Technology Convergence in the Logistics Industry
Some people may not think of the logistics industry as cutting edge or technology- savvy. And there are good reasons for that. Ask anyone the first thing they think about when talking about logistics and transportation, and they would probably answer trucks and truck drivers.
“Innovation and staying ahead of the curve are the keys to success”
While this image still holds some validity, it hides a much more impressive reality. The trucks you see on the roads conceal marvels of the latest and greatest technology. Sensors, computers, handheld devices and mobile apps are all inseparable parts of the logistics operations these days. Some of the coolest innovations near the top of the hype cycle today were part of the logistics industry for a long time. Uber-like concepts were in use before Uber even existed. Internet of Things (IoT) was a part of daily operations at a number of logistics companies for many years. Big Data was a reality long before the term became mainstream.
Business Needs & Technology Challenges
As the saying goes, “Necessity is the mother of invention.” Despite the unglamorous image to some, the logistics industry requires a tremendous amount of technology to operate. Customers need to be able to place an order, define specific parameters of their shipment, get an accurate quote, track the shipment, and determine whether the delivery was successful. Logistics companies need to understand the customer demand, match it with available capacity, determine the most efficient delivery route, track the freight, communicate with drivers and provide the ability for customers to know where their shipments are at any point of time. Truck drivers need to be able to communicate with the company, accept load offers, obtain recommended routes, provide acknowledgements of pickup and delivery, send in all the necessary paperwork and get paid for the work performed. And this doesn’t even touch the air, rail or ocean transportation modes, which have their own sets of requirements.
The challenges in the logistics industry are incredibly complex. Technological solutions are not only needed to operate efficiently, they are necessary to survive. To keep up with the competition and position themselves for success, logistics companies should invest in a wide range of technologies. The core systems need to integrate with a variety of providers, from EDI and web services to external data feeds and route mapping. Each truck needs tracking equipment to transmit its location. Some trucks require temperature-control sensors as well. These IoT devices generate a huge amount of data and therefore require Big Data solutions to properly consume and interpret it.
Besides interpreting a large amount of data from the equipment in the field, logistics companies also generate a significant volume of data from their everyday operations. Quotes, booked orders, amount of daily phone calls, revenues, profitability figures and many other data points are necessary to understand how the business is operating and what needs to be changed to improve performance. As you can imagine, Business Intelligence and Analytics solutions are critical. Data warehousing, reporting and dashboard tools are necessary to provide insight into business operations and help leaders make informed decisions.
Before mobile applications became mainstream, the logistics industry already had heavily invested into them. A variety of problems had to be solved. Drivers needed to be notified of new loads and suggested delivery routes. They had to accept the load and communicate with all the parties involved in the shipment while on the road. Pickup and delivery notifications had to be sent out and verified. To solve these problems, logistics companies invested into proprietary solutions that allowed them to address these needs. Today, many of these products are being replaced by mobile apps that run on a wide range of devices. This reduces companies’ reliance on proprietary solutions and provides a number of efficiencies, but this direction also requires a significant investment in mobile application development and related capabilities.
One of the most challenging problems in the logistics industry is keeping track of individual shipments through each leg of their journey, from pickup to delivery. Customers increasingly want to know exactly where their shipments are at any point of time. Carriers need this information not only to present to customers but also to properly coordinate each leg of the transit process. Whether the shipment is in transit, split up between multiple trucks or sitting somewhere in the yard, both carriers and customers need to know its exact state and location. In the past, drivers and dock workers would enter this information manually via either handheld devices or computer terminals. Today, this information is captured and transmitted automatically through the use of RFID and similar devices. Increasingly, technologies such as IoT, mobile and cloud are being used to capture real-time location of each shipment down to the pallet or even the individual package level.
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Staying Ahead of the Future
The logistics industry pushed the boundaries of technological innovation because of necessity. It was ahead of its time in a variety of categories. The convergence of many different technologies brought it to where it is today. Yet, this is not the stopping point for the industry, the apogee of its maturity and growth. Much more complex and challenging problems are just around the corner.
Like many other industries, logistics is at an inflection point today, in which the amount of data is exploding and the demands from customers are changing daily. Many new transportation modes are being created and explored. Drones and self-driving vehicles soon will be reality. Increased complexity in the types of transportation options will drive logistics companies to mix and match various modes of transportation to more efficiently serve their customers. This will require increasingly sophisticated systems that can build and optimize delivery routes based on all available options. Predictive analytics will become more heavily utilized to predict where demand may be coming from based on various geopolitical, meteorological and economic conditions and automatically optimize capacity and rates based on this. Customers will continue to require greater and greater levels of integration, communication and automation. According to Gartner, algorithms, not people, may be solving these types of problems in the future.
Innovation and staying ahead of the curve are the keys to success. Dr. Albert Szent-Gyorgyi, a Nobel Prize-winning biochemist, believed that “innovation is seeing what everyone has seen and thinking what nobody has thought.” Forward-looking logistics companies understand this and are looking to solve tomorrow’s challenges today. Technology convergence is the key to success. Whoever can figure out the right recipe for bringing all the disparate technologies together in an effective manner will be in the best position to win.