IoT enhances logistics and supply chain management

How is the Internet of Things (IoT) changing the way logistics and supply chain workflows work? And how does implementing connected logistics solutions impact the rest of the chain? Millette Manalo-Burgos finds out more.

Will the future of logistics be connected to the Internet of Things (IoT)? A number of companies that are into logistics services seem to think so. For example, the collaborative report called Internet of Things in Logistics, by DHL Trend Research and Cisco Consulting Services, stated that the world has entered a unique period in the life of the Internet — IoT; and while IoT is not an entirely new concept, perhaps the simplest way to think of IoT is to consider it as the networked connection of physical objects.

Indeed, this connection has already gone out of computers and into any physical object that can be attached with any sort of connective device. The DHL-Cisco report illustrates an example: Since the advent of IoT, Internet connections now extend to physical objects that are not computers in the classic sense and, in fact, serve a multiplicity of other purposes, says the report.

Shoes, for example, are designed to cushion our feet while walking or running. A street light illuminates a road or sidewalk. A forklift is used to move pallets or other heavy items. None of these have traditionally been connected to the Internet — they did not send, receive, process or store information. Nonetheless, there is information latent in all of these items and their use. When we connect the unconnected — when we light up “dark assets” — vast amounts of information emerge, along with potential new insights and business value, explains the report.

A connected shoe can tell its owner (or a researcher or manufacturer) the number of footfalls in a given period of time, or the force with which the foot strikes the ground. A connected street light can  sense the presence of cars, and provide information to drivers or city officials for route planning and to optimise the flow of traffic. A connected forklift can alert a warehouse manager to an impending mechanical problem or safety risk, or be used to create greater location intelligence of inventory in the warehouse.

Thus, with all these possibilities, it is not surprising that the logistics sector has readily adopted connected logistics solutions designed to enhance operational efficiency of various logistics applications, such as fleet management, warehouse management, tracking and monitoring, inventory management and telematics connectivity.

IoT is said to be the main technology being used in connected logistics solutions and its adoption rate is increasing in a number of logistics processes due to Internet services being accessible almost everywhere with the emergence of the cloud platform.

Aside from the widening reach of the  Internet, what other factors are pushing for the deployment of connected logistics solutions?

Eugene Ho, Consumer & Industrial Products Industry leader for Deloitte South-east Asia, tells RETAIL ASIA that there are a number of these key connected logistics solutions now being utilised. An example is the workow management system for freight purchase order (shipment) management, which oers better visibility and more execution control over the supply chain and staying better connected with shipments and inventory movements throughout the different stages of managing the purchase order from creation until final destination.

“Systems such as this help to streamline processes, increase planning, better manage documentation and generate higher eciencies through work queue management,” says Ho. “ese systems also provide exibility and are designed to meet the unique requirements of each customer.”

Another is the logistics control tower systems which oers logistics and freight trade collaboration platforms that leaders from multiple sectors can rely on to automate trade and logistics operations across their global partner networks for comprehensive supply chain planning and network orchestration.

“Companies need to orchestrate their supply chains successfully to be competitive,” Ho says. “It’s critical to seamlessly connect the entire supply chain for both upstream (for example, raw materials) and downstream (finished goods) to improve service levels while reducing cost to serve with end-to-end connectivity and visibility (such as real-time services).”

One more connected tool is the Enterprise Content Management (ECM) System for document management and cloud visibility. e ECM software is an empowering solution to enable digital transformation of a company’s enterprise. It allows the end-to-end management of trade and freight content right from purchase order capture to disposition.

ECM delivers contextual information to business stakeholders for improved collaboration, smarter decision-making and enhanced customer satisfaction, says Ho. It also provides the exibility to access or deliver content over mobile and cloud, creating a highly connected and digital workplace for records management to ensure compliance with regulatory customs requirements.

Then, of course, there is mobility/ wearable technology. Wearable devices (together with responsive environments and contextual apps) are significantly changing the way of working in logistics and supply chains. Ho reveals that different players in the logistics industry are developing strategies for adopting multifunctional wearable devices at an early stage — for example, DHL’s Google Glass and a Major Cargo carrier using HP’s mobility solutions for driver productivity; and Apple iOS Enterprise Mobility Management for Omni-channel fullment) — with the main aim of improving productivity and eciency through reduced workload, shorter connect times, fewer supply chain failures and on-time delivery for improved customer service.

Another solution is robotics and automation. Robotics and automation technologies support zero-defect logistics processes and enable new levels of productivity and inventory accuracy. The new generation of robots and automated solutions with signicantly improved performance and enhanced sensing capabilities offers a serious alternative to manual handling. For example, due to the growing popularity of e-commerce, an increasing number of small individual orders have to be handled in warehouses, and fulfilment and distribution centres using A-frame picking systems (such as SSI Schafer) or automated palletisers (for example, ABB Industrial robots).

Robotics and automation is an increasingly hot topic for global players. There is also big data. Big data carries huge untapped potential for optimising capacity utilisation, reducing risk, improving customer experience, and creating new business models. Open external data sources will add a new dimension to big data use cases.

Big data and logistics are a perfect match due to the vast degree of digitisation. The enterprise’s data can become liquid and shareable in an unprecedented way. Not only structured data but also additional data types such as unstructured (for example, social or channel-specie), sensor (RFID), and new data types (GPS, voice, video, images) are becoming increasingly important.

In summary, Ho says it is in the best interest of logistics and supply chain service providers to employ these connected solutions as doing so results in more productivity and eciency gains, flexibility, reliability, visibility, track and traceability, supply chain governance and control, plus customer satisfaction.

But while these tools are readily available in most parts of the world, are these connected solutions already being used by most companies in Asia-Pacfic?

Ho says that although exact adoption figures are not available, they can, in general, be expected to be low due to, on average, the more favourable short-term labour cost versus the longer-term technology return on investment — especially in markets such as Vietnam, Indonesia and Thailand.

“The take-up rate is highest in Singapore driven by its higher labour cost, limited space and strong infrastructure (stability and speed of telecommunications  network, road network, building infrastructure), and strong push from Singapore agency Economic Development Board to position Singapore for innovation and high value-added services,” reveals Ho.

However, he notes: “Cost-prohibitive infrastructure requirements currently limit greater uptake and application of technology innovation, which requires the right balance of exibility and automation. The concept of fully automated factories, warehouses and fullment centres will generally grow from the current more favourable hybrid concepts as cost of labour rises.”

But he says that specic elements of automation are picking up faster than others — ECM systems, for example, significantly strengthen processes for self-cortication, enabling authourised exporters, traders and manufacturers who have demonstrated their capacity to comply with origin requirements to self-certify the originating status of goods improving transport lead-times and reducing duty fees.

“As the ASEAN markets are opening up and ease-of-doing-business improves, new postponement strategies can also be explored, whereby traditional manufacturing activities in origin-countries can be moved closer to the ASEAN destination countries,” Ho says.

While having these technology can improve efficiency and reduce costs, how will these deployments aect manpower? Will it impact the labour market if there are more technology adoption in the logistics market? Ho replies that technological change can cause short-term job losses — a known phenomenon.

“However, the duration and speed of the impact has been long controversial. Technology innovation in the logistics and supply chain industry is and will be disruptive in the short term,” he says.

But this setback is also expected to create various compensation effects, such as new opportunities for higher skilled workforce that is required to operate the new technology as well as job creation as a result of new products and services being offered to the market, says Ho.