Digital transformation of logistics: challenges and opportunities

Like all areas, logistics is experiencing its digital transformation which affects production, warehouse management and the transport of manufactured goods.

Set up transparent processes

E-commerce, the factory of the future and just-in-time deliveries require transparency in chain management logistics. This is also true for the consumer who buys and wants to be able to follow the progress of his order. Logistics companies must adapt and equip themselves to optimize their processes and develop new business models in order to remain competitive. New platforms are emerging to connect people, machines and data. The impact for the sector is a particular requirement in terms of flexibility, speed and traceability. Logistics 4.0 is underway.

Logistics 4.0 stems from Industry 4.0, the technologies of the second applying to the first. Supply chain 4.0 maps the integration and networking of objects, processes, resellers and suppliers, customers and producers.

It is based on objects and processes capable of organizing and controlling themselves. For example, GPS technology can be used for location, microchips RFID, barcodes and sensors for identification. Electronic and automated data transmission takes place via cloud-based services. The whole constitutes an intelligent solution whose various components communicate with each other via theinternet of things (IoT) and use AI to learn from each other, make decisions and monitor themselves.

The challenge: rethink old processes

For many people, using a smartphone, tablet or computer has become part of everyday life. This has profoundly changed buying behavior, the emerging desire and the act often happening online. It also increases the need for optimized services and product customization. An item in a large online store can be ordered with just a few clicks and logistics players have to adapt to this.

In summary: old processes need to be redesigned. The massive increase in data volume adds complexity. Employees need to be trained and the organization of work restructured, with people, machines, devices and robots no longer complementing each other, but now having to work together.

Solutions and innovation

Modern means of transport use smart technologies, such as artificial intelligence, big data, blockchainaugmented reality, 5G and the Internet of Things.

5G is a mobile communications standard that will gain in importance. Successor to the LTE standard, beyond telephony and Internet access, the 5G allows many devices to be connected to each other, consuming little electricity and with low latency, it is ideal for the IoT.

The Internet of Things (IoT) brings together technologies capable of connecting physical and software objects on a global scale. The standard IPv6 literally allows each object to have its own IP address, which allows it to communicate and collaborate with another similar object, regardless of its location.

Big data refers to volumes of data so large and complex that they cannot be processed and analