June 16, 2015

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Emerging Technologies – The Future of Logistics

Logistics and technology go hand in hand. While the global supply chain has been around for an eternity, it is the powered engine, the container box and computers that make our world more connected and more efficient than ever.

The logistics industry is going through a time of swift and unparalleled transformation. Its future is paved with innovation and technology. It was not long ago that ideas like 3D printing, the Internet of Things (IoT), drone delivery, and augmented reality were things from a science fiction movie. Today, the industry is cautiously adopting these technologies to provide faster, cheaper, more reliable and sustainable delivery. At the same time, their customers – primarily manufacturers and retailers – are urging their 3PL logistics providers to integrate these technologies into their service.

It’s only been 20 years since the first web browser was invented, but today, 3 billion people browse the internet. It’s only been 70 years since the invention of the shipping container, but today, global container capacity is somewhere in the vicinity of 35 million TEUs.

These are some of the emerging technology objectives:

  1. Atomization of logistics
  2. Increase in labor efficiency
  3. Technology upgrade
  4. Reduction in errors

Technology upgrades are inevitable. In fact, technology is constantly being updated/upgraded on a day-to-day basis through activities like updating smartphones so that the latest applications can be used. Desktops were replaced with Laptops, and now Tablets are replacing Laptops.

These are some of the technology trends:

The Internet of Things (IoT)

A study found that 26.25% of 3PL companies are currently using machine-to-machine (M2M) technology and 46.62% plan to deploy them in the future. When asked about the impact of IoT on logistics and supply chain management, 47% said they believed it would have a tremendous impact, while 49% said that it would have some impact. Only 3% said that it would have no impact at all.

3D Printing

According to the 3PL Selection and Contracting Survey conducted by EFT, over 40% of the manufacturers and retailers questioned expect their 3PL providers to have some knowledge/expertise on 3D printing. But what do people who run 3PL companies think about the technology? The study revealed that 19.2% of manufacturers and retailers are already using 3D printing in their businesses. However, only 1.5% can provide expert knowledge and services. Only 2.6% of those surveyed have comprehensive knowledge and know-how and plan to provide the services; 1.5% have complete knowledge, 12% have some knowledge, and 7.5% plan to have knowledge and provide services.

Drone Delivery

However, not everyone in the study by EFT is so skeptical of drone delivery. 27.31% of respondents believe drone application in shipping will occur only in highly specialized areas, such as delivering drugs to remote locations. 36% of respondents believe that there will be some form of drone delivery in 5 to 10 years, and 6.3% believe that it will be commonplace in 10 years.

Without a doubt, drone delivery faces many challenges just as every new technology in its infancy does. A significant number of respondents (35.71%) believe that regulatory issues will be the main difficulty while 23.95% believe that it will be safety issues. 11.334% of respondents think that the cost of creating a network will be the biggest challenge, 10.92% believe that it will be reliability issues, 10.08% think it will be weight and size limitations and 2.94% think it will be technology issues.

31% of manufacturers and retailers want to see logistics companies use drones for product delivery. But are the 3PL companies ready to adopt the technology? The study found that only 1.5% of the companies can provide expertise, knowledge and service while 1.5% of businesses have comprehensive knowledge and know-how, and plan to provide the service.

Driverless Vehicles

The study found that 42% of manufacturers and retailers would like 3PLs to have some knowledge and expertise of driverless vehicles. However, 0.75% of the 3PL companies can provide expert knowledge and service while 1.5% of them have comprehensive knowledge and expertise and plan to provide the service. On the bright side, 12.78% said they have some knowledge, and 6.02% said they planned to have knowledge and services.

Big Data

Big Data usually means the practice of collecting electronic information from numerous sources and applying analytics to identify patterns, trends, and other intelligence. The analysis might point to things that have happened but weren’t easy to perceive, or it might help a company predict what will happen in the future.

Among the respondents to the Gartner survey, 56% say that determining how to get value from big data is a major challenge, and 41% cite challenges with defining their big data strategies.

These are some of the advantages of emerging technologies:

  • 10 to 15% estimated savings on manpower cost
  • Technology enhancement at par with the marketplace
  • Increased employee efficiency
  • Customer satisfaction
  • Real-time visibility of cargos
  • Reduced bottleneck in inventory picking
  • Transport assets tracking
  • Route optimization

HCL has a strong 3PL customer base and is currently developing new technology solutions for these companies.