Logistics in the Digital Age: Staying Ahead of the Curve
Over the past year, my blog has evolved into a hub where a community of people interested in the topics of logistics trends and female leadership can come together to exchange ideas. A reoccurring theme has been digital transformation. It is not just me who has embarked on a digital journey, but also my organization, the entire logistics industry, and virtually every industry out there.
One essential question I am pursuing regularly on my blog is: How will digitalization leave its mark on the logistics industry?
Digital Technologies That Will Impact Our Industry
One innovation that is certainly going to impact our business are autonomous vehicles. Our industry faces driver shortages, also drivers make up to 30% of the road transport costs – AV’s will be a game changer in respect to these challenges. I believe that an effective application of the technology of self-driving cars and trucks is especially realistic in two logistics fields: long-haul road transport and last-mile delivery.
Two other factors that leave big marks on our procedures are Robotic Process Automation (or RPA for short) and chatbots. RPA describes the use of AI-software and machine learning capabilities to handle high-volume, repeatable tasks. At DHL, we implemented it in many processes, for example in the invoicing process. A chatbot is also an AI feature that interacts with our customers like a human.
Robots and collaborative robots that are fit to be used in warehouses also have the potential to improve the speed and efficiency of our operations, as well as reduce costs. A collaborative robot, designed to work safely around humans, can for example support and improve the manual process of co-packing.
Constant Monitoring and Optimization Through Data-driven Technologies
In the long term, we are sure to witness more fundamental changes in our industry due to digital transformation, challenging us to rethink our value proposition and operating model.
Especially data-driven technologies such as cloud systems, predictive analytics and also Blockchain can be utilized to make existing logistics processes smarter – by for example creating real-time visibility of all inventory at all levels. Data-driven technologies will be able to take care of data inputs – internal and external – for constant monitoring and optimization of the supply chain.
There are two areas that illustrate the potential long-term effects of digitalization in logistics particularly well. In the following will illustrate those in more detail.
1. Smart Warehousing
One thing I have noticed: The current approach to warehousing lacks flexibility, scalability, and responsiveness to changing customer expectations. These inadequacies have attracted new market entrants offering open platforms for service providers and customers to easily access and book available warehousing space – kind of like an “Airbnb-model” for warehousing. In response to this disruptive market trend, upgrading our warehouses in the short-term by applying digital technologies will not suffice. We need to transfer cloud logic to the warehouse environment. The result would be an entirely new operating model: the Smart Warehousing Cloud (SWC). The SWC is a real-time online platform that intelligently allocates warehouse space by matching customers’ needs for storage with available capacity in a warehouse network. Such an SWC solution provides customers with a broad network of warehouses, transparent pricing linked to actual usage, and instant conclusion of contracts. Making our warehouses smart will translate into shortened lead times, higher scalability and service levels, and greater coverage.
When digital technologies are leveraged in the right way, logistics service providers can be first-movers in smart warehousing solutions. Their asset ownership and customer data access gives them an advantage over startups trying to disrupt the market.
2. Blockchain in Logistics
Blockchain is one of the tech trends to watch as it is likely to challenge the way we do business in various industries. There are several areas where the tangible benefits of blockchain for logistics become clear:
Blockchain applications can facilitate the interaction between multiple parties along the supply chain. On the blockchain, the processing status of all involved parties can be saved automatically, and the related data is accessible by all parties. The result is a much faster and more transparent process. Also, blockchain can be used to track an item’s provenance and handling conditions. With blockchain technology all parties along the value chain, including the end-consumer, can trace all process steps. In this way, blockchain applications can, for example, provide proof of legitimacy of pharmaceutical products or proof of authenticity of luxury goods.
Blockchain is regarded as a disruptive trend because of its potential to reshape the structure of logistics processes and the handling of information flows. It will likely present us with a challenge: the need for a middleman may disappear which can impact logistics companies whose value it is to act as a ‘trusted’ party coordinating other supply chain players. Tapping into the opportunities that blockchain provides rather sooner than later is therefore a must to ensure sustainable industry growth.
Emerging digital technologies are fundamentally transforming the supply chain landscape. To stay one step ahead, business leaders in this field need to capture the opportunities digitalization presents – both to evolve the existing business model but also to fundamentally rethink logistics operations in order to remain competitive in the digital age. Only in this way we can continue to offer the greatest convenience, speed, and flexibility to our customers and secure our position as the preferred provider.
During the coming year, I will further explore the topic of digital transformation and what it means for change management and the future of our industry. I invite you to continue to be a part of the conversation and knowledge exchange on my blog and social media channels.
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Welcome to Sabinext. I’m Sabine Mueller, CEO of DHL Consulting. DHL Consulting is an independent strategic supply chain and management consultancy of Deutsche Post DHL Group. I have been dedicated to the logistics sector for close to two decades. This personal blog is a discussion platform for supply chain trends, diversity and future of work.