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Decoding Logistics

Edited by: Winny Linandy-Tan


The Next Big Link

Like many industries, logistics is faced with immense change brought on by the growth of the real-time economy. In an arena where it is critical to juggle speed with precision, players now need to keep one eye on a rapidly evolving supply chain system as well.

Changing customer expectations, technological breakthroughs and new entrants to the market keep businesses on their toes because they bring unprecedented challenges and invaluable opportunities.

There is enormous potential for growth within the global supply chain, and any organisation able to transition successfully to digital logistics stands to gain a tremendous competitive advantage.


A Seamless Chain

Somewhere in the world right now, an online shopper is completing a sale. As warehouse robots pick and pack the items for delivery, artificial intelligence (AI) crunches data including global weather and local traffic to determine the quickest delivery route before it initiates stock replenishment.

For online retailer Amazon, deliveries to addresses within range of its drones are automated too.

Since June 2018, several robot vehicles have been deployed at the 50,000 sqm Rhenus warehouse in Poland, where employees walked up to 800 metres each time between shelves. The unique vehicles were co-developed as a customised solution to efficiently fulfil 18,000 orders daily. These robots are summoned by pushing one button and will autonomously unload products at various packing stations, significantly reducing the walking distance covered by employees.


Logistics 4.0 is set to redesign the supply chain network. While the term supply chain rightly suggests a link-up of several parts, technology will make these collaborations increasingly seamless, until we end up with a model that resembles a loop where product and service demands are automatically met with adequate supply.

The basis for Logistics 4.0 is the transformation of supply chain components, such as inventory and transportation, into cyber-physical systems (CPS). Manual management is replaced with computer-based algorithms across channels, providing an increasingly comprehensive volume of data in real time. This data offers insights that makes it possible to seamlessly integrate, manage and analyse processes to streamline material flows.

For example, purchasing departments can use sensors to facilitate inventory monitoring and automate reordering. Sensors also provide a clear view of freight shipments across the entire supply chain and send alerts when threshold levels are approaching.

The value of an optimised logistics platform is without question. Complex sectors such as agricultural or manufacturing face daily challenges - transportation delays, operator errors or IT failures - that could break a supply chain.


The Technology Behind Logistics 4.0

Just as Industry 4.0 leveraged on machine-to-machine (M2M) communication and Internet-of-Things (IoT) devices to create smart factories, Logistics 4.0 operates under the same principles, only with a different set of component parts.

Logistics professionals use a digitised supply network of smart containers, vehicles, pallets, and transport systems to gain insights, so as to efficiently plan logistics tasks and transportation routes.

The effectiveness of these smart systems depends heavily on the influx of rich data that flow into organisations. By employing AI and machine learning, businesses are able to promptly apply the insights to predictive algorithms, to understand their customers and ultimately make better business decisions.For example, DHL uses machine learning to optimise its air freight schedules by predicting average daily transit times up to a week in advance.

The algorithm analyses 58 different parameters of internal data and identifies factors that could delay shipments like weather conditions and operational variables. In relation to global trade, air freight accounts for one percent of tonnage but 35 percent of value, so such insights are invaluable.

In the food industry, it is estimated that about 30 percent of perishables never make it from the farm to the table, representing a massive waste and loss of revenue.

Technology like smart containers and IoT help to prevent overages and improve conditions during transportation. Meanwhile, global supermarket chains rely on blockchain data like source, batch, and and sell-by dates to keep better track of its products. If they have to pull food from the shelves due to contamination up the supply chain, blockchain enables them to pinpoint the affected products instead of throwing everything out.


The Road Ahead

As Logistics 4.0 takes off, companies will soon be able to realise their ultimate goal of an automated supply chain that adds value to customers and partners through self-monitoring and adaptive logistics.Using a mix of complementary technologies such as GPS, barcodes, radio frequency identification, on-site and cloud architecture and software, this next epoch of supply chain digitisation optimises edge computing and IoT to yield real-time automated, sense-and-respond feedback mechanisms.

The potential of using blockchain technology as a layer of security for logistics is also immense. For use on AI-driven networks, the application is scalable, transparent and highly secure, and can improve the efficiency throughout the supply chain from warehousing and delivery to payment.

It is important to note that despite being in a time of growing automation and hyper-connectivity, the human element in the supply chain is more important than ever. As the impact of the real-time economy becomes more pressing than ever, not every action can be automated.


Case Study: A decade of innovation

This November, Alibaba celebrated the 10th anniversary of its “Singles’ Day” shopping bonanza, involving 180,000 brands and 200,000 offline smart stores. A record US$30.8 billion sales changed hands in 24 hours and this is the new warehouse that made it all possible.

Since October 2018, over 700 smart vehicles run the show at the Wuxi facility. The wifi-enabled robots pick up parcels and automatically deliver them to pick-up points for delivery. Each robot which can carry up to 600 kg has inbuilt lasers to prevent collisions.

Humans work alongside the robots for now, but considering the intelligent system that automatically docks them when they need to recharge, a fully automated warehouse is certainly only a matter of time.


References:

1 "The Top 5 Changes That Occur With AI In Logistics" Cerasis, August 15, 2018. cerasis.com/2018/08/15/ai-in-logistics/
2 "An Inside Look At Cainiao's Intelligent Warehouse. https://www.alizila.com/video/smart-robots-alibabas-intelligent-warehouse/

Edited By:
Winny Linandy-Tan, Marketing and Communications Manager (APAC) at Rhenus Logistics Asia Pacific. To contact her about this or other articles, email blog@ap.rhenus.com

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