Digital logistics – the definition
It’s ironic that digital logistics aim to simplify and speed up the process of traffic, goods and transport management but have a less than simple definition! Digital logistics have one or more of three key features:
- convergence of logistics and technology
- web-based collaborative technology that extends through the entire supply chain
- tight integration of warehouse, transport and end consumer information, featuring complete transparency through the supply chain.
Warehousing and digital logistics – the practice
While traditional logistics has focused on functional excellence in a range of different areas of expertise, often seen as ‘specialist’, digital logistics sees these operational areas as completely integrated. So for example specialist transportation or haulage is no longer the responsibility of a small provider working alongside a retailer or manufacturer but a fully built-in partner with seamless electronic communication at every stage of the process. Key aims of digital logistics include
- Reductions in cost
- Better growth via bespoke, customer-led logistics eg selecting delivery slots and/or rescheduling drops
- Faster cycle times with integrated learning from each cycle.
Big political players in digital logistics
While it may not be the first question you ask yourself, if you have any kind of logistics element to your business and especially if you are involved in warehousing, transport of goods across borders and/or customer facing delivery, it’s good to know which big hitters are backing digital logistics and why.
The EU has a Forum called Digital Transport and Logistics (DTLF), specifically looking at how to foster growth, improve competitiveness, create jobs and streamline the internal market by using digital technologies to benefit the transport sector in particular.
Key issues for the DTLF include how to improve transport management, and open border information sharing to speed up the internal market in goods across the EU. Quite where this leaves Britain, post-Brexit, is anybody’s guess, but what is almost certainly true is that warehousing and transport operatives will need to bear in mind the tendency to digitisation and ensure that their own software is cloud-compatible and/or open source if they are not to be disadvantaged. The forum reports back in July 2018, so its findings may affect the Brexit negotiations in the transport and logistics arenas.
Big business players in digital logistics
Manchester will host a digital logistics forum in 2018 that aims to bring the focus towards digitalisation with a particular concern for the interconnected freight industry linking air land and sea freight, intelligent and robotic transport systems such as driverless trucks and drones and digital linking of manufacturing and logistics to offer a single ‘production to delivery package’ to customers. IBM and Oracle, alongside Advantech and Tech Mahindra are all major players investing substantial research budgets in this area.
How can digital logistics benefit your business?
There are a range of potential benefits including:
- Factories being able to optimise inventory management through transparency in the supply chain
- Logistics service providers having earlier warning of unexpected problems and a wider range of opportunities to divert/reschedule transport operations
- Customers receiving more options, more transparency in supply chain and more opportunity to inform both manufactures and delivery systems of their needs and preferences
- Local and national authorities gaining insight into planned infrastructure use from port docking through to multi-drop end fulfilment, giving them better management of networks such as roads, rail and ports and allowing them to inform infrastructure users of planned or unexpected disruption to access/services.
Stages of digital logistics development
While start-up logistics enterprises may begin fully digitalised, with cloud based functions and open source software that allows easy addition of suppliers/manufacturers/customers etc, established warehousing or logistics firms may find that digital logistics need to be taken as a step approach.
Phase one might include functional performance improvement, seeking to have the same level of expertise from the local to the global level. This particularly focuses on ensuring that close to customer logistics are as transparent and user friendly as possible.
Phase two includes enterprise logistics management as core. This means supply chain visibility is a priority and that ‘velocity’, the speed with which order fulfilment can be achieved, is given the highest priority. Dynamic response to logistic events should run in two directions, towards the customer (eg changing planned delivery times) and towards the supplier (eg maximising inventory and allowing for flexible and 3PL warehousing options). Centralised command is also a popular feature of stage two digital logistics development which can be used to create higher logistics efficiency and also to build new capabilities in warehouse management systems (WMS) that may synchronise or even automate a wide range of operations.
Phase three involves digital collaboration, bringing higher synchronisation and possibly allowing ‘bidding’ on elements of the supply chain process, crowd-sourcing some areas of operation such as customer fulfilment and instantly providing feedback on every element of the supply chain so that all users can collaborate on moving towards operational excellence. Feedback systems are likely to be a key feature of phase three digital logistics.
Where should you begin with digital logistics?
New generational logistics technology is already influencing the way multinational companies are pursuing success. Competitive advantage is likely to come by remaining flexible rather than opting for a single logistics management system, considering open source software as a future solution that is likely to be easy to integrate into digital supply chains and exploring where your organisation may already be experiencing a digital logistics operation without necessarily using that language to describe it. As an example, the use of 3PL systems may give even the smallest organisation access to a substantial digital background that they are almost unaware of using – flexible warehousing is the best example of this ‘digital background’ on which small firms call without realising it.