Many technology advancements have been accelerated by COVID-19. It was an unwelcomed catalyst in 2020 and continued into 2021. Necessity being the mother of invention, some businesses have been overwhelmed by an increase in volume during the pandemic. We have worked with many of these and specifically in the transportation and logistics space. Whether this is your core business, or it is a part of how you need to do business for your customers it is important to stay on top of how this industry is changing .
To stay on top of logistics technology trends, we have put together this article to to help you understand just some of the important technologies in this space and potentially where your company sits on the logistics tech curve. We do this to get you thinking about what technology goals you may want to go after. In some cases, it is difficult to go after significant advancements if your company is still needing some of the necessary technologies used by you and most of your competitors. By understanding these technology options, it helps guide you to where you want to lead your business.
Quality Solutions + Seamless Integration = Better Outcomes
We divided the technology into three categories: Necessary, Differentiators, and Disruptors. None of these are mutually exclusive, and the key to top performance is solution integration. You want your tools to work well together in a way that you can’t tell where one ends and the other begins.
One way companies achieve smooth integration is with microservices development architecture. Microservices allow you to build updates and deal with bottlenecks without reconfiguring your entire system all at once (we’ll return to this later).
So how far is your organization along the tech curve? Let’s find out.
This first category includes solutions that have been around for at least a decade. These tools have proven their value and utility, and not having them may translate into significant business disadvantages. To take it a step further, and to ensure you are getting the most out of these technologies, take some time to consider if your business has these running seamlessly as the backbone of your business. We work on a lot of advanced systems for our customers, but many times there's issues with these necessary technologies or how they are integrated into the business which prevent us from being able to go that next level of technological advancement.
Even if you don’t have these elements running smoothly now, it’s not too late. There's many tested incumbent systems as well as emerging competitors for each. It's good to consider how each will work as a complete, integrated ecosystem and not as individual parts. Let's explore each.
ERP & Integration
Enterprise resource planning (ERP) systems unite many business processes under a single suite of integrated software tools for easy business data flow. By collecting shared transactional data from multiple sources, ERPs eliminate data redundancy to establish a single source of data truth.
The ERP is typically your logistics company’s backoffice. It’s used to manage everyday activities such as accounting, procurement, project management, risk management, compliance, and supply chain operations. ERP may also include an enterprise performance management (EPM) component to handle financial tasks. When they are setup, supported, and your staff is well versed in their operation they are a significant portion of the technology you need to operate. In one survey of 237 companies implementing ERP, 95% of respondents improved some or all of their business processes. In another study of 315 companies using ERP, 85% had a projected ROI timeline, of which 82% achieved ROI in their expected time. So yes, ERP is worth it and it works.
These systems can become significant issues when they are poorly implemented; poorly integrated or not integrated at all; have been customized significantly over time and can no longer be updated, and a host of other issues. Consider how your business will want to resolve these issues so that the core functions of the ERP are reliable and don't hinder your ability to move up the technology maturity curve.
CRM & Integration
Most B2C and B2B companies that have more than a handful of customers have some form of customer relationship management system (CRM). The CRM platform manages online relationships with customers, potential customers, partners, and suppliers. A CRM enables companies to dial in sales and order process management with most implementations automating as many steps as possible with the ultimate goal of decreasing increasing profits.
CRM is your front office, and it helps manage contacts, sales, agent productivity, marketing, ecommerce, and customer support. It can streamline and unify relationships across the entire customer lifecycle.
Amazon has one of the most advanced customer relationship management (CRM) platforms on earth, but any brand can implement similar tactics. For example, when you buy from Amazon, you set up an account. Then, the company tracks purchases and browsing history to personalize marketing campaigns based on your preferences. These types of tools are within easy grasp of any mid-to-large sized logistics company.
- Boost sales by 29%, productivity by 34%, and forecast accuracy by 42%
- Increase revenue by up to 41% per sales rep
- Ramp up conversion rates by 300%
As you might imagine, frictionless integration between your ERP backoffice and your CRM front office leads to superior, organization wide efficiency thanks to data and operational unification.
Warehouse Management System
A warehouse management system (WMS) provides high visibility and control over a company’s inventory. With specialized software, WMS can improve operational efficiency by managing work processes and optimizing asset utilization.
With tools such as advanced barcode scanning, warehouse floor mapping, and expiration date tracking, WMS improves performance across multiple KPIs. Other features include pick and pack, integrated labelling, dynamic putaway, and order routing across warehouses.
