How the world of logistics is benefiting from digital

In the world of logistics, networked real time data are becoming increasingly important. This is both a challenge and an opportunity for the sector. It will benefit from digital change if it adapts accordingly.

Let’s fast-forward to the year 2050. Warehouses are fully networked systems in which products and transportation vehicles communicate with each other independently. A carton of milk provides automatic notification once it has reached its use-by date - or it orders a replacement if it leaks on the way to the supermarket. Self-driving trucks know which goods are required and transport them autonomously from the warehouse to the customer – without requiring anyone to coordinate them centrally.

Digital change: many companies are still waiting

A glance into the future shows how digital logistics will be faster, more efficient and more flexible. Our society is now at the threshold of the Industry 4.0, in which machines and systems network with each other and communicate via the Internet of things. In the future, however, people won’t be steering the machines any more: machines will be networked with each other on a decentralized basis and communicate automatically via the Internet of things.

Due to the Internet, which is connecting people and systems all over the world, we are now on the threshold of this new era. There remains plenty of skepticism to digital change in the transportation sector, however. According to research by the German Logistics Association (BVL) conducted in 2016, 73 percent of all of those surveyed have a high to very high opinion of the positive effects of digitization. Yet more than half want to wait until tried-and-tested solutions are available.

But is it really such a good idea to wait? Current developments show that in the future, the only companies to survive will be those that are well networked and respond rapidly to customer requirements. This was confirmed by experts at the 33rd German Logistics Congress in Berlin. With the motto of “shaping the future”, in October 2016, experts from the world of industry, retail and services met and discussed the ways in which logistics can use digital change.

Digital change: challenges and opportunities

The research by the BVL also shows that digital change is being driven by end-customers. Why? Online shopping has led to increases in customers’ expectations: they can order what they want, where, and at any time. And their order should ideally arrive the same day. However, same-day delivery only works smoothly if the worlds of logistics and retail are well networked with each other with the appropriate software. That’s why information technology is benefiting from digital change.

To be able to offer the best possible customer experience, gathering, linking and analyzing this data is becoming increasingly important in the world of logistics. With predictive analytics, for example, companies use data models to make forecasts on how a situation is likely to develop: Package delivery services gather weather data and analyze how long a package needs to reach the customer in the event of snow. This means they know exactly how much time they have to plan for in the case of similar weather. Alternatively, they might evaluate empirical data that they have gathered during the rush hour. With this data, the software suggests an alternative route to the driver so that s/he can arrive at the destination faster. Companies can therefore fulfill their customers’ expectations and gain a competitive advantage.

This means that IT will play a key role in the future so that companies can stay competitive. Logistics firms should therefore invest in digital management systems, software and databases. To be able to use the technology, they also require qualified employees. “Training school- and college students so that they gain genuine digital expertise is set to be a big task for both businesses and society as a whole,” explains Sabine Bendiek, Executive Chair of Microsoft Germany.

machine and human

People have to think in terms of networks

Information technology can enable change – but it can't shape change. That requires people. Employees have to learn how to think in terms of networks and solutions. They are required to make quick, brave decisions and to work well together over large distances.

A well-networked transportation management system (TMS) can help them to plan, manage and optimize their processes. The experts at inet can advise and train your staff on the best ways of using a TMS. This will enable you to save costs and put time aside for the things that are most important to you.

inet has experience in both the IT and logistics sectors – which is an ideal combination, as confirmed by a package services manager from the research by BVL: “The most successful companies in the area of logistics are IT companies that have learned logistics.”

Where we are right now

According to Professor Günther Schuh of the Fraunhofer Institute for Production Technology, the logistics sector still has some way to go until it becomes a genuine digital network. To get there, we need to respond more quickly to customer inquiries and ideally we need to implement them directly.

To be able to enable digital change, we need to rethink old processes, try out new things and embark on new approaches. Companies should also let their employees make mistakes and learn from them.

And where will people be in 2050? Logistics experts have a positive view of the future: in the Industry 4.0, employees will not be replaced by machines. They will still manage and control the flows of goods. And it is important for society to ensure that there are enough skilled employees.

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