This article, written by Bogumił Paszkiewicz and Martyna Strzoda, originally appeared on goodloading.com.
Until the beginning of 2020, the majority of people, when talking about logistics development, praised the speed with which technology supported or replaced our processes. We widely discussed autonomous vehicles, fleet management in 5G, and the development of e-commerce. The year 2020 had its own plans and has shown us how much there is to be done.
It very much appears that we have not learned our lessons in recent years. We promised ourselves in previous years to deliver in 2021, so that logistics 4.0 was no longer just a dream, but turned real. We present the 8 most urgent needs of the coming year, of which as much as 5 (!) relate to algorithmization.
A year ago, the number of entrepreneurs who would have never given their employees the “freedom” of working from home was much higher than those who at least recognised such a possibility. Today, those who had to move from the comfort zone to the lockdown zone are also starting to notice that there is business outside of the office building. It is time to summarise the effectiveness of working at home and the negative assessments resulting from it. We already know it is possible—the company just needs to provide the appropriate tools and a secure architecture of internal networks. Nowadays, even the electronic signature is getting a second wind, and it is certain that many employees who are currently working from home will never return to their offices.
Moreover, it turns out that remote work can be beneficial for both employers and employees. An employee performing their duties from home generates lower costs than when they need to be provided with a suitable work station at the office. Employers have the option of hiring industry specialists who live away from the company’s premises. In turn, the employee gains the opportunity to work from anywhere, saving time and money on commuting. If 2020 was a test, 2021 will be a revolutionary year for many businesses in terms of remote work.
Artificial intelligence and machine learning
The transport and logistics industries have always been dealing with a lot of different data, and the logistics specialist was a person who was said to have the ability to connect multiple dots. However, when the number of dots exceeds the human brain’s ability to process information, it is a sign that we need AI & Machine Learning. You “just” need to define a target for them, called the label, create an artificial neural network, and show similar examples. The rest is simply math.
Thanks to this, we can predict and recognise data, striving to automate the process. By using it, we reduce mistakes made by a human, which in turn translates into greater savings. AI is also able to predict certain phenomena, such as a vehicle needing maintenance or a customer ready to re-order to schedule internal procurement.
For some time now, more and more supporting systems and tools have realised that diversification can greatly multiply profits. Combining various intelligent solutions using AI and ML is entering the threshold of Logistics 4.0. It is enough to combine a modern TMS with a thinking route planner and an efficient cargo space planner to perform the fastest and cheapest transport possible. Let us embrace it.
Robotisation and automation of processes
In the first half of 2019 alone, North American companies spent $ 869 million on more than 16,400 robots (1). They most often appear in warehouses and distribution centres, and their main task is to transport or sort goods. Autonomous vehicles are another popular example. This trend applies not only to cars and trucks, nut also aircraft and ships. Soon, drones will appear, capable of delivering small goods. The combination of autonomous robots with appropriate software will allow to further improve the supply chain efficiency.
The goal of robotisation and automation of processes is to reduce or replace human work in simple and repetitive activities. This does not mean, however, a complete resignation from personnel. It is assumed that employees will be needed to manage processes and in tasks requiring greater involvement. We have nothing to fear.
Internet of things and Big data
In an extremely hot July 2021, a smart home in Los Angeles will turn on air conditioning in overheated rooms where people spend the most time. The refrigerator, aware of its content and consumer needs, will inform the local e-shop about the need to deliver white wine and fruit for the evening. The warehouse robot will make sure that the fruit is fresh and will place the purchased goods in a lightweight gitterbox of the correct size. If only an unmanned vehicle could move around Hollywood…
The Internet of Things has very wide applications in logistics and in 2021 even more autonomy for smart devices can be expected. Perhaps we will witness the birth of new local e-shops or drones that will be delivering small goods. It is certain that we have already made a few big steps forward by implementing telematics devices that improved the effectiveness of logistics. We are also sure that a lot of measuring, thinking, and responding gadgets will appear on the market this year. The only question is how big they will be.
