The Future of Logistics

Stephen DeAngelis

October 20, 2020

During the coronavirus pandemic, consumers have increasingly used the digital path to purchase to buy products. This expansion in e-commerce has, in some cases, overwhelmed logistics providers. Even before the pandemic struck, subject matter experts insisted the logistics arena required more digitalization and more automation. The pandemic only intensified those beliefs. Back in December 2019, when rumors about a new virus were just getting started, Oscar de Bok, CEO of DHL Supply Chain, stated, “Automation and digitalization will re-shape the logistics industry.”[1] De Bok added, “On the execution side, standardization and constantly improved processes will lead to more profitable growth, while customer experience, especially the digital customer journey, are becoming more important than ever. Leading innovations and digitalization are the connecting element above all.” Digitalization, of course, is all about data — gathering data, storing data, and, above all, analyzing data.

 

The digitalization imperative

 

Julie Clements, from Managed Outsource Solutions, notes, “Businesses need to digitize supply chain management to increase efficiency and maximize customer value. Especially in today’s digital world, where consumer demands are increasing rapidly and many companies are struggling to keep pace with the onslaught of digital trends, it’s very important to digitize your supply chain logistics.”[2] An infographic developed by her company, provides nine reasons organizations should pursue digitalization. They are:

 

  • Increases productivity and efficiency
  • Maximizes customer value
  • Centralizes data control
  • Provides accurate, certifiable, manageable, and accessible information
  • Provides visibility in real-time operation data management
  • Provides greater data accuracy for operational execution, analytics, and reporting
  • Offers system-driven audit support — for freight audit management
  • Ensures better communication and collaboration capability
  • Increases job satisfaction

 

Two of the above bullets (#4 and #6) make specific references to advantages provided by analyzed data. Suresh Bhuj, from Cloudaeon, notes, “Data has become one of the most valuable raw materials for businesses today. However, sometimes, many responsibilities accompany it. In addition, more and more companies are becoming digital, with the result that large amounts of data are generated in their supply chains. However, unlike capital, data is useless without tools that enable organizations to better understand, and gain more knowledge. The big data revolution has forced executives to invest in technology that can analyze big data. Supply Chain Analytics provides data-based intelligence by reducing overall maintenance costs and increasing service levels.”[3] He adds, “Supply chain analytics uses data & quantitative methods to improve decision-making for all activities across the supply chain.”

 

Logistics and cognitive technologies

 

The advanced analytics to which Bhuj refers often are embedded in cognitive technologies, like the Enterra Cognitive Core™ — a system that can Sense, Think, Act, and Learn®. Cognitive systems, a form of artificial intelligence (AI), are likely to be found in the best logistics organizations in the years ahead. The staff at Shipchain notes, “A future in which smart machines can make decisions on their own (with a touch of human guidance, of course) could be closer than we think.”[4] They call this “cognitive automation.” They also note, “While self-driving supply chains may be around soon, it will take a lot of trial and error before it is commonplace in shipping and logistics.” Members of team Operencia – NMIMS Hyderabad agree that AI technologies will play an important role in supply chain and logistics. They write, “The most essential way to ensure that a company’s supply chain work processes are operating at the highest possible level is with a well-oiled logistics team. With the growing digitization of the professional world, more and more companies are adding artificial intelligence to their supply chain in order to maximize their resources by reducing the time and money spent on figuring out how, where and when to send a package to a certain place.”[5] They go on to list three advantages of AI in logistics. They are:

 

1. Load Cost. “Predicting the price of a load can be tricky because the cost of shipping varies from season to season, and even from sunshine to rain on a day-to-day basis or by time of the day. AI can help monitor these conditions and choose the right price based on delivery time and what ‘lane’ —  route and destination  —  a shipment is headed.”

 

2. Optimizing Inventory. “AI also plays a role in the democratization and accessibility of information as the technology can offer a fair price quote to ensure that both parties are getting a fair deal, while also monitoring inventory and load capacity so trucks don’t falter on the execution of the delivery. The technology can also secure and manage the supplier inventory and the number of trucks that are available for delivery. Smart algorithms offer this information ahead of time so clients know the exact price and availability of certain inventory and trucks for a future delivery. AI also offers data analysis to learn which carriers have moved what freight in the past at what price and service level.”

 

3. Tackling Unforeseen Circumstances. “Expect the unexpected when it comes to the logistical business as a series of circumstances could affect the expected delivery date of a product. Natural disasters such as hurricanes and floods, carrier bankruptcies and employee strikes can all affect the natural course of a company’s logistical workflow. AI can be trained to learn from contingency plans that can guarantee corrective action in the future in the case of an emergency or a disruption. The technology can re-route trucks to a different distribution center if weather strikes the original distribution center, using information from past disruptions to adapt to changing circumstances.”

 

They conclude, “The world of logistics and the supply chain is a complicated one that requires a lot of planning, resilience and ability to adjust when unforeseen circumstances happen. With the right AI platform, companies will be able to automate logistics work processes and find alternate routes for vehicles derailed by road construction or bad weather. The technology can also help to reduce the amount of money and time spent determining the logistics of an operation by ensuring that a company’s inventory is replenished and by determining which vehicles are best to carry a particular load.”

 

Concluding thoughts

 

Shipchain analysts assert, “The [logistics] industry has been historically slow to accept change.” They add, “That said, in a world increasingly driven by technological advancements, and an age dominated by social distancing and removing the human element as much as possible, it is time that the industry ‘let go of the wheel,’ so to speak, and embrace the technological revolution.” I’m much more sanguine about the logistic industry’s ability to change. When I look at how warehouses are being automated and autonomous vehicles are being touted, I see an industry ready to embrace the future.

 

Footnotes
[1] David Edwards, “Automation and digitalization will re-shape the logistics industry, says DHL,,” Robotics & Automation News, 4 December 2019.
[2] Julie Clements, “Why Digitize Supply Chain Logistics?” Managed Outsource Solutions Blog, 3 September 2020.
[3] Suresh Bhuj, “Infographic: Big Data in Logistics and Supply Chain Analytics,” Cloudaeon, November 2019.
[4] Staff, “Cognitive Automation and How it Could Transform the Logistics Industry,” Shipchain Blog, 19 August 2020.
[5] Team members, “Artificial Intelligence in Logistics,” Operencia – NMIMS Hyderabad Blog, 16 November 2018.