5 contributions of digital technology in the logistics sector

28 September 2021

Never before have so many packages been delivered on Earth, and the last few months have accentuated the phenomenon. Such an evolution in demand forces the logistics sector to adapt its organization to keep up with the change. Already alert to the transformation of the industry into a fourth generation, it is becoming necessary to digitize logistics tools to keep pace.

  • Online sales were up 45% in the first week of April compared to the first week of 2020 due to the closure of "non-essential" businesses.
  • The e-commerce sector has reached nearly 4200 billion dollars in 2020 and is expected to reach 5400 billion dollars by 2022.

It is therefore necessary to focus on the speed and efficiency of the processes from the warehouse and the advanced storage points by gaining visibility on all the logistic platforms and paths traveled by the product, inside and outside the warehouse. It is in this sense that a smarter, digitally driven industry can meet today's challenges and customer expectations.

Operations productivity

In the course of operations, digital technology standardizes all the procedures to be followed, making them fast and simplified. Now equipped with a standardized coding system, each product is digitized, identified and recorded in a data processing software. Inventories are better managed and delivery operations are optimized: product and equipment information is structured, standardized, and visible to all.

Optimized inventory management leads to better delivery organization, especially since the number of references in the catalogs tends to multiply. Real-time access to data allows, for example, to know the traffic conditions and the location of vehicles in order to manage the delivery and the intervention in its entirety, to have visibility on each link of the chain even when the goods leave the warehouse.

As digital technology makes information visible to everyone, customers are also alerted to their deliveries in great detail and have a view of the entire path taken by their order or the food chain of their product to know its terroir. Accessing all the data in real time allows each economic agent to have a global vision of what is happening on the entire supply chain but also to have direct access to what concerns him and what he can expect from others:

  • Demand level,
  • Price,
  • Location of the raw material,
  • Order status,
  • Disputes in the chain,

This makes collaboration between all the people involved in the business efficient and relevant.

Productivity is also enhanced by digital technology when it limits errors in the transport chain by allowing everyone to have visibility and traceability on each infrastructure, equipment and product that comes into play during the production and logistics process. Today in logistics, barcodes and RFID tags are the most widely used. These methods of coding and labeling products speed up the receipt of orders because controls are faster and ensure full traceability from the point of departure of the product to its final arrival at the customer, without errors and with efficiency.

In addition to controls, picking is a time-consuming operation in the warehouse. Digital technology has enabled the development of several methods for efficient and error-free order picking : Pick To Light devices, for example, illuminate the position of the article and the employee only has to look at it and see the quantity to be used.

Long-term reduction of logistics costs

The automation of certain manual operations thanks to the implementation of digital tools in the logistics processes would allow in the long term a notable reduction of the operational costs in the warehouse.

  • The control, tracking and validation of products and vehicles through an automated portal and RFID reading is faster,
  • Digital technology limits inventory management costs. Artificial intelligence enables a smarter and more agile Supply Chain, resources are better allocated and with a view to the future, purchases or transfers of stocks are controlled to avoid stock shortages, expiration of stocks or surpluses.

    Poor inventory management costs the company in terms of revenue, credibility with customers, partners and suppliers, and fixed and variable costs in the warehouse. For example, when the expiration date is passed or there is excess inventory, the company has to give up its inventory. Digitizing its inventory management method allows it to control inventory at each key point in the supply chain and thus gain better knowledge of its inventory and flows to manage them efficiently.

Digital technology and the Internet of Things (IoT) are also revolutionizing the logistics sector by making the entire warehouse connected to the Internet so that each object can inform its user of its status. An IoT platform centralizes information from sensors placed on the objects to order and enrich them.

The information is then processed in real time, which makes the actions carried out more fluid: companies are always alerted to the state of their machines and know when they require intervention, maintenance or a different use to increase profitability. In this sense, operations are less and less paused because of revisions or interventions of technicians, which in the long run saves the company in maintenance costs.

At the exit of the warehouse, the delivery is also tracked thanks to the IoT so that the company is able to follow its cargo and containers. For example, the on-board camera is now present in many vehicles and is triggered by any suspicious action on the road (collision, rapid acceleration, hard braking, etc.). The driving information is sent directly to the logistics chain, and in the event of an accident, the insurers act without wasting time and allow for a rapid treatment of the incident and an acceleration of the administrative process for a significant reduction in management costs over the long term.

Improve the customer experience

As operations become faster and more efficient, the company has more time and information to give to the customer. The customer is now included in the circle of people who have access to the data retrieved from each object so that he can know where his order is, when it will arrive and who will transmit it to him.

