Top technology trends
in logistics

Top technology trends in logistics

In logistics, there’s a need for improvements in efficiency, delivery scheduling, real time information and asset usage. Technology plays a vital role in these areas. INSIGHT examines some key tech trends in logistics and the network infrastructure required to enable them.

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Trend #1: Improving efficiency with IoT

With more and more devices being equipped with IP addresses and linked to networks, the Internet of Things (IoT) is expanding at great speed. Predictions vary from 50 billion IoT-enabled devices by 2020 (according to Ericsson) to 212 billion (says IT, telecom and consumer technology analyst IDC). Logistics was one of the first industries to adopt IoT. The use of Radio Frequency Identification (RFID) tags has been steadily gaining ground for tracking shipments.

DHL Supply Chain is running an IoT programme at its automotive site in Liuzhou, China together with Huawei Technologies. Global logistics leader Kuehne + Nagel have introduced sensors and a cloud-based platform to provide shippers with information. Lufthansa Technik Logistik Services is launching an IoT programme to digitalise warehousing operations.

Trend #2: Driverless vehicles are almost here

Driverless cars have been around for some time, and now Uber, Tesla, Volvo and Embark have been successfully developing and testing (semi-) self-driving trucks. Startup Otto, led by former Google engineers, is convinced that driverless long-haul trucks may be more feasible.

Amazon Robotics is using self-driving forklifts and robotics to reduce delivery times, that allow the process from order to drop off cut down to 24 hours. The robots can fulfil orders in a quarter of the time it would take a human. UPS has partnered with medical drone delivery startup Zipline for deliveries in Africa.

Trend #3: Leveraging the benefits of enhanced GPS

GPS is just the first generation of a wider positioning network: the Global Navigation Satellite System (GNSS). At the end of the decade, GPS will be only one component in the larger GNSS network, which will also incorporate the EU Galileo system and possibly the Russian Federation's GLONASS.

Improvements to the current GPS system are underway in the areas of accuracy, signal availability and system integrity. Miniaturisation and digitisation mean the required electronics can be embedded in a wider range of devices.

Trend #4: Transportation Management Systems and platooning

Cloud-based transportation management systems (TMS) increasingly act as a hub for logistics communications and processes, such as carrier and freight management, route scheduling and optimisation, and payment processing.

Truck platooning involves several connected trucks closely following one another. Semi-or fully autonomous trucks follow a lead vehicle and take cues from its driver, resulting in improved traffic flow, fuel efficiencies of up to 15% and better throughput for the logistics sector.

Automotive firms including Tesla and Scania are currently working on truck platooning. In Europe, DAF, Daimler, IVECO, MAN, Scania and Volvo Group have joined forces with TNO in the ‘ENSEMBLE consortium’, which will implement and demonstrate truck platooning. Peleton has demonstrated fuel savings of 4.5% for the lead truck and 10% for the following truck.

Trend #5: Blockchain: enhancing transparency  

Blockchain can improve existing processes, reduce costs, allow safe sharing of shipping and transaction data, and improve transparency throughout the supply chain.

A key benefit is that Blockchain can help reduce the considerable complexity of today’s transit and supply chain networks. Organisation BiTA (Blockchain in Transport Technology) is currently working on developing and setting standards for blockchain technology in transportation. The Port of Rotterdam has been working with Blockchain to enhance security, shipment monitoring and auditing transparency.

Blockchain is currently being used to track diamonds on their journey from mining to retail using a unique digital record. In the maritime sector, a joint venture between Maersk and IBM is implementing a blockchain-based global platform for digitised trade.  

Trend #6: AI

Artificial Intelligence (AI) can play an important role in improving decision making as well as improving customer experience. Developments in AI and machine learning will result in even greater opportunities for efficiency enhancement. Fleet Management software has already proven crucial in optimising routes and schedules, thereby saving time and money.

Big Data, especially when enriched and cleaned up with AI, allows companies to make highly accurate forecasts for shipping volumes.

Trend #7: Big Data

For an overview of how data collection and analytics may affect the logistics and transport sector, see the separate article in the following section, TRACKING THE FUTURE.

The need for a supporting network

The distribution of production and the role of logistics may also be affected by 3D printing. Consumers may soon be printing products or parts in their own homes on a large scale, and manufacturers such as Google, Nike and Gillette are also looking into the possibilities for product creation.

Logistics companies and organisations are being challenged to remain competitive and continuously improve performance whilst also controlling costs. Although many applications should be able to build adequately on previous generations of network technology, logistics may be an early adopter of 5G and even drive this adoption, as this will leverage the benefits brought by new IT applications in logistics.

