Are we on the cusp of Logistics 4.0?

Industry 4.0 has been around for a while but are we seeing the emergence of Logistics 4.0, powered by IoT, AI and analytics?

Image by Gerd Altmann from Pixabay

For some time now, Logistics 4.0, the internet of things and the spread of artificial intelligence have been threatening to change everything by combining to create an “ideal world” in which areas of waste and inefficiency are uncovered, decisions are thoroughly optimised and some simple (or not so simple) processes are automated. How is the fourth industrial revolution affecting the supply chain? And where does anticipatory logistics fit in?

Industry 4.0 comes to logistics

According to supply chain management software developer flexis AG, the best place to start is with industry in general. “Industry 4.0 has been partially defined by its use of machine-to-machine communication and by its use of Internet of Things (IoT) devices to create factories that operate like smart homes,” it says.

The German company specialises in automotive, manufacturing, and logistics software and believes that we are now moving towards a world in which: “An array of appliances and machines are brought into constant communication in order to create a cohesive, highly visible system.”

Indeed, Logistics 4.0 operates under these exact same principles, says flexis, “but with a different set of component parts.

“Specifically, it makes use of ‘smart’ containers, vehicles, pallets, and transport systems in order to create a fully networked supply stream that offers supply chain managers, shippers, freight forwarders, and others the necessary visibility to perform logistics tasks in an optimal way.

“It becomes possible to see potential bottlenecks and breakdowns well in advance and develop counter-measures or back-up plans in time to preserve smooth operations.”

Anticipatory Logistics

Global supply chains are a complex puzzle. End users are on the move all the time. Some pieces of freight are heavy and cumbersome to store and move. Flexis argues that: “Logistics 4.0 has the potential to pave the way for a new, more advanced conception of the value stream that involves autonomous vehicles (aka driverless cars), automated warehouse operations, and perhaps even the elimination of warehouses altogether in favour of predictive deliveries with full, zero-lead time integration into smart production processes.”

International supply chains are seeing the rise of ‘anticipatory logistics’ … “Supply chains in which smart technology predicts instances of demand ahead of time, enabling planners (or even autonomous machine processes) to adjust production schedules to meet future demand changes,” says flexis AG.

“As anticipatory logistics becomes a reality, the global value chain will become more complex, relying on advanced predictive algorithms and the integration of more and more connected elements.

“It will become simultaneously much leaner, offering a more adaptive and agile environment in which lead times are shortened significantly and shortages, overages, and all manner of disruptions are made increasingly uncommon.”

Fellow software development services provider Finoit Technologies, a company that specialises in mobile app development and IoT applications agrees, saying: “There has been a shift from the traditional approach to a digital supply chain making it smarter, more widely networked, and more technologically advanced.

“Logistics 4.0 makes use of smart-technology-derived containers, vehicles, pallets, and transport systems. This ensures the creation of a fully networked supply stream that offers managers, shippers, freight forwarders, and others the necessary transparency and visibility to route transport and performs other logistics tasks in an optimal way.”

Finoit points out that: “Logistics 4.0 comprises of a mix of technologies for smooth functioning, including GPS, barcodes, Data Matrix codes, radio frequency identification (RFID), sensors, electronic data interchange (EDI), the internet and telematics … as well as on-site and cloud architecture and software.”

The key piece in Logistics 4.0

Finoit argues that there are several key elements of Logistics 4.0:

1. “Visibility: One of the most important elements of technology-driven logistics is the increase in transparency and visibility from digitisation across the complete supply chain system. Visibility has encouraged the building of a smarter value stream system. Also, it has proved to be a necessary pre-requisite that has made logistics transparent and intra-operational (processes) much more efficient and comprehensive than before. For instance: Smart ports like Abu Dhabi are already implementing solutions that make possible not just real-time tracking, but also the real-time viewing of documents and other mission-critical information for freight forwarders and their customers.

2. Smart Utilities: The introduction of various ‘smart’ versions of traditional logistics components has already transformed the way shipments circulate from suppliers to end users. Smart containers and smart pallets are transforming traditional shipping workflows already and incorporating fresh ways to collect data and perform judgements based on the crucial information generated.

3. IoT Adoption: With the introduction of Industry 4.0 in the market, many IoT development companies have come up with digital devices that can be deployed and embedded on factory floors and in the warehouse. Such enhancements connect them to the cloud. This not only evolves the entire supply chain management but also increases profits by producing better granular insights.

4. Industry 4.0 Integration: The modern technology-driven logistics paradigm is closely related to Industry 4.0. The most important factor of Logistics 4.0 is its power to collaborate integration with Industry 4.0 systems and procedures. This usually creates an environment that builds a synergy and communal relationship between manufacturers, shippers and end users. There is a constant security of safety from external threats, storage of important and crucial data and meeting the needs of end users. The transparency is clearer than that of any traditional approach ever followed.”

