an industry where punctuality, transparency, and privacy play key roles. And with more and more consumers opting for e-commerce, pretending to stay relevant without relying on big data is naive.”[5]

Blockchain. Blockchain (aka distributed ledger) technology remains in its early stage of development. The Modum staff notes, “There is no denying that the future of blockchain and AI in logistics is filled with potential. …[However,] these technologies are not for everyone and will also take time until they reach maturity. Gartner, for example, reports that 80% of supply chain blockchain initiatives will remain at a proof of concept (POC) or pilot stage through 2022.”

The Cloud. Data has to reside somewhere and, today, that place is often the so-called cloud. Cloud storage generally involves remote servers that can be accessed from the internet (aka “the cloud”). Cloud storage models include public, private and hybrid architectures. Angel Mitev, a senior vice president at Sciant, insists, “Cloud-based and IoT-enabled dock management, together with event management platforms, will become the industry’s must-have.”[6]

Implementing Logistics 4.0

The South Florida Reporter offers four tips for perfecting your logistics and supply chain[7]. They are:

Tip #1: Begin with a good strategy. Although technology is essential for Logistics 4.0, strategy is just as important. “According to Benjamin Gordon Cambridge Capital, ‘In the military, successful logistics has proven the difference between winning and losing.’ Business is no different. A great plan can ensure better efficiency as a great logistics manager will ‘lookup’ the supply chain intuitively understanding every angle that needs to be considered. It’s no secret that last-minute decision making and not factoring in rare circumstances can cost you dearly. Having a contingency plan is essential in logistics and supply chain management. To do this, plan every single element including various issues that can and most likely will crop up. If you are just starting out consider consulting with experts in logistics who can assist you as you map out potential scenarios.”

Tip #2: Get Automated. “If your system isn’t already fully automated what are you waiting for? The digital age has made it possible for us to remove easy human errors that can cause irreparable damage. There are fantastic tools you can utilize at every stage of your business to automate your logistics and supply chain.”

Tip #3: Pay attention to customer experience. “Ironically, the more things are done online the more people crave a personal touch. The customer experience is having a massive impact on the supply chain with 30% of people considering their experience as the driving force behind their choice and over 60% surveyed and agreed that people are willing to pay a higher price to receive an excellent customer experience. Considering this, it is imperative you factor in every part of the supply and logistics chain to accommodate your customer. More so than ever describing and advertising the level of customer satisfaction and amenities they can look forward to when they choose your company. Some services to consider are 24/7 technical support and free drop shipping or courier service to deliver beyond expectations.” Mitev adds, “Customer relationship management and tailored logistics services will be the new battleground, where companies will be fighting to differentiate themselves, and where the human factor will remain critical.”

Tip #4: Stay Alert. “An easy mistake to make is letting your guard down around peak periods throughout the year. Companies that prepare well in advance for these high traffic times reap the rewards while others can literally be ground to a halt with some easily overlooked processes. Consistent monitoring and backlog mitigation can help triage important cases that will impact your business. Choosing seasonal teams to add more eyes, ears, and hands to the logistics and supply chain will make a phenomenal difference.”

Concluding thoughts

Puorto concludes, “Big data will grow even bigger, with an increasing number of connected devices autonomously generating terabytes of new information. The ability to access and process that intelligence will give logistics companies a substantial competitive edge, but the foundation for it needs to be built now.” The Interlake Mecalux staff adds, “Effective supply chain management is inconceivable without the optimization of companies’ logistics operations.”

Footnotes
[1] Staff, “Supply chain: what is it? Definition and differences from logistics,” Interlake Mecalux, 22 May 2020.
[2] Staff, “Logistics 4.0: transforming business today and tomorrow,” Interlake Mecalux, 17 May 2020.
[3] Mark Broadly, “Everything You Need to Know About Smart Logistics and IoT,” IoT Evolution, 24 June 2020.
[4] Staff, “AI and Blockchain are Changing the Face of Logistics,” Modum, 12 March 2020.
[5] Simone Puorto, “Why Logistics Companies Must Adopt Big Data and Cloud Technology,” Supply Chain Brain, 11 November 2019.
[6] Ibid.
[7] Guest Contributor, “Top 4 Tips for Perfecting Your Logistics and Supply Chain,” South Florida Reporter, 28 December 2019.