Author: Kushal Nahata | Dec 26, 2017
Publication in: GLOBAL SUPPLY CHAIN
Technology has changed many industries, and transportation and logistics are no exception. With the advent of digitization, the supply chain is undergoing a complete change. With logistics becoming the backbone of every industry such as retail, e-commerce, consumer goods, and healthcare, the business world today is defining its development strategies with an eye on the ever-increasing innovations in logistics such as robotics, artificial intelligence/AI – from English artificial intelligence/ and algorithm for “learning” machines.
Technologies that once seemed futuristic, such as Google Glass and drones, are now being used to make things easier for customers. With recent technological innovations, companies strive to improve customer satisfaction and achieve a higher quality of service.
Based on our observations over the past 2 years, the following is an overview of the trends that will lead to revolutionary changes in the logistics industry in 2018.
Blockchain or blockchain /Blockchain/
Blockchain and artificial intelligence first entered the logistics industry in 2017. The security and transparency that the blockchain provides allow data to be stored while minimizing the possibility of error.
For example, if a customer’s personal data is stored digitally on a blockchain, it could not be masked during delivery. Similarly, it is possible to trace any blockchain – for example matching each vehicle’s registration number against the delivery identification code. By 2021, no less than 25% of international companies will already have implemented artificial intelligence and blockchain supply chain processing.
If until now customers have been spoiled in terms of choosing a portal from where to shop, or products and various discounts, they will now be able to choose between logistics service providers to organize transport. In 2017, only a dozen online trading companies provided this opportunity, but in 2018, their number will multiply.
This is a game changer for logistics companies, as they can no longer afford to sit in the background. They must compete with each other with differentiated, customer-centric services.
“Flexible logistics” means the ability to expand or contract capacity depending on demand over a period of time. Variable automated processes lead to increased flexibility and elasticity of the logistics infrastructure to be able to respond with cost-effective solutions to market changes. One size fits all is no longer applicable. However, a customized solution is provided to the requirements of cost control, warehouse management, overcoming geographic restrictions, distribution channels, prioritization, and many more.
The relationship between supply and demand determines the day-to-day operations of logistics. To accommodate ever-changing demand and changes in supply, logistics companies add elasticity to their operations so that their capacity can match demand. More and more companies will outsource resources through 3PLs. By optimally utilizing resources, businesses will provide timely services while keeping costs unchanged regardless of rising demand. In short, the benefits of flexible logistics are as follows:
- better customer interaction
- ability to monitor processes in real-time
- ensuring connectivity between business processes
- ensuring flexibility and comprehensiveness of processes
Order fulfillment quality – perfect orders
Another trend that continues to gain importance is the pursuit of perfection in order fulfillment. The complexity of organizing full capacity down to the last kilometer reflects the quality of the service, but companies are now clearly aware that perfect order fulfillment is the ultimate goal when measuring customer satisfaction.
“Perfect orders” is the percentage of orders delivered to the right place, with the right products, on time, in perfect condition, in the right packaging, in the requested quantity, with the right documentation, to the right customer, and with the right invoice. In 2018, delivering not just the right but perfect deliveries will be even more important than it is now.
Drones and “smart glasses”
With automation and mobile apps as an enabler in the quest to stay ahead of the competition, smart glasses and drones will take logistics to the next level. With built-in information, integration with smart glasses will make deliveries much easier by switching to hands-free route search, as well as facial recognition to avoid mistakes and personalize deliveries.
With the popularity of drones and the introduction of “smart” glass, the operational efficiency of the end-to-end process can be improved, along with achieving flexibility and speed of delivery even in densely populated megacities.
Data-driven logistics leads to predictability of outcome
With demand forecasting and data analysis, businesses can predict requests and thus plan their operations ahead of time. In the constantly changing market situation, maintaining a leading position through key importance, so logistics based on data analysis is the future of the industry. Companies will introduce Big Data algorithms, data visualization techniques, and “smart” ways of analysis to improve process efficiency and service quality by reducing lead times.
The big change in 2018, however, will be that companies will use geographic search engines to predict demand for a certain product in a certain area and deliver it in advance. For example, if many people in New York City are looking for a new book due to be released in a week, additional copies can be sent to the nearest distribution center to maximize the benefit of prospecting.
Building sustainable and profitable logistics chains
Logistics companies link their business with the idea of sustainable development. In order to reduce hydrocarbon emissions, companies seek to implement processes that leave no trace in the atmosphere. The Paris Agreement and the World Economic Forum are issuing serious warnings about high hydrocarbon levels in the atmosphere. According to the World Trade Forum, companies such as UPS, DHL, SABMiller, and Nestlé are among the top companies that have committed to sustainability, increasing revenue by 20% while reducing supply chain costs by 16%.
To achieve efficiency and reduce carbon emissions, companies will collaborate with logistics companies that offer “smart” transport and smarter processes.
In general, the logistics industry is moving towards simplifying the most cumbersome processes by eliminating duplicative activities to create a more efficient organization while satisfying the needs and wants of its customers.
Kushal Nahata /Kushal Nahata/ is the founder and CEO of FarEye, a provider of technology solutions that enable real-time traceability of processes for companies in the fields of consumer goods, healthcare, commerce, etc.