Internet of Things (IoT) is poised to disrupt every industry digitally and is considered a “given” phenomena due to its ubiquitous presence in accelerating its influence on the way an individual or a society lives, works, communicates, and connects with one another.
The Connected Logistics 4.0 and Smart Supply Chain Management (SCM) in the Industry 4.0 reckons the market worth of USD 41.30 Billion by 2021, a report from the global markets. That said, the Logistics company is facing an unprecedented transformation as digitization is taking hold with ever-growing expectations & demands from the customer.
Like most of the significant industries, logistics & supply chain management is also confronting an immense transformation; and like all disruptions, this brings both opportunities and risks. New IoT Technology, new market entrants, a new set of growing customer expectation, and new business models have pushed the Industry to develop and adapt to address these challenges which could be revolutionary and evolutionary in some way.
IoT technologies promise far-reaching payoffs for the logistics operations and their end consumers and business customers. The IoT technology is extending its benefits across the entire value chain in the logistics world right from operations, warehousing, freight transportation, to last-mile delivery. IoT technologies also enable productivity, higher efficiency, safety and security and more collaborative operating model. They are also reshaping and redefining the marketplace in ways that are only beginning to become apparent.
The currently SCM is undergoing a significant change, right from the drones for online fulfilments, to mobile robots in the warehouses. With the possibilities in Artificial Intelligence (AI), the SCM 4.0 will be self-orchestrated and become completely autonomous. A fleet of trucks using swarm intelligence or algorithms can increase the throughput in the cargo yards; a trusted peer-to-peer ledger on the blockchain architecture could revolutionize compliance in the Industry. The mobile robots or a host of wearables, as well as machine learning, can rapidly fasten and increase the pace of the order fulfillment. Furthermore, the IoT platforms could connect the retailers to transporters and couriers or delivery services with a single click.
Hence, the SCM 4.0 will be faster, leaner and self-orchestrated. This unprecedented pace of transformation will be driven by a few underlying technologies which will be cautiously adopted by the Industry within the next 10 to 15 years’ timeframe. Following are the critical segments where the IoT technologies will disrupt the logistics and supply chain management functions:
1. Customer Experience: Amazon is developing capabilities to cull out spam and build predictive analytics around their consumer shopping behavior. Amazon wants to ship the products even before the consumers know that they want it. Amazon in its patent on “Anticipatory Shipping” has exemplified a strategy to send deliveries to partial street addresses or zip codes and get the products as close as possible to its consumers and then, in-transit complete the address and route to the one who has placed the order. This advanced delivery process will work well for new product launch such as iPhone X. How many people have searched for iPhone X in the recent times? Interest in a product is shown even before the buying decision is made. Anticipatory shipping is the next wave and will come soon; Predictive models combined with next-gen fleets could potentially lead to “Zero” fulfillment time. Amazon has made a significant investment on building robots and drones to focus on cutting down the delivery time and providing the customer with what they want immediately by getting their drones to deliver small packages directly from their warehouses.
2. Traffic and Fleet Management: Autonomous fleet brings in greater efficiency. “Drones” have become the most favorite toy of all the key players in this Industry. Companies like Amazon has launched its drone for the last-mile deliveries which will be an integral part of the small-time delivery mechanism given that the technology is still at a very nascent stage and for it to advance might take next 10 to 15 years. Before experimenting drones the first vehicles to become Autonomous were forklifts.
The development of forklifts was to avoid the travel by man which is time consuming, unproductive to perform tasks within the warehouse. The forklifts called “vision-guided mobile robots fully autonomous” not only addressed this specific problem but also processed orders (pick and onboard for delivery) four times faster than a man. In fact, Amazon has launched its Robotics at the UK fulfillment centers in Dunstable and Doncaster, where the robots will slide under a tower of shelves where the products are stored, lift it and move it through the fulfillment center enabling to get the items to the customer lot quicker unlike in the traditional processes.
The next significant paradigm shift is in the fleets becoming autonomous as well. Rolls Royce has announced plans to launch its autonomous cargo ships or as the Economist called it – “Ghost Ships” by 2030 while aiding or replacing man was the critical criteria. Autonomous technology in material handling for fleets driving the value of autonomy centers for fuel economy and Truck platooning would cut down on fuel costs by 20 percent.
3. E-Brokerage Platforms – Uber of Trucks: Growth in E-commerce coupled with the connectivity of IoT technologies will usher contemporary solutions for logistics and freight firms. The proliferation of digitisation in trucking will force the freight brokers to align their business models which is mobile-based, freight brokerage-solution types. Mobile Apps have become critical ensuring a seamless on-the-move brokerage systems also called “Uberization of Trucking.” In the future, the mobile-based freight brokers will be required to develop in-house software solutions by building synergic collaborations or partnerships with the traditional OEMs, freight brokers, and telematics providers/vendors to facilitate this transformation.
For example, imagine a mobile application is incorporated to match shipper rates, truck drivers, schedules, and routes. This advancement is expected to automate various processes concerning the delivery status, load-finding, driver payment, delivery status, apart from sharing critical real-time information on asset tracking or consignments right from pick-up to delivery. In the current scenario, approx $20 billion is lost in revenue due to empty miles or excess capacity issues.
4. Smarter Commerce with Blockchain: Blockchain technology is demonstrating its potentials in generating new innovative channels on how the logistics applications or solutions need to be developed and deployed which means that the technology can emerge entirely as a new operating system for the supply chain networks which combines the software apps with B2B connectivity.
For instance, as a warehouse head who is responsible for the flow of unhindered supply of goods, there might be occasions when the suppliers may fail to deliver the goods on time and undamaged, that might lead to potential disputes that are time-consuming and recourse measures that legally punitive. The blockchain technology will circumvent such scenarios while allowing the individual to define clear terms and negotiate smart contacts with the suppliers the modes operandi and conditions between the two suppliers or parties. While mandating the sensorization of all goods for generating critical information about the status and delivery time of the products.
The implication of blockchain technology is expected a broader reach to track right from the order initiation by the customer to shipment details, creating a visibility within the entire supply chain system which has not been seen ever before and allowing the parties concerned to access real-time status that is accurate from anywhere and anytime that are only going to be viable in the immediate future.
The future of Logistics Industry which I envision and predict are “On the Spot Manufacturing and Anytime, Anywhere Delivery” which will pose a rigorous competition as the manufacturing of the goods may not be required and will be produced right at the place of the purchase eliminating the intermediaries significantly. Please refer to my article on this advancement here
Similarly, if you want to grow a plant, you don’t need to go the market to purchase it. There are techniques like Hydroponics where you can now grow the plants/trees right where you are. Likewise, with 3D printing or additive manufacturing (AM) using patented designs available on the internet you can create products or things right at your home.
To summarise, the IoT transformations in the logistics industry will open for challenging competitions and compelling for a paradigm shift in the business models which will offer an end to end supply chain of integration to aggregation. So, stay tuned to learn more about how the “Logistics and Smart Supply Chain 4.0” will redefine itself.
