Artificial intelligence: The future of logistics

What does that mean in concrete terms? The processes in logistics, i.e. getting the right goods to the right place at the right time, are usually standardized. But the networking and optimization of these steps is highly complex, so it’s an ideal space to deploy artificial intelligence. With the help of AI, logistics in future could control extremely complicated processes along the entire value-added chain and, for example, enable the rapid manufacture of individual products (batch size 1 production). In addition, logistics has numerous points of contact with other industries such as construction, retail or the trades. According to ten Hompel, logistics is therefore the basis for global free trade. If processes based on artificial intelligence function here, logistics simultaneously create a technological basis for other sectors.

But in practice things look quite different: According to Telekom's Digitalization Index 2019, the topic AI is not yet relevant for 47 percent of those firms surveyed, with just 19 percent having concrete plans to use it in the next two years. However, failing to have an overview of the supply chain is not a more affordable option: According to a study by the German Association for Supply Chain Management, Procurement and Logistics (BME), one in five supply chain interruptions in 2018 caused damage of up to €1 million or more. The solution? Digitalized supply chains that can be monitored in real-time at every station from the factory to the customer.

Such complete networking can only be achieved if the participants in a supply chain share their data transparently. "Data becomes more valuable depending on how well described, shared and processed it is. So we have to figure out how this data gold can be mined in real-time, as well as how it can be handled confidently and responsibly," says ten Hompel. For a complete digitalization of the supply chain, all participants have to share their data in a transparent manner – from the sensor the size of a euro coin on a supplier's warehouse shelf to the coordinates of the container ship that transports the goods across the Atlantic. Secure platforms are obligatory here. But only companies that actively exchange data will likely have a chance at being successful in the future.

Fortunately, such platforms already exist today. The Data Intelligence Hub from T-Systems allows companies to manage their securely data while making it available to other subscribers in order to monetize it. This can be geo-coordinate info, such as weather or traffic data, so firms can better plan the delivery of their goods. It can also include measurements from various machines. But very few companies involved in supply chains are using these platforms. According to ten Hompel, this is a mistake: "Anyone trying completely on their own to make the whole world happy as an established company is still under the spell of late-capitalist romanticism left over from times long since gone. Pretty soon they will only be driving around packages for others."

According to his vision, all industrial companies will eventually publish and exchange their data on such platforms. "We already have everything we need to make a total platform economy a reality – not just for logistics," says ten Hompel. Such an intelligent and global platform economy could be the basis for further technologies in the future, such as smart contracting, distributed ledger technologies or blockchain.

In order to ensure that Europe does not lag behind the USA or China in these developments, ten Hompel advises investing today in the development of appropriate platforms and algorithms. Because only those who are prepared to open up and participate in neutral platforms will win the race to be world champion of logistics.