FOUR MEGATRENDS SHAPING PRYSMIAN GROUP’S SUPPLY CHAIN MANAGEMENT

A conversation with Ferdinando Quartuccio, Prysmian Group Supply Chain Director

With 10% of the world’s cables plants now under the Group’s roof after the merger with General Cable, Prysmian Group Supply Chain Director Ferdinando Quartuccio needs to manage inbound and outbound flows at 180 production and distribution points more skillfully than ever. Quartuccio sees four megatrends affecting supply chain overall and therefore Prysmian’s supply chain management going forward. Here’s what he and his team are doing to stay on top of the sector’s evolution.

THE AMAZON EFFECT

The first megatrend is sometimes called “the Amazon effect,” a name that aptly describes how the US online commerce giant’s disruptive impact stretches far beyond familiar industries like retail and forces logistics experts to adapt to higher transport costs and increased competition for highly skilled supply chain staff.

Outbound logistics costs in the cables industry have historically hovered at a range of 4-5% of turnover, and are now moving quickly towards a range of 6-7% as an increase in transport volume drives costs higher, according to Quartuccio.

While cost increases are an issue for the company, it’s the tougher competition for skilled staff caused by Amazon - as well by as broader industry trends – that is one of the most important challenges he faces, said Quartuccio.

“You need to have people who are able to quickly analyze big numbers and sets of data, and arrive at the right level of summary from the business perspective,” said Quartuccio. “It is very difficult to find people with this combined skill set.” The only way to find staff with this advanced skill set is to train them in house. That’s why Quartuccio has added an Advanced Supply Chain program to Prysmian Group’s Supply Chain Academy. Now in its third year, the Advanced Supply Chain program trains about 25 people worldwide, each year, on the specifics of transport, drums management, SOP, planning and material flow. A further 30 to 40 people each year take the fundamentals course.

THE BIG DATA TSUNAMI

The “big data tsunami” is a second megatrend affecting supply chain management. Data Quality is in direct relationship to sales: “No data…no sales” says W. Toulemonde, International Market Director of Sonepar, one of Prysmian’s most important customers.

For example, Quartuccio’s team now must crunch as much as 1.95 million possible data entries from 180 sites around the globe at S&OP (Sales and Operations Planning) deadlines twice a month across the Energy, Optical cables, Telecom cables, Copper cables, MMS cables and Optical Fibers product lines. Every year Prysmian Group delivers more than 5 million orders lines to customers, 30% more than the amount five years ago.

This increase in data is largely driven by a third megatrend, of which more below.

In order to help Supply Chain to manage the rising big data tide, Prysmian Group’s IT staff moved onto an S4/Hana SAP data base system that handles vastly larger amounts of data. Computing power is essential, but can only go so far if you have a staff capable of capturing the underlying business intelligence contained in the numbers.

THE CONTROL TOWER MODEL

This wave of big data is linked to a third megatrend, which is a move to a “control tower” model capable of overseeing activity across the chain with suppliers, customers and manufacturers in real time. That’s because the traditional segmented “silo” model of supply chain management meant that staff had to track a product as it moved from supplier to production to distribution and finally to the customer. This model is being replaced with one where the supply chain manager sits at the center and can interact directly with each of these actors at any time during the process, checking on quality and status of orders.

“As a supply chain, you need to be able to manage a customer relationship that goes across from you directly to customer, to supplier, and to manufacturing,” said Quartuccio.

“And this involves a set of parameters, of KPIs (Key Performance Indicators), that is three times more than 10 years ago. As a result, Prysmian Group’s supply chain has seen their number of KPIs triple in the past 10 years.”

An increase in order fragmentation across the entire cables industry is also driving the flows of big data, he said. Customers large and small are making more frequent and smaller orders, as they are forced to cut down on the amount of capital they tie up in inventory following the financial crisis.

THE VENDOR MANAGED INVENTORY

The fourth megatrend is tighter supply chain integration, or Vendor Managed Inventory, in which Prysmian works much more closely with its customers in a streamlined approach to inventory management and order fulfillment. Just how closely can be surprising. Prysmian Group has been asked by a large customer in Northern Europe to directly manage its inventory, so when they need to replenish its stocks, Prysmian now does it for them.

“You need to have tools,” he said about this development. “You need to be connected to your customer’s supply chain and their 3PL suppliers. And we also ask our suppliers to do the same for us.”

These four megatrends interact with one another at a time when Prysmian’s supply chain is integrating with its new colleagues at General Cable. Quartuccio and the Group CIO Stefano Brandinali have managed to quickly cobble together the different ERP data bases to enable the staffs to work on the same “Business intelligence/reporting” data set. Now the long process begins that will result in a shared and similar reporting system to manage production location, operational transactions with customer and suppliers. “We need to speak the same language,” he said. “If you live in Italy and want to order something in a restaurant, you need to speak Italian. Of course, you can order in English, but you won’t get to taste everything you want.”