Looking into Q4 2017 Trends for the Logistics Industry

Mike Togle
January 4, 2018

With technology disrupting many of today’s industries, logistics is one sector that is not immune to these forces. The rise of customer expectations and rapid digitization has caused the industry to undergo major transformations. New entrants supporting the digital transformation also take advantage of the disruption to push the boundaries of what is considered normal or help old players adapt to the change.

Some may see these new technologies as a potential way to optimize processes as well as reduce costs, but others see it as trends that only come and go. Specific technologies may stick  around or fade instantly but technology in general will continuously disrupt the industry.

While it has not faded, here are the trends that continue to affect the logistics industry by Q4 of 2017:

Trend 1. Augmented Reality

Most people are already familiar with Virtual Reality (VR) given its common application for gaming and entertainment. A recent example was when people experienced Augmented Reality (AR) on Pokemon Go. The difference between VR and AR is that the first immerses the user in a virtual world with wearable technology while the second alters the user’s real world such as seeing a Pokemon on your desk through their smartphone’s screen.

In 2017, aside from seeing AR for consumer applications, many industries are looking for potential uses of the technology commercially. In fact, the logistics industry has already started using AR for its warehousing needs.

DHL was able to successfully use AR in a pilot project called Vision Picking in Netherlands. The employees were equipped with smart glasses for easier indoor navigation and faster picking process. With Vision Picking, it was able to speed up the picking process and reduce errors, fundamentally increasing efficiency by 25%.

Trend 2. Internet of Things (IoT)

The phrase Internet of Things (IoT) has been buzzing in the business world, as much as outside of it. IoT is defined as a system of physical objects that are embedded with technology that enables them to connect and transfer data via wired and wireless networks. Consumers have developed an interest in IoT due to the idea of Smart Homes. These allow their residents to command devices in their home by voice, remote control, tablet, or smartphone.

Several businesses and industries such as healthcare and airlines have also developed an interest in IoT since it can help them reduce costs and increase efficiency to better service their customers. For the logistics industry, they found potential uses of IoT that transformed their manufacturing and supply chain processes.

Other than tracking items throughout their delivery journey, players of the industry also use IoT to have smart containers. Maersk equipped more than 260,000 refrigerated containers with machine-to-machine (M2M) that allows them to view real-time data of the equipment’s location and status. They can also remotely control the temperature and humidity settings of their perishable cargoes. About 30% of food produced is lost each year; but with this technology, it has significantly reduced cargo damage as well as costs.

Trend 3. Race for the Last Mile

Before the rise of portable technology, most consumers shop by tuning into their favorite shopping channels at home. Now, consumers can easily shop by accessing online stores and e-commerce sites on their smartphones, tablets, and laptops. The rise of omnichannel retail has increased the demand for purchasing flexibility and last-mile delivery.

The ‘last mile’ is the most cost-intensive process of the supply chain that pertains to the delivery of goods from the distributor to a retail store or consumer. Other than demand, omnichannel retail has also increased the costs for operating last-mile deliveries. There is also a demand from consumers to be able to deliver or receive products with a click of the button, which is similar to the on-demand service model of Uber, hence the ‘Uberization’ of the last mile.  

The demands have caused both old and new players of the industry to join the ‘race for the last mile’, which is developing innovative ways to get products delivered. Current popular models are crowdsourced delivery, where  people hire other people to deliver products. As an example, Walmart and 711 Canada’s Grab and Go Lockers allows consumers to pick up their online orders shipped to a locker near them. With these new models, consumers will receive or send their products faster while distributors lower the costs of last-mile delivery.

Trend 4. Anticipatory Logistics

The increase of consumer desire for ever-faster deliveries are pushing the players of the logistics industry to find innovative ways to meet this demand. Other than applying new last-mile delivery models, companies are also turning to anticipatory logistics.

Using big data and predictive algorithms, anticipatory logistics can help companies predict consumer demand before they order. By analyzing data based on the consumer’s previous purchasing behaviour, distributors can offer one-day or one-hour deliveries which helps them meet the demand to deliver products faster.

