Why is technology so important to the Logistics industry?
Operations and logistics companies are experts in the fine balance of supply and demand. Recent events have highlighted the importance of logistics, operations and supply chain management. From the transportation of goods to supply chain systems and networks, workforce orchestration, production, packaging, inventory management, warehousing, security, material handling and the integration of information, the world of digital technology is quickly transforming these organisations into highly efficient machines.
What are the problems logistics companies are facing?
Accurate modelling and monitoring of process and transportation costs remains elusive for many businesses. Fuel and labour typically form a significant proportion of cost centres. High volume supply chains had avoided or absorbed these costs with bulking, followed by combining cargo inventories.
The industry is moving into on-demand, low-volume, high-variety and just-in-time, making the combination process exponentially more complex. This makes the traditional approach of mass-bulking the same product, customer or location impossible.
Labour capacity is a significant problem in logistics and operations; the growth in this sector has not been matched with labour supply and the underlying issues are complex.
The increasing need for on-demand operations and logistics systems has meant the need for labour in this sector is increasing dramatically. In addition to the standard sets of knowledge about the industry, there is greater demand on technical, analytical and continuous improvement skills, particularly in technology, digital and data - the skills required broaden rapidly.
Consumers and businesses are under greater pressure to show their capability and strategy around minimisation of resource and energy consumption - for example, reducing empty miles and GreenHouse Gas emissions.
Reinforcing the trend of sustainability from consumers and business, government policy is moving toward a legal commitment to environmental sustainability through specific zones. This means that some companies will need to geofence zones and direct cargo around them, impacting their service areas, which will have an effect on demand and subsequent revenue. Other companies will look to change their fleet to comply with emission standards stipulated by their areas.
How can technology help remove these barriers?
Internet of Things
An example of a well-established technology is distributed systems in the Internet of Things (IoT), Edge Computing and Cloud Computing. This can provide location, speed and route information for cargo and transportation. This allows for the data to be streamed into a tracking system that can adapt to variations, lowering cost margins whilst optimising the overall service output. This can also be used to provide real-time quantification of CO2 emissions as part of a strategy towards NetZero.
Technology vs Labour
Technology is part of the solution, by first reducing the total human labour requirement and secondly by improving the quality of the labour by making the jobs more rewarding, lifestyle-supportive and interesting. The labour requirements can be reduced by identifying areas of workflow and task automation, high intensity, non-value adding tasks that can be easily removed from the process or even automated can drastically reduce the labour demands.
The optimisation of supply networks is famously difficult - the effect of multiple decisions that interface with uncertain future demand. However, recent developments in computational modelling, simulation and search algorithms are providing insights into the historical and current performance of the supply network and can support prediction and optimisation of future decisions. This allows for informed decisions to be placed and continuously refined in response to actual behaviour of the supply network and stress-tested against disruptions or variations.
Digital transformation cannot happen with digital tools exclusively - translating the digital opportunities demands that companies make coordinated change across people, culture and processes. This is a systematic organisation-wide transition that needs vision, guidance and determined leadership. Here at Razor we help businesses define that journey.