Beyond just making life easier, some of the main benefits of WMS include:
- Accelerated delivery times (happy customers)
- Optimized resource use (less wear and tear on forklifts, best use of storage space)
- Reduced inventory error (human error is the top issue in 46% of warehouses)
- Up to 60% cost reduction for cloud based supply chain management
Remember, your WMS shouldn’t be contained in a silo. WMS can also be linked to your ERP and CRM systems. This enables your business solutions to merge into an integrated ecosystem making it easier to get answers and make decisions. This approach is essential for nearly any technology you choose to deploy, including even the more advanced tools mentioned below.
Differentiators are technologies that are relatively new but more mature development-wise. Still, these solutions haven’t been universally adopted yet. For the companies that implement them now, however, significant business advantages can be realized.
End-to-end (E2E) logistics is a continuation of warehouse management software. In today’s digital economy, customers want to buy, fulfill, and return anywhere, and E2E is the answer to this demand. E2E logistics manages supply chain fulfillment from the ecommerce portal to the distribution center to the storefront (or customer doorstep).
E2E enables the integration of marketplaces (Amazon), shopping carts (Shopify, BigCommerce), carriers (UPS, FedEx), accounting (QuickBooks), and more to create a frictionless process from order to delivery.
E2E strives to encompass as much of the supply chain as possible and bring it all under one umbrella. Some E2E providers sell pre-built, customizable platforms, others build to suit, while others offer a mix (pre-built + build) enabling the integration of various platforms. Seamless integration is the key to any successful E2E strategy.
E2E overlaps with third party logistics (3PL) where some or all of the supply chain management is outsourced. The trend has become so popular that 90% of Fortune 500 companies operating within the U.S. sought assistance from one or more 3PL providers.
Traceable Shipping & Transportation
Traceable shipping has two approaches. One way is product focused and involves lot, batch, or serial number tracking. As one might imagine, products with an expiration date are especially sensitive to accurate tracking methods. Also, product recall response can be critical especially when customer safely is involved.
Product tracking software offers several advantages, such as:
- Track down product problems (spoiled batch of food)
- Leverage inventory & market trends (identify fast moving products)
- Recall response (know precisely where products have been delivered)
- Compliance issues (Drug Supply Chain Security Act - DSCSA for pharmaceuticals)
- Less warehouse waste (get rid of near to expire inventory first)
- Eliminate human error (digitalize inventory record during entire journey)
- Cost vs. time (track inflationary and seasonal fluctuations)
Another way logistic companies trace shipping and transportation is from the fleet perspective. This means keeping track of drivers, vehicles, maintenance, schedules, and more. Some features of this kind of platform might include:
- Driver geolocation information (fleet wide vision for decision making)
- Hub and route configuration tools (uses advanced, automated logistical logic)
- Easy dispatching tool (manage, reorder, dispatch, and optimize driver activity)
- Automated triggers (get alerts for delays, fuel consumption, and speeding)
The most advanced solutions integrate both the product and fleet perspectives. This means when a customer inquires about their order (product perspective), you can have precise details about where the product is along the shipping route (fleet perspective).
As one can imagine, FedEx has been implementing many of these strategies for years.
Automated Inventory & Fulfillment
In the old days, factories sent goods to distributors who dispatched the goods to stores where customers then made purchases. Now, in the wake of COVID-19, a direct business to consumer (D2C or DTC) trend is building steam. Much of this is possible thanks to automated inventory and fulfillment.
This involves the automation of tasks, such as receiving, put away, storage, retrieval, picking, packing, labelling, and shipping. Much of this is software directed (see warehouse management systems above). Advanced inventory and fulfillment solutions also include physical product movement by mechanized equipment like conveyor belts, pick towers, sorters, and robots.
Brands are increasingly selling directly to consumers as automation has accelerated the order fulfillment process. Still, the victory of technology isn’t just in faster delivery, it’s also found in the democratization of automated technology.
One of the most striking examples is Nike. In 2019, the sports apparel brand decided to stop selling sneakers on Amazon. For some, this may sound crazy as Amazon Fulfillment leads the industry in getting goods into people's hands faster than ever. But Nike realized their power was in their brand. Also, they knew they could access advanced delivery technology, just like Amazon.
Over the past 2-3 years, the company has detached itself from department stores and wholesale outlets. Instead Nike opened smaller neighborhood stores, called “Nike Live,” to serve as pickup and delivery hubs for online orders. They also rolled out multilevel flagship locations dubbed “House of Innovation.” Now, Nike D2C sales account for one third of its revenues.
Undoubtedly, the power of the brand has a lot to do with Nike’s incredible direct marketing, however, the ability to decouple logistically from distributors was a key element for the transition.