5. Analytics: The endgame here, says flexis, revolves around “advances in transparency, visibility, and data collection through sensors and RFID chips. By feeding large quantities of information into predictive and prescriptive algorithms, modern logistics providers can improve their demand and shipping forecasts while uncovering potential areas of waste or possible improvement in their value streams.”

This rapidly evolving next generation of successful supply chain management solutions is going to rely on the best computing and IoT processes possible if it is going to deliver real-time automated, sense-and-respond feedback mechanisms. Cyber security and the safe handling of data will be key.

However, it is the intelligent use of all this big data that will drive the biggest pay-back. For instance, US-based rail freight operator Union Pacific has introduced IoT to predict failure and risk by deploying an array of acoustic and visual sensors on the tracks. These monitor train wheels by sending more than 20 million temperature readings per day back to the Union Pacific data centre for processing via analytics.

On average, three railcars per day are currently being identified for attention, inspection and/or servicing. The cost savings now run into millions of dollars per annum as delays and derailments are reduced.

The IoT payback

To get a better handle on what companies are doing in the here and now, the Forbes Insight research group recently joined forces with Intel to produce a paper labelled ‘As IoT marches into the enterprise, transformation follows quickly’. The survey behind the project revealed that: “As IoT efforts mature within enterprises, greater benefits are being realised. The intelligence and insights available through IoT systems are enabling businesses to expand their horizons and explore new paths not possible before. Even more noteworthy: IoT leaders identified in the survey are seven times more likely to be seeing rapid corporate growth than their less advanced counterparts.”

The report, which was based on a survey of 700 executives, showed that 63% of big company bosses say they have already introduced new or updated products or services that incorporate IoT capabilities, and 60% are: “Leveraging their IoT infrastructure to catalyse new business opportunities.”

According to Forbes and Intel: “The survey reveals that as IoT efforts mature within organisations, (they move) from laggard to leader and greater benefits are realised. The intelligence and insights available through IoT systems are enabling businesses to expand their horizons and explore new paths not possible before. IoT leaders identified in the survey are seven times more likely to be seeing rapid corporate growth than their less advanced counterparts.

“Data is the fuel of the IoT engine and as IoT progresses across partner networks (and supply chains), gaps in partners’ technology capabilities become more evident. Ultimately, IoT leaders have a much deeper appreciation and understanding about what’s required to (be) successful.”

The logistics sector may not be the fastest adopter of these new technologies, but it is going to be sucked in fast because, as the report concluded: “Almost three-quarters of IoT-leading companies, 74%, expect a profit boost of more than 25% over the coming year because of IoT, versus 10% of laggards.”

Smarter, safer, smoother

For Jeremy Stickling, a vice president at Nussbaum Transportation, based in Hudson Illinois, the benefits of Logistics 4.0 could not be clearer: “With the amount of data incoming from sensors on our trucks, there is a lot to manually review, aggregate, store and analyse. We need to be able to store and aggregate the data at a macro level, but still have slices of data that are granular enough to give an accurate indicator.”

The UK-based Chartered Institute of Logistics and Transport (CILT) has published a series of reports on Logistics 4.0. In a piece on “The future of construction logistics,” Gerald Morgan, a director at UK construction company Wilson James, said: “Imagine electric, driverless vehicles silently breezing through the streets delivering materials to site in the dead of night, self-unloading, with drones delivering materials to pre-determined landing pads just in time for the next day’s work. Timings could be remotely managed, first with automatic demand forecasting, and then with an added layer of physical checks before approval of delivery is granted.

“Using 360-degree cameras within construction areas to photograph work zones, and uploading images regularly, will allow managers to monitor progress remotely, providing the advantage of up-to-date condition reports. These cameras may well be robot-programmed to scan work areas at predetermined times … or as the programme dictates.”

Morgan can also see more computer modelling being used in the planning stages of major contracts too, as well as the deployment of “smart helmets” fitted with cameras so that sites and the equipment being used there can be viewed remotely. “Technology will allow us,” he adds, “to monitor flow rates and use thermal imagery to check the operation of services. Smart, high-visibility jackets compatible with geo-fencing will alert the wearer that he or she is close to a digital exclusion zone.

“Bionics will be regarded as an essential element of personal protective equipment, making people stronger. Using exoskeletons, operatives will have no problem lifting large mechanical and electrical components into position, with one person doing the work of two.” And, as a final thought, Morgan wonders: “The question may be to what extent AI (artificial intelligence) can replace human endeavour.”

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