Blockchain is now common, although it has not shown much yet and should still be treated as a hot commodity. According to Saxo Bank’s forecasts for 2021, thanks to this technology we will more effectively eliminate… fake news.
This technology, used in logistics, in addition to information on transactions, stored documents, etc., also allows you to check the origin of purchased raw materials or reduce paper documents. Maersk has made good use of the latter advantage, working with IBM to reduce documentation errors and time for customs clearance.
Cryptocurrency, the mother of blockchains, is becoming an increasingly common means of payment and it is estimated that it could become the preferred method of payment in cross-border trade. Perhaps this is a safer way to replace the mythical Gold Franc from the CMR convention? We are convinced that when it comes to the security of the supply chain, Blockchain will surprise us, because we have serious shortcomings in terms of cyber-safety.
Digitisation of processes
The time of business with Excel and cork board is old news for all medium-sized and large enterprises.
Process digitisation is the implementation of systems that allow us to manage a company, warehouse or its resources. ERP, CRM, WMS or TMS, which have been functioning for years and are now a bit old, have clearly seen in 2020 that without investing in new solutions, the ambitious competition will not only have a bigger slice of the cake, but it will take it all for its own party. At the same time, the importance of these tools has never been emphasised so strongly before. Availability in the cloud, working in browsers, mobile versions, comprehensive integration with other tools and readiness to provide “white label” services are something that awaits all producers of extensive management systems. Because this is what the market requires, as it sees enormous potential savings. Most industries related to logistics are aware of this. Interestingly, even the language so far reserved for the IT world is starting to be used in industries related to logistics.
Currently, customer service personnel also manage tickets, and a procurement manager who wants to use API integration is able to guess how many requests should be enough to meet business needs. Saving without investments will simply not be an option in 2021 and this is the time to implement modern systems supporting process management. All in one place.
According to Eurostat data, in 2018, 60% of Europeans aged 16 to 74 ordered goods or services online. In 2019 it was already 71%. Soon we’ll get the statistics from 2020, which raised this value as high as the market allowed, because the needs were much higher.
Everyone providing e-commerce services should learn this year’s lesson, but there is still a lot of work to do in the e-grocery sector. According to GeekWire research, in March 2020, 42% of US residents did their grocery shopping online at least once a week. This is 22% more than two years earlier.
The transport of food in large cities at some point jammed, but it is not here that the shortages in supply are noticeable. Inhabitants of small towns and villages, who will be delivered not only fresh, but also locally unavailable products within 24 hours, will be satisfied but also will become regular customers of the e-grocery store.
Modern e-commerce services, which also benefit from the above-mentioned technological trends, in a large city are able to deliver the goods within an hour, and we don’t mean a pizza. We can treat the very need to sell goods and services online as a new standard for every industry. Unless the service requires a physical meeting with an expert or account manager.
We feel that logistics investors who have already noticed the great potential in our crown year will not give up. Services that have so far been reserved for places with numerous residents will also be provided in small agglomerations. Be it Amazon, the largest logistics operators, or a new player with sufficient capital—whoever develops a denser supply chain with relatively cheap and fast transport, will be able to win a lot, although there is also a lot of risk.
Sustainable development is the one in which the needs of the present generation do not diminish the chances of future generations for meeting their own goals. The basis of sustainable development is the natural environment. Many countries are actively taking up the issue of environmental protection, and the European Union sets requirements for its countries in terms of reducing CO2 emissions and better waste management.
The climate package aims to reduce CO2 emissions by 40% by 2030. It is a very ambitious plan. Additionally, we have smaller packages or packages that do not contain plastics. We have warehouses with sensors allowing to reduce energy, water, and gas consumption in the rooms. Renewable energy from the sun, water or wind is used more and more often. Processes are being optimised, new devices and technologies are introduced to reduce the negative impact of this sector on the climate.
The scientific community is sure about one thing—if we do not act, we will be in trouble. The challenges are huge but we have known for a long time how much can be earned on ecology.
Which of these trends will have the greatest impact on the development of logistics in 2021?