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Driving forces that will shape the future of logistics

Jan Tore Pedersen | 25. Apr 2019
6 minutes read

“The times they are a changin”. Never was Bob Dylan’s title more correct about what is happening in logistics. Driven by demanding consumers, eCommerce operations are offering “immediate” delivery of purchased goods. The consequence is investments in large warehouses close to customers for faster delivery, management systems that provide complete visibility to buyers of goods and carriers willing to deliver on time. In addition to providing electronic information about all their movements and actions.

At the same time, many so-called industrial logistics operations, are still characterised by the use of information systems that are not communicating electronically. Information exchange between these systems is based on excel sheets, PDFs or similar, requiring manual intervention to get information from one system to another. Some operations also lack the culture of capturing and communicating status information. In such situations, goods arrive when it arrives, and it is not possible to plan operations properly.

The scenarios above are two “extremes” in today’s logistics, and there is a tendency to say that they are different and that they need to be treated differently.

Since the fulfillment of eCommerce goods is based on the use of warehouses close to customers. In some cases, investing in such warehouses has become too expensive for it to be profitable (JD.com’s experience in China is one such example). To “solve” the problem, fulfillment- and replenishment processes will need to be more distributed. Fulfillment will be made using the cargo available in warehouses, terminals currently used in the process of replenishing the warehouses, and cargo on the move (floating warehouses). The process will no longer be separate B2B and B2C, but combined into B2B2C, with the resulting need for transparency and predictability in the part of the operations that used to be “only” B2B.

Until now, supply chain strategies have essentially focused on cost reduction. This has led to cost-efficient, but static and immobile order flows. This hampers supply chain growth and flexibility.

 

Customer Expectations

As consumers, we are becoming used to be able to track shipments from eBay, Amazon or similar providers when we buy goods on the internet. But as employees in many industries, we currently seem to accept different performance by logistics operators in “traditional” B2B operations. If a truck containing 250.000 Euro worth of materials is dispatched, it is quite likely that we will not know when or if it will arrive, until it actually arrives.

This is about to change. The knowledge we have about what is possible in eCommerce, the technology that is available and affordable, will lead to a culture where visibility is a must. The situation described above will no longer be accepted, and there is no reason to.

As a buyer of goods (in B2B settings) you should require that your providers of goods employ logistics operators that are able and willing to provide detailed information about the status of logistics operations at all times. Some logistics operators have been surprised when industrial customers are asking for provision of real-time updated Estimated Time of Arrival (ETA). Many more will be surprised if they are unable to provide such information in the future.

 

Environmental Considerations

Whether we like it or not, transport and logistics is a major contributor to greenhouse gas emissions and other pollutants. Transport represents almost a quarter of Europe's greenhouse gas emissions and is the main cause of air pollution in cities. The pressure is on. Some believe that the introduction of electric vehicles will “solve the problem”, but we will still waste energy unless we are utilising transportation resources to the best of their ability.

The good thing is that by reducing the energy needed to move goods from origin to destination, we manage to kill two birds with one stone. We are reducing emissions and costs.

Read more: These are the 5 key logistics trends in 2019

 

From Traditional Supply Chain to Logistics Networks

In the THINK Executive White Paper Series from January 2019, the Logistics Institute – Asia Pacific at the National University of Singapore, is looking into how to deal with the future requirements in supply chains: On-Time, Reliability, Cost-Effective deliveries, Faster and Convenience Delivery Services for a different level of customer’s expectations.

Their hypothesis is that traditional supply chains with linear and long chains may not be sufficient in the future, which they call the “digital era”. They claim that businesses need to be proactive in recognizing the ever-changing trends of consumer demands and likewise shift to a more connected supply chain network.

This is in line with ideas previously published by Woxenius and others, which states that future logistics need to be viewed as a network of logistics networks.

Logistics network

With a logistics network, goods are not fixed to move from origin to one destination following a predefined path, but goods may be allocated to receivers while on the move and redirected as required. The hubs will then decide which is the best path to take in the next segment of the network.

 

The Future is Here

MIXMOVE Software-as-a-Service capabilities are currently operating a logistics network of more than 25 hubs in Europe ensuring full loads and complete transparency throughout the network. Hence, the logistics network thinking is here already. It can be implemented in the existing physical infrastructure (hubs of all kinds) and do not require changes to existing information and communication systems. It also supports collaboration between all logistics stakeholders, ensuring the best possible use of resources.

 

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