Logistics 4.0: intelligent supply chains
A combination of forces is causing major disruption for the logistics industry. With globalization, supply chains are becoming ever more complex and tightly managed, increasing the pressures on logistics companies.
At the same time, many customers are implementing widescale digital transformation that changes the demands they place on their logistics providers. In particular, the spread of Industry 4.0 technologies is set to revolutionize some supply chains: companies, especially in manufacturing, are starting to use the Internet of Things (IoT), automation, artificial intelligence and real-time analytics to optimize, accelerate and predict their operations. As a result, the logistics market is itself changing. New entrants such as Flexport and Freighthub are rethinking traditional logistics by leveraging digital technologies and incumbents must innovate to keep pace. Even well-established logistics service providers are developing new digital services to enhance their capabilities (including drive4schenker and DHL Resilience360).
One thing is clear: logistics companies’ operations will need to be increasingly digitalized if they are to stay competitive. And for major logistics providers, the ability to leverage increasing volumes of data to improve or differentiate their services will be key to future success.
Traditionally, this has been difficult: organizations have tended to operate in silos, making it hard for logistics companies to see what’s happening up and down the supply chain. As supply chains get leaner, longer and more complex, the results of this lack of visibility become magnified. If, for any reason, a logistics company cannot meet its service level agreements, as well as the reputational impacts, it costs their manufacturing customers, either through the need for extra warehousing or lack of materials or stock.
The arrival of IoT changes all that – and in partnership with Atos, Siemens has been working with manufacturing companies and their logistics providers to harness Industry 4.0 technologies to create what we call intelligent supply chains.
IoT connectivity can be used to gather real-time data from multiple fixed and mobile systems, devices and sensors along a supply chain. This data can come, in any format, from within customers’ enterprise resource planning and SAP systems, from logistics companies’ operational and planning systems, from sensors on the factory floor, on pallets and on goods in transit, and from telematics in trucks and on ships. It can be integrated with multiple external and open data sources, such as weather data, geo-positioning (land, air and sea) and geo-political advice and information.
When this data is overlaid with powerful analytics and machine learning, logistics providers can then use it to track, optimize and predict their operations. They can accurately monitor and adjust the movement of goods to maximize efficiency and even simulate complex supply networks. They can also share information and work more closely with customers and other partners.
Intelligent supply chains are a game-changer for any logistics company serving large customers or those with complex operations and distribution requirements. While digitalizing operations and becoming data-driven enables logistics companies to meet service level agreements more precisely, critically, it also helps them get closer to their customers. Trust and confidence improve, and logistics providers can better compete on the basis of helping their customers to maintain cashflow and just-in-time delivery, with security enhanced and risks minimized at every stage. In measuring the benefits of digital supply chains, McKinsey, for example, found that better logistics routing could produce 17% gains in operating efficiency, package/container tracking could yield 10–25% better utilization of containers and 30–50% less damage with an overall 5% productivity improvement.
Transforming business models
Yet there are wider benefits of embracing digital. Logistics market leaders are transforming the services they can offer. For example, DHL has developed 3D printing capabilities so that when it receives an order and a design, this is queued and shipped straight out to the customer. It has also started to use drones to deliver blood samples to a testing site in Zurich.
We are at a tipping point in digitalization and moving to a world in which logistics providers will use artificial intelligence to predict impacts along their supply chains in order to take pre-emptive and preventative actions. To retain their place along today’s fast-changing markets, forward-thinking logistics companies must prepare for a new phase in the evolution of the industry: Logistics 4.0.
Intelligent supply chains
Atos and Siemens have collaborated to create a unique Intelligent Supply Chain solution that brings together Siemens AX4, Siemens MindSphere and Atos Codex offerings. AX4 is our Digital Supply Chain solution; MindSphere is the cloud-based, open IoT operating system from Siemens, with seamless connectivity to harness and analyze data; Atos Codex is a complete portfolio for data-driven business transformation.
By combining these three data powerhouses, the Intelligent Supply Chain solution is unique in its scale and the power of its analytics capabilities. This ready-to-use platform gives logistics companies immediate, secure access to mature IoT and analytics capabilities as a service, with the ability to collaborate with hundreds of customers and partners.
Digital Vision for Mobility
This article is part of the Atos Digital Vision for Mobility opinion paper. We explore opportunities and challenges for transport and logistics providers in this rapidly evolving space, where transport and logistics are leading other markets in digital transformation.