Big data can also be used to deliver supplies on time. For example, Coca-Cola uses IoT to connect their vending machines to the internet which allows them to gather data on which machines are busiest and which drinks are selling the most. Anticipatory logistics improves delivery experience and maintains supply, helping increase customer satisfaction and loyalty at a lower cost.

Trend 5. Batch Size One

There has been an increasing consumer demand for personalized products and solutions. Consumers nowadays want to be able to design their own drinks, shoes, cars, and even print their own personalized chocolates. The demand for hyper-customization has led to the rise of a new trend called batch size one.

Batch Size One refers to a form of assembling customized products and services one at a time. This new form of production will help companies meet the demands and expectations of consumers for more personalized products and services.

Harley Davidson equipped their machinery with sensors and location awareness to help its employees produce and assemble customized motorbikes. They were able to reduce a 21-day cycle to six hours despite each model having more than 1,000 configuration options. With batch size one, companies will be able to build stronger customer relationships and achieve higher satisfactions rates.

Trend 6. Warehouse Robotics and 3D Printing

The logistics industry has turned to automation and robotics to improve warehouse productivity. Other than increasing efficiency, robotics along with 3D printing are in-demand technologies since it can be utilized in the batch size one production and meet the increasing demand for consumer product and service personalization.

Quiet Logistics launched LocusBots, which can assist and collaborate with warehouse staff in producing personalized and customized products. Compared to their Kiva robots which follows tracks on the floor and tend to be stuck in traffic jams, the LocusBots can ‘see’ and maneuver around almost like a normal person. The LocusBots wait for a staff to fill a bin based on the online order before bringing it to the packing station to get it personalized and customized. The LocusBots increased efficiency and productivity, producing five times better results compared to a conventional robot.

Adidas unveiled Futurecraft 3D, an initiative that makes use of 3D printing to tailor-fit the midsole of the customer’s running shoes. Eventually, consumers will be able to customize their shoes based on their footprint, foot shape, performance needs, and preferences. The industry is also investing in 3D printing farms to provide customization services before shipment.

Trend 7. Self-driving Vehicles and Drones

With the rise of consumer demand on faster deliveries, the logistics industry is working on developing self-driving vehicles and making use of unmanned aerial vehicles or drones. Further enhancement of these technologies will help optimize logistics operations, increase safety, and reduce costs.

Western Australia has already been using automated trucks for its mining industry. British mining company Rio Tinto makes use of 73 behemoths to transport iron ore to four job sites 24 hours a day. Using the autonomous fleet, it was able to reduce costs by 15%. It was also stated in DHL’s report that autonomous driving could lower costs for as much as 40% per kilometer.

Players of the industry can see the potential of using drones as a form of express delivery service. Amazon conducted a trial for its Prime Air drone delivery service in the United Kingdom. They tested delivering orders to consumers with huge gardens near an Amazon depot with ordered items weighing less than 2.6 kilograms. This new technology will increase the speed and flexibility of delivery, especially in crowded areas and remote places.

Rather than negatively affecting the way things are done in the Logistics industry, disruption allowed it to meet customer demands for faster deliveries and personalized products and services.

A Pro-Active Logistics Industry

Instead of waiting and being reactive, companies are using big data to predict orders, providing consumers with one-day or even one-hour deliveries. The demand for personalization has forced manufacturers to find ways to be able to produce personalized and customized products without slowing down.

Technology may have disrupted the industry but it has also helped companies optimize processes and reduce costs. These trends may stick around longer, but with the enhancement of technology and discovery of new innovations, it may also fade instantly. This is why companies must understand the potential impact of trends and be prepared to make use of the ones that can help them grow and stay ahead.

Pointwest has ventured and grown the capability to support businesses that want to apply these trends to their own. Anchored on analytics, Pointwest values the use of data by logistics businesses not only for themselves and their operations, but also in helping their customers in optimizing supply chain cycles. Robotic Process Automation, Machine Learning, AR/VR, and Internet of Things are within the quadrant of digital technologies that Pointwest continues to push in this vertical.

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Founded in 2003 by pioneers of the Philippine Global Sourcing industry, Pointwest creates value for its list of satisfied clients — including top Fortune 100 and local companies — with world-class IT and BPM services backed by international-standards methodologies and innovative practices.