When we talk about fourth generation industry, we emphasize new technologies in the transformation of production methods. With this industrial revolution, we approach the term of extended Supply Chain to speak about collaborative logistics with a sharing between suppliers, colleagues and customers. The latter finally enters the logistic loop as an important and taken into account actor.

We avoid sequential decision making and we opt together for the right strategies, and this from the first mile. Through the chatbot, the company builds customer loyalty at a lower cost than with a customer service offered only by humans. The customer can be helped at any time of the day, so he receives a better service at a lower cost. New technologies and last mile delivery are also inseparable for a digital and personalized service offering.

On the company's side, this artificial intelligence can now store customer information for further study, with the idea of proposing ever more improvements in the quality of the company's customer service and products. Giving information to the customer brings the same benefit to the company, which, thanks to this simplified communication with the customer, can better understand their behavior in order to adapt the offers.

More than just the company, it is all the players in the supply chain that benefit from these new digital tools, used collectively to optimize performance.

Responding to major environmental challenges

Even though logistics is an essential sector, it is still a major emitter of greenhouse gases. In addition to the organizational advantages, digital technology also offers the possibility of reducing the ecological footprint.

As seen previously, online sales are exploding and the number of packages is increasing. It goes without saying that logistics platforms are expanding to accommodate this and are consuming ever more energy. Air-conditioning, heating and lighting are costly installations for the company and for the environment.

To respond to this problem, digital technology has brought Building Information Modeling (BIM). From the design of the warehouse, BIM is used as a digital model and centralizes data and information until the construction of the warehouse and then throughout its operation by making changes in real time. This allows for greater visibility over the entire platform, cost reduction and planning of the warehouse organization to make it intelligent and energy efficient.

This digital warehouse management is used, for example, for door management, i.e. to check whether the doors are closed properly to avoid temperature changes between two rooms, especially at the entrance to cold stores. This limits energy losses and unnecessary expenses.

Beyond the BIM model, the networking of the entire supply chain also helps to reduce energy costs. On the road, the pooling of logistics networks and the optimization of vehicle filling up to the point of delivery reduce the number of vehicles on the road and therefore greenhouse gas emissions.

  • In France, this networking has led to a 10% reduction in emissions and a 15% increase in the vehicle load factor.

It is also easier to know the traffic trends and therefore to choose the departure times of the transporters according to the vehicle or the price of the journey. In-vehicle devices can also analyze the driver's behavior so that he or she can change his or her driving style to an environmentally friendly one and thus reduce greenhouse gas emissions.

New jobs and a new way of working

The digital transformation of logistics warehouses is now almost complete for large groups that operate on large platforms. In parallel to this digital transformation, it is not in the small independent warehouses but in the large hubs that we are seeing a change in employment.

Already, the way of working inside the warehouse has changed. The "Goods to Man" method, for example, consists of bringing the articles from the order to the picker in charge of assembly. Gone is the traditional method where pickers wander around the warehouse to assemble their order, now the products come directly to the picker for scanning and finalizing the order.

  • Picking is faster and error-free.
  • The employees limit their comings and goings in the aisles and the company therefore guarantees greater safety and a minimization of work accidents.

Then, new jobs have appeared with the need that companies have felt to manage the arrival of digital in each branch of logistics. Thus, modelers are sought to deal only with the BIM model and maintenance workers who are also able to drive robots and exoskeletons. This change causes a change in the expectations of employers towards students during training. Indeed, automation or artificial intelligence require, in addition to understanding the Supply Chain and technical knowledge of logistics, the ability to analyze data to aim for economic and productive optimization of the site.

But if new jobs and trainings are flourishing (data scientist, business analyst, etc.) in the logistics sector, some positions are losing their competences and are therefore losing their value and attractiveness.

Once again, these transformations bring advantages and disadvantages, the arrival of robots and automation in general impoverishes the tasks of the human being but relieves the drudgery at work, modifies the management methods but makes the global system more flexible and interactive with the objective of better communication and information sharing on larger surfaces.

Representation of the mobil and webstite Monstock solution

The digital transformation forces all players to take agile solutions (Smart Supply Chain) to adapt quickly. To achieve high efficiency and expand into new spaces that were not necessarily thought or organized for their activity, it is now essential to digitize all processes.

Monstock is alert to the challenges and needs of companies (traceability, extended supply chain, flow control, planning, artificial intelligence, etc.) and offers a digitalized solution for inventory and flow management (Smart Supply Chain), which provides a complete and innovative solution to satisfy your customers, partners and suppliers.

You want to know more : Contact the Monstock team

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