Digital transformation of logistics: challenges and opportunities

Like all areas, logistics is undergoing its digital transformation that affects production, warehouse management and the transport of manufactured goods.

Establish transparent processes

E-commerce, the factory of the future and just-in-time deliveries demand transparency in supply chain management. This also applies to the consumer who buys and wants to be able to follow the progress of his order. Logistics companies must adapt and equip themselves to optimize their processes and develop new business models to remain competitive. New platforms are emerging to connect people, machines and data. The impact for the sector is a particular requirement in terms of flexibility, speed and traceability. Logistics 4.0 is underway.

Logistics 4.0 stems from Industry 4.0, the technologies of the second being applied to the first. Supply Chain 4.0 maps the integration and networking of objects, processes, resellers and suppliers, customers and producers.

It is based on objects and processes capable of organizing and controlling themselves. For example, GPS technology can be used for location, RFID chips, barcodes and sensors for identification. Electronic and automated data transmission takes place via cloud-based services. The suite constitutes an intelligent solution whose different components communicate via the Internet of Things (IoT) and use AI to learn from each other, make decisions and monitor themselves.

The challenge: rethink old processes

For many people, using a smartphone, tablet or computer has become part of everyday life. This has profoundly changed buying behavior, the emerging desire and act often happening online. It also increases the need for optimized services and product customization. An item in a large online store can be ordered with just a few clicks and logistics players need to adapt to this.

In short: old processes need to be redesigned. The huge increase in the volume of data increases the complexity. Employees need to be trained and work organization restructured, with people, machines, devices and robots no longer complementing each other, but having to work together.

Solutions and innovation

Modern means of transport use smart technologies such as artificial intelligence, big data, blockchain, augmented reality, 5G and the Internet of Things.

5G is a mobile communication standard that will gain importance. Successor of the LTE standard, in addition to telephony and internet access, 5G makes it possible to connect many devices to each other, consuming little electricity and with low latency, it is ideal for IoT.

The Internet of Things (IoT) brings together technologies capable of connecting physical and software objects on a global scale. The IPv6 standard literally allows each object to have its own IP address, which allows it to communicate and collaborate with another similar object, regardless of its location.

Big data refers to volumes of data so large and complex that it cannot be processed and analyzed by traditional computing. The cloud, artificial intelligence and high-speed networks are needed.

Blockchain is a technology that has become well known in the world of cryptocurrencies (like Bitcoin). A blockchain is a decentralized database distributed across multiple computers on which reservations, contracts, etc. can be stored. Blockchain is characterized by tamper-proof data security as each individual record is based on previous and subsequent data records and therefore cannot be changed.

Augmented reality applies to technologies that add information about reality visible to the naked eye. This process is known for its use with connected glasses that display information in an unknown universe, for example. We can also see its use on television during football matches, where lines are drawn and the distances between two points are superimposed on the field. This technology can be used in logistics.

Several solutions are available to help track, analyze and, if necessary, optimize a complete supply chain between manufacturer and consumer. For example, to find an alternative to a transport route. The prerequisite is always reliable connectivity for all components involved.

Opportunities in logistics

Digitized business models have changed customer relationships. Previously, a customer’s load was taken over by the forwarder, who arranged the onward transport. Today, digital platforms allow each manufacturer, retailer or end-user to bid for each individual shipment, putting carriers in direct competition. Thus, transport customers have direct contact with logistics providers and obtain greater transparency.

This transparency pleases the customer, but it also brings other advantages to the benefit of the company’s competitiveness thanks to the optimization of processes:

  • Optimum work thanks to various optimizations
  • Reduced costs and optimized resources thanks to comprehensive analytics
  • Fewer errors thanks to automation

Anticipate future trends

A digital transformation project never ends, it is a holistic process that constantly learns and adapts to new requirements and individual circumstances. In times of perpetual change and new demands for scalable systems, Logistics 4.0 offers companies invaluable potential to continuously optimize logistics performance and improve competitiveness. Some points will become even more important in the future:

Meet individual needs

Delivery and customized production are increasingly important. Thanks to Logistics 4.0, customers’ special wishes can be realized even on a very small scale. Automated and transparent processes, as well as networks, allow companies of all sizes to establish control and decision-making processes in a decentralized way, using existing data and adaptive AI algorithms.

delivered quickly

With Logistics 4.0, logistics service providers and manufacturing companies will share warehouses, means of transport, distribution centers and reverse supply chains through computer networks. This will create global logistical super-networks that will allow for much faster deliveries. Furthermore, web-based “logistics as a service” and virtual logistics marketplaces are emerging thanks to the Internet of Things.

Ensure data security

The digital transformation of logistics presents a number of challenges. Due to the large volume of data, data protection is a key element of Logistics 4.0, to comply with the General Data Protection Regulation (GDPR) of the European Union. We have to create solutions that guarantee the security of personal and company-related data. Blockchain-based apps are a modern choice. In many medium-sized logistics companies, fear of cyber-attacks is seen as an obstacle to the introduction of digital infrastructures. However, it is possible to protect your data networks with reliable partners, which contributes to a good image with customers. Security experts must be involved in the digital transformation process and employees must be security-conscious.

Logistics 4.0 requires stable and functional connectivity, wired or wireless.

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