The logistics sector is a laggard in technology investment. Small, undercapitalised companies operating on tight margins are still the norm, despite the growth of Amazon and DHL, and a survey by Infosys showed that 65% of shippers and 71% of 3PLs are investing less than 5% of their capital expenditure on digitisation and automation. Unsurprisingly, the sector remains profoundly inefficient – up to 50% of trucks return home empty and productivity gains are elusive – not good for the planet or the economy.
Nonetheless, change is in the air. In the warehouse, automated sortation, and robotic materials movement are becoming commonplace. On the road, telematics are becoming ubiquitous, and autonomous trucks are in development. In the back office, warehouse and transport management systems are beginning to benefit from artificial intelligence. Blockchain and the Internet of Things may soon start to pull everything together.
But merely linking together these islands of automation will not build a digitalised sector, which the World Economic Forum (WEF) predicts ‘could unlock $1.5 trillion for logistics players and a further $2.4 trillion worth of societal benefits over the next decade’. Despite the eye-watering numbers, digitalisation is not just for the big boys – the WEF emphasises that digital platforms will ‘allow small companies to have a global reach and compete with the sector’s established giants’. The message for smaller players is: you need to be niche or you need to automate, not just to compete but also to survive.
WEF identifies a dozen key digital initiatives, ranging from physical capabilities such as drones, and autonomous trucks, to the use of Big Data in logistics control towers and Analytics-as-a-Service. Transport and warehouse capacity will be shared, while digitally enhanced cross-border platforms will mean you don’t have to be a multi-national to put together an end-to-end transport solution. Meanwhile, 3D printing, and ‘crowdsourcing’ could radically change transport requirements: regular routes and ‘hub and spoke’ operations may no longer be the norm. Only fully automated and integrated digital services can provide the capability to offer ad-hoc alternatives to regular routes and hub and spoke operations.
All this will require fundamental change in how we conceive and configure our organisations. Business will be less about long term contracts that give the best average outcome over time: an ever-changing pattern of partners will present the optimal solution for each individual event. Similarly and necessarily, sequential planning and execution will be replaced by systems which evaluate all options and changes simultaneously and in near real-time.
This requires the sort of approach and seamless integration with back office systems, that TGMatrix’ automation has already applied to freight matching – the ability to compare thousands of data set pairs at once, and to reflect changes without rerunning the entire routine, for example. It is hard for us to grasp the full consequences: humans have only a limited capacity for thinking concurrently – hence all the jokes about ‘multi-tasking’. But it is already happening, and it will transform the economic and environmental performance of the logistics and transport industries.
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