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Smart Delivery: Logistics supply chain undergoes digital transformation

March 28, 2019
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The information and communication technology (ICT) infrastructure of logistics enterprises is evolving rapidly. From legacy applications such as enterprise resource planning, the industry is moving towards new-age technologies such as internet of things (IoT), artificial intelligence (AI) and blockchain, which are set to disrupt the sector. These technologies are expected to improve the efficiency of supply chain networks, reduce wastage and ensure supply chain optimisation, thereby increasing productivity and streamlining operational processes. The industry’s digital transformation will help establish an integrated interface across the value chain to ensure seamless last-mile delivery.

A look at the key technology trends in the logistics industry...

IoT to drive the future of logistics

IoT will play a key role in the digital transformation of enterprises in the logistics industry. It can help in capturing information for generating new insights and adding value to business in the following ways:

• Predictive diagnosis and performance monitoring: IoT may be used to monitor the status of assets across the value chain on a real-time basis. In several countries, advanced sensors are being used to detect risks pertaining to breakdowns, and avoid process delays and fatal accidents.

• Providing visibility for in-transit carriers: IoT, which deploys GPS and radio-frequency identification (RFID) systems, is used for providing real-time information on key location statistics to logistics carriers. This has helped make the logistics ecosystem more responsive. This helps service providers predict the delivery time and improve asset utilisation, while on the other, it enables customers to track their consignment on a real-time basis.

• Warehouse management: Another promising use case of IoT in logistics is warehouse management. Enterprises can undertake pallet-level or item-level tagging using the RFID system at warehouses to enable smart inventory management. Moreover, IoT can ensure optimal asset utilisation in warehousing operations. Sensors could be deployed to monitor assets in a sorting system, such as conveyor belts, to determine their running time. Analysis of such data analysis can help in identifying areas for optimising capacity.

Automation and robotics to transform warehousing operations

Warehouse automation is one of the key technological developments in the logistics space. The rise of online shopping has led logistics enterprises to modernise warehouse operations for faster and more efficient operations. Several enterprises have revamped their warehousing operations with robotics. Robots are being enabled to automate and fast-track a range of warehousing functions. This includes programming the robots to pick and pack, load and unload, and also deliver the goods. The use of robotics will not only fast-track the processes of data collection, record keeping and inventory management, but will also eliminate human errors.

Further, automation in the logistics sector involves the use of control systems for operating machinery, processes, vehicles, vessels, and aircraft through AI. Further, automation technology can be adopted in the logistics sector for reducing manual intervention through robots, self-driven vehicles and drones to bring down costs. AI can help automate business processes to reduce/eliminate manual interventions in freight handling in order to improve quality, speed up processes and subsequently bring down logistics costs.

While system-guided manual processes can improve warehousing efficiencies, complete automation of warehousing operations through robotics and automated guided vehicles can raise warehousing efficiencies and material throughput to a completely different level. Reducing manual intervention may also help regulatory agencies speed up inspection, ensuring minimum handling damage and reducing the inventory holding time.

Leveraging cloud and big data to enhance operational efficiency

Cloud and big data analytics are the other key ICT solutions being leveraged by logistics enterprises. Since the logistics industry is highly fragmented, the vehicle fleet often lies idle or returns empty after transporting the freight. Cloud computing can help service providers optimise asset utilisation by collaborating with each other to share fleets and networks. Sharing real-time information on cloud-based platforms can help service providers coordinate the pickup and delivery of freight. This will not only reduce the idle time of their fleet but also make the delivery ecosystem more efficient. Further, cloud technology allows logistics service providers to store data and easily access information from anywhere, thus giving them the flexibility to control critical processes remotely. A logistics company can analyse and respond to the latest information on routes, schedules, rates, regulations and other details almost immediately and take informed decisions. The biggest advantage of cloud-based applications is that they help logistics companies save the time and resources spent on building cumbersome, stand-alone systems and instead focus on their core competencies.

Big data analytics, another element of the digital revolution, enables enterprises to analyse complex data sets that are captured through smart devices and stored across servers and networks. The technology can be applied to the entire logistics value chain to identify areas of improvement and enhance operational efficiency. It can also be employed for driving future strategy.

Using blockchain for supply chain management

Another disruptive technology that has had a significant impact on the logistics sector is blockchain. It helps create a secure system, which can potentially help increase the efficiency and transparency in the supply chain and improve warehousing, delivery and payment management. Further, with an built-in chain of command, blockchain facilitates reliability and integrity in supply chain management.

Blockchain can also be used to create common networks among entities unwilling to share information, without compromising on the integrity of the data. This technology becomes especially relevant in the Indian context, given the fragmented nature of the sector and the lack of common platforms to exchange information. It can be used to align processes seamlessly, from one point of the logistics value chain to another, by eliminating redundant documentation processes. This, in turn, will also reduce the risk of errors due to manual data entry at several points across the value chain. Blockchain will also facilitate an integrated end-to-end logistics system.

Some of the key areas where the technology can add value are:

• Keeping records: This includes accurate recording of the quantity and transfer of assets such as pallets, trailers and containers as they move between the supply chain nodes.

• Real-time tracking: Tracking of purchase orders, change orders, receipts, waybills and other trade-related documents.

• Verification: Assigning or verifying certifications of certain properties of products.

• Labelling: Linking physical goods to serial numbers, bar codes, digital tags such as RFID. to ensure efficient tracking.

• Information sharing: Effectively sharing information about the manufacturing process, assembly, delivery, and maintenance of products with suppliers and vendors.

Challenges and the way forward

While logistics enterprises have been focusing on expanding their ICT network, several factors continue to impede their efforts. There is low awareness about the economic benefits of digital technology and there is little collaboration among stakeholders. The logistics ecosystem is fraught with operational inefficiencies and poor asset utilisation. The lack of technology systems and insufficient technical skills lead to high costs and network underperformance.

Challenges notwithstanding, logistics enterprises in India are increasingly adopting new technologies, upgrading networks and reinventing processes to make them smarter and more efficient. In the coming years, the draft National Logistics Policy, 2018, will help steer the sector towards greater digitalisation. The policy will promote the adoption of cutting-edge technologies such as blockchain and IoT. It will play a key role in aligning the technological innovations and strategies of logistics enterprises with their operational models to ensure last-mile delivery.

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