Room to improve: Digitalization of logistics

27.04.2020 by Daniel Kunz
Shipping containers in doc

Many logistics firms are already using digital solutions such as the Internet of Things. But when it comes to things like blockchain or AI, there is still room for improvement. So what exactly are the real advantages of smart supply chains?

After a few days working from home, an employee sees her printer’s toner cartridge is nearing the end. Ordered on the Internet, a new one arrives just a day later. It’s a similar scene at the local supermarket. If flour or milk is missing from the shelves, the store manager orders new supplies from the nearest distribution center. This, in turn, contacts the appropriate goods provider. Whether e-commerce or food retail: Even in times of a pandemic with closed stores, there are sectors that simply have to continue functioning in order to ensure people have the most basic necessities. Supply chains have to be kept running and processed order by order. This is not always easy. Due to the current high demand, many logistics firms and particularly transport companies are reaching their limits. Drivers can no longer keep up with deliveries and the days are becoming longer. This in turn is reflected in rising costs.

Reducing CO2 Emissions

It’s already well established in the industry that digital solutions can help to accelerate and improve logistical processes. According to the Bitkom study “Digitalization Logistics”, 80 percent of those companies in Germany surveyed consider digitalization to be particularly important for both logistics and along the supply chain. They expect using digital technologies will result in faster deliveries (92 percent), lower costs in the long-term (85 percent) and a more reliable transport chain (79 percent). And more than two thirds (69 percent) believe that digital technologies can help reduce CO2 emissions, making transport management more sustainable and less damaging to the environment.

Internet of Things: Easily begin new projects

Container tracking, supply chain management and route planning: The IoT Solution Optimizer helps our customers from the logistics sector plan projects for the Internet of Things. And all without the need for complex and costly testing. The online service rapidly provides answers to the following questions: Which IoT devices and sensors are suitable for a specific project? What kind of performance can existing applications deliver on various networks? Which protocols are required for the Internet of Things? And how can a company work more efficiently thanks to IoT technologies?

Despite the advantages of such digital solutions, many companies are still reluctant to invest in them, especially when it comes to the latest trends like blockchain or artificial intelligence (AI). The reasons? They see too great a risk of these projects failing and often there is a lack of financial means and the corresponding knowhow. According to the Bitkom study, only one out of ten companies uses software to plan routes in advance and load vehicles optimally while only one fifth rely on data analysis. Though the Internet of Things (IoT) and robotics already frequently support their supply chains and logistics, few firms are demanding new technologies such as 3D printing, blockchain or AI. Expressed in figures, some 56 percent of companies are already working with sensor technologies and 16 percent are planning to use them. In contrast, only ten percent are focusing on 3D printing, six percent on artificial intelligence and four percent on blockchain.

Perfectly Punctual: Optimizing Route Planning

Of course, many logistics firms have to master technological as well as organizational challenges. One major issue is a lack of qualified drivers. For example, the study “Digitalization of the Transport Chain and the Role of Drivers”, conducted by the German BVL logistics association and T-Systems, found that the sector lacks around 40,000 truck drivers. By the year 2030, as many as 150,000 jobs are expected to go unfilled. One reason is that many employees are retiring, while junior staff is not replacing them. And at the same time, there has been a steady increase in the number of deliveries.

But digital solutions can help alleviate this discrepancy. According to the study, both better time management and more effective capacity planning can reduce waiting times at loading docks and at customer’s facilities. Drivers also gain time if routes are better planned, loading areas used more efficiently and empty runs avoided. Since such efforts will hardly work without a centralized database, more than half of the logistics experts would use a comprehensive data platform. The fact that such platforms are still rare is less a lack of willingness than the limited availability of data.

Possible impact on the logistics sector from the shortage of drivers

  • Rising risk of operational disruptions
  • Increase in freight rates
  • Not enough qualified personnel
  • Turning down delivery orders

Moreover, autonomous delivery vehicles can help compensate for driver shortages and route planning. Driverless trucks do not require rest periods, so the fleet is used at full capacity non-stop. According to a Statista survey, 63 percent of the logistics experts surveyed in Germany therefore see self-driving vehicles as having a medium to very high importance to their own companies.

Examples of Smart Logistics

A look at real-world examples shows just how much easier things become for logistics firms when they deploy digital technologies and networking. The e-book “Increasing Success with Smart Logistics” from T-Systems describes how six companies from different industries have implemented IoT projects along the entire supply chain.


 

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Daniel Kunz
Daniel Kunz

Expert Digital Marketing

Digitization and the Internet of Things are among the favourite topics of Daniel Kunz. He has been with Deutsche Telekom since 2017 and regularly writes about technology trends and many exciting topics, especially for the retail trade and the logistics industry.