New insights from Kearney and CSCMP show how technology is helping the logistics industry work smarter, better, and faster in today’s challenging business environment.
In 2019, organizations around the world were dealing with trade wars, electronics component shortages, labor crunches, and geopolitical issues like Brexit. By early-2020, the entire world’s attention shifted over to fighting a global pandemic and coping with the steep toll it took on human life, livelihoods, businesses, and industries.
In response, the logistics industry has spent the past few months dealing with crises. Now, it’s carving out a path forward in a VUCA (volatility, uncertainty, complexity, and ambiguity) world, where new challenges continue to surface daily.
Some signs are optimistic, according to Kearney and CSCMP’s 31st Annual Council of Supply Chain Management Professionals (CSCMP) State of Logistics Report. For example, e-commerce continues to boom, amplified by the online shopping of those sheltering at home. Some carriers maintained profits despite declining volumes in 2019, suggesting a commitment to pricing discipline that may help them survive the bigger drops of 2020.
“An economic slowdown damaged most sectors of the economy, including logistics,” Kearney points out in its report, which covers the macroeconomic factors affecting logistics, insights from industry leaders, discussion of important trends, detailed analysis of each major logistics sector, and a strategic assessment of the industry.
6 Ways Tech is Making a Difference
In its report, Kearney discusses how the implications of the COVID-19 crisis have reemphasized the value of technology in logistics. Here are six advanced technologies that it says will continue to positively impact the industry for the near term:
1) Artificial intelligence and machine learning: Artificial intelligence (AI) and machine learning (ML) are broad categories, which companies across all stages of logistics are already using to make smarter and quicker decisions. AI and ML directly address the data challenge, helping companies turn existing data into better insights and competitive advantage. “Their importance to the industry is why 20 percent of the AI-100 are in logistics,” Kearney points out, noting that companies can use AI and ML to:
- Anticipate market changes to make better planning decisions
- Predict high-demand products, so that warehouses can move them to easy-to-access locations
- Optimize delivery routes based on real-time traffic and weather conditions
- Recognize damaged goods before they get delivered
- Automate simple, repetitive back-office tasks to reduce paperwork, improve productivity, and reduce errors
Calling AI and ML “dominant disruptive forces in logistics,” Kearney says the value they bring is clear. “Barriers to entry are lowering, computing power continues to grow, and ever more data is ever more widely available.
2) Robotics and automation: Kearney breaks robotics and automation technologies down into two categories: moving goods and handling goods.
- Autonomous trucks are likely to develop in stages: first platooning, then driverless platooning, then full-blown autonomous vehicles operating at scale without drivers all the way from loading to delivery. Similar, but lower-impact, effects can be expected in rail, air, and warehouse drones.
- In warehouses, robotic shelves can move goods to picking stations, picking systems can use robotic arms with sensors to effectively grasp many shapes of objects, and autonomous palletizers can robotically build pallets from units and cases.
Noting that autonomous vehicles still need to make significant headway on safety and regulatory issues, Kearney says stakeholders need to come together to build the vision of a driverless world, which is likely still years away. “Platooning will come first, in three to five years, and fully autonomous vehicles will become a reality in about 10 years,” it concludes. “However, the handling technologies focused on picking, sorting, and palletizing are already in full swing.”
3) Augmented reality and virtual reality: Augmented reality (AR) and virtual reality (VR) can make processes more efficient, thus improving productivity, especially in warehousing and delivery. The earliest examples have focused on aiding warehouse product picking by displaying instructions on smart glasses for items in the field of vision. Glasses can also provide instructions for employees performing maintenance tasks.
“Eventually they could even help employees find the right pallets when loading or unloading a truck,” Kearney adds. “The approach can reduce lead times, error rates, and job training requirements.” Similar approaches on vehicle windshields could aid delivery people, perhaps even by showing a picture of the package’s intended recipient.
“In the near term, AR and VR will likely remain limited to existing use cases in warehouse product picking and training,” Kearney predicts, “although it will likely expand from early adopters to other competitors in those areas.”
4) 5G and the Industrial Internet of Things: Companies can use the new 5G wireless standards in three key ways:
- End-to-end visibility. 5G will enable companies to deploy many more devices, creating an Industrial Internet of Things (IIoT) that can provide real-time data for container-, truck-, and SKU-level tracking.
- Enhanced routes and schedules. Better tracking will help organizations avoid delays, eliminate unnecessary trips, and optimize routes and schedules in real time.
- Improved maintenance. The 5G network will support VR and AI technologies to improve on- and off-road maintenance.
“5G networks will soon be ubiquitous,” Kearney predicts. “However, beyond the 5G-powered infrastructure on which copious devices can communicate, achieving full IIoT benefits also requires easily available low-cost devices and the emergence of standards for their communication across the network.”
5) Renewable energy: Logistics companies can benefit from renewables through savings in fuel and power, reducing emissions to meet consumer preferences, and potentially increasing delivery windows through quieter electric fleets. Kearney sees three clear innovation areas within the logistics space:
- Electric trucks rely on battery innovations that reduce costs and charging times (for example, swappable batteries).
- Electrified last-mile vehicles may include handcarts, tricycles, or medium-sized vans.
Green warehouses reduce carbon footprints through rooftop solar panels, smart motion sensors to reduce illumination requirements, and forklift charging in off-peak hours.
6) Blockchain: Kearney says that while blockchain’s decentralized nature and transparency can improve tracking and reduce inefficiencies in logistics, advocates often overlook the foundation of digitization needed to extract the full potential of the technology. “There are also technical issues,” it points out. For example, a smart contract won’t self-execute without connectivity at the point of delivery to log the fact that the goods were delivered.
Before blockchain can become ubiquitous in the supply chain, Kearney says there are also trust issues to work through. “Making all data in a network transparent to all users can undermine trade secrets. These and other issues surrounding blockchain in logistics are certainly solvable,” it explains. “But it may take years for the solutions—and the changes in a wider ecosystem that they require—to be ready to live up to the hype.”
Stepping up to the Plate
The COVID-19 crisis serves as a reminder of the world’s reliance on logistics to deliver regardless of circumstances. It also accentuates some of the industry’s challenges, especially in meeting increased e-commerce demand from customers. “It highlights the need for modernization and technological advances,” Kearney states.
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