At this point we move forward to the cutting edge of logistic solutions. Disruptive technology has the potential to be a game changer for companies that choose wisely. Remember, some titans began as early adopters.
Even at this high level of technology, integration remains critical. Rather than being experimental, these solutions are real, and when built into your systems, the improvement can be dramatic.
Predictive maintenance through machine learning
Who wouldn’t want to know exactly when they should tune up their fleet or warehouse equipment? You want the most mileage possible before costly breakdown, right? Instead of an arbitrary maintenance schedule, predictive maintenance enables data driven decisions.
Predictive maintenance involves the strategic use of sensors to gather vehicle or equipment data. This data is then compared against breakdown risk parameters (vibration, temperature, noise, emissions, etc.), and machine learning algorithms “learn” to predict breakdown. Lufthansa has implemented machine learning assisted predictive maintenance and has realized a 20% reduction in downtime.
Real Time IoT
The internet of things (IoT) essentially enables any machine or device to capture and transmit data online. In some ways, we can relate this to predictive maintenance where equipment sensors relay the data back to a data command center.
The faster this works, the sooner you can do the proper analytics and execute meaningful action. Real time IoT involves advanced cloud computing capability and, more recently, edge computing which distributes compute workload to nodes closer to end users. Currently, Avis, with the help of Amazon AWS, is working on a way to remedy suboptimal utilization of cars in real-time using real-time IoT principles.
Supply Chain Robotics
Robots in the supply chain are by no means new. For example, warehouse pick optimization robots roam facilities to increase picking throughput via picking to cartons and totes.
The immense robotic category includes store based replenishment bots, drones, autonomous trucks, and autonomous freight trains. Also, in areas such as dangerous environments, robots make a lot of sense. For example, Boston Dynamics’ Spot can be deployed for autonomous inspection and data collection on hazardous and remote sites.
For mammoth companies (Uber, Tesla, and Alphabet) and for innovative startups, the fully autonomous car race is in full throttle. Depending on your stage of growth, you may or may not implement this tech anytime soon. Still, it’s worth paying attention to what happens in the self-drive sector.
For many logistics providers, autonomous vehicles are the future. And guess what? It’s already here. On October 8, 2020, Waymo (a subsidiary of Alphabet) announced fully driverless service to the general public in Phoenix, AZ.
Pfizer’s COVID-19 vaccine is temperature sensitive, and it must be transported at –70° Celsius. Transporting any perishable item has its challenges. Cold-chain logistics incorporates many of the tech principles we’ve already touched upon. Plus, you must consider elements to keep things frosty, such as dry ice, cold plates, and liquid nitrogen.
Other layers of complexity include regulation, customs, and climate conditions, as well as an estimation of the length and time of a distribution route. Essentially, it’s an ultra-tight level of control over end-to-end logistics.
The core strength of blockchain is that it produces an incorruptible, publicly available transaction ledger. This has great potential value in the ever increasing supply chain complexity. For example, in the auto industry, dozens of companies across various countries may be involved in manufacturing a car.
According to PwC, for logistics, blockchain has the potential to:
- Enhance supply chain transparency & traceability (permanent, single source data trail)
- Ensure security, immutability and authenticity (prevents data corruption, loss, and fraud)
- Reduces complexity (fewer intermediaries, improved QA, and enhanced automation)
- Improves operational efficiency (better compliance, lower transaction cost, less error)
Blockchain has already been put into use in ports in Singapore, Rotterdam, and Antwerp. Meanwhile, Trade Community System is developing a blockchain based platform where international trade partners can securely share information in end-to-end supply chain visibility.
Moving Up the Logistic Tech Curve
For some, supply chain technology and innovation is like buying a new laptop. Lots of information, but not much decision making expertise. Plus, newer methods, such as microservices, are changing the software development landscape dramatically.
Microservice architecture is a way to develop software systems by building single-function modules with well-defined interfaces and operations; it’s sort of a Lego-style type of development. Why is this important? Because it offers more agility and flexibility to build better solutions and evolve your business. Netflix was built on microservices. Microservices work well to upgrade existing system deficiencies without having to replace entire platforms.
Choosing the right partner to develop and deploy your logistics technology is key. Trying to get up to speed in-house isn’t always practical or cost-effective. If you already have an ERP or CRM in place, the right development team can modernize it with minimal friction to your day-to-day operations.
As AWS Advanced Partner and Google Cloud Platform experts, Xerris has developed advanced platforms for many brands to improve core business metrics. Plus, we’re microservice experts.
Reach out and discover how we can propel your logistics organization forward on the tech curve.