In recent years, the logistics industry has stepped up its investments in information and communication technology (ICT) to ride on the digital wave. Rapid digitisation and the adoption of ICT solutions has enabled logistics enterprises to streamline their business operations and modernise key services like warehousing, freight forwarding, express cargo delivery, and container and shipping services. Further, emerging technologies such as internet of things (IoT), automation, blockchain technology, cloud computing and big data analytics have helped them restructure their distribution set-up to achieve high-level service delivery and reduce inventory and supply chain costs. Going forward, the industry’s digital transformation can help in establishing an integrated interface across the value chain to ensure seamless last-mile delivery.
A look at the key ICT solutions and their applications in the logistics industry…
The logistics industry was among the first few to adopt IoT technology. IoT has enabled enterprises to monitor the movement of assets, detect risks pertaining to breakdowns and avoid process delays as well as fatal accidents. Further, IoT along with GPS and radio frequency identification (RFID) system is being used to provide the location status to logistics carriers on a real-time basis. While on the one hand this enables service providers to predict delivery time and improve asset utilisation, on the other hand, it allows customers to track and trace their consignment on a real-time basis. This has helped in making the logistics ecosystem more responsive.
Another promising use case of IoT in logistics is warehouse management. Warehouses can undertake pallet-level or item-level tagging using RFID system to enable smart inventory management. Moreover, IoT can drive 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. Data analysis based on this can help identify optimal capacity rates and tasks for the assets. Connected assets can also enable predictive maintenance of warehouse transport systems. For instance, sensors could be placed on a sorting machine to detect the level of physical stress by measuring its throughput or temperature. Cameras can also be employed to detect package damage or pileups as they occur. All this data can be collated for predictive maintenance analytics, which includes scheduling maintenance appointments and calculating the expected lifetime of a machine at its current level of usage.
Automation in logistics includes the use of artificial intelligence to control machinery, processes, vehicles, vessels and aircraft. From the use of robots to self- driving vehicles and drones, automation technology can be adopted in the logistics sector for reducing manual intervention and bringing down costs. Reducing manual intervention in freight handling can help improve quality, speed up processes and subsequently bring down logistics costs. It may also help speed up inspection by regulatory agencies, ensuring minimum handling damage and reducing inventory holding time. Further, almost two-thirds of the logistics costs are hidden owing to cargo theft and pilferage, and inventory pileup. Automating processes can help eliminate these hidden costs, thereby bringing down the high overall logistics costs in India.
Cloud technology is another key ICT solution being leveraged by logistics enterprises. Since the logistics industry is highly fragmented, often the vehicle fleet 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 not only reduces the idle time of their fleet but also makes 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
Big data analytics also presents several opportunities for stakeholders in the logistics industry. Analytics can be applied to the entire logistics value chain to achieve operational efficiencies. For instance, GE’s analytics platform, Predix8, and Cisco’s Unified Computing System Integrated Infrastructure for Big Data can be used to undertake complex statistical analysis, data mining and retrieval processes to obtain insights and identify key trends. This analysis can then be used to develop algorithms, estimate the remaining life of assets, identify areas of operational inefficiencies, eliminate redundant costs and drive future strategy.
The most obvious implementation of augmented reality (AR) in logistics is in the optimisation of the picking process. AR-based advanced vision picking software can provide hands-free intuitive digital support to workers in picking operations. It can also help in object recognition, barcode reading, indoor navigation and seamless integration of information with the warehouse management system. Through this software, each worker can view the digital picking list, along with the best route, in their field of vision, thereby reducing travel time. Further, using automated barcode scanning capabilities, the software can guide the worker to quickly locate the right item. Further, the system’s image recognition software can check whether the worker has arrived at the right location.
AR can also help in the warehouse planning process. It can be used to visualise any planned rearrangements or modifications in the current warehouse environment through interactive digital representations. Meanwhile, AR has the potential to optimise freight transportation in areas such as task completion checks, international trade, driver navigation and freight loading. For instance, an AR-equipped collector can quickly glance at the load to check if the task is complete. In addition, AR is valuable for global trade service providers. An AR system can be used to ensure that the shipment complies with the relevant import and export regulations and that the trade documentation has been completed correctly. Moreover, AR driver assistance applications could be used to display real-time information in the driver’s field of vision either through glasses or a windshield display.
Blockchain is yet another technology that is gaining traction among logistics enterprises. The technology can help in creating common information exchange platforms for enterprises, without compromising on the integrity of data. It can also be used to streamline processes across the logistics value chain to eliminate redundancy in documentation processes. This, in turn, reduces the risk of errors.
Further, blockchain technology has a key role to play in supply chain management. It can help in documenting the transaction every time a product changes hands and creating a permanent history of a product from manufacture to sale. This could significantly reduce time delays, added costs and human errors that plague transactions.
Challenges and the way forward
While logistics enterprises are increasingly adopting ICT solutions, they continue to face several challenges. A major challenge is the country’s inadequate technological infrastructure characterised by slow network speeds, sub-par performance, and unreliable hardware and software. This increases the cost of operation and leads to underperformance of networks. Keeping pace with the rapidly evolving technology, ensuring the integration of old and new technologies, and handling additional costs of employee training and technology upgradation are some of the other challenges faced by logistics enterprises.
Nonetheless, emerging logistics enterprises, which are increasingly deploying advanced IT infrastructure, will drive traditional enterprises to adopt IT in a big way to retain their market position. Therefore, the scale of IT adoption in the logistics industry is only going to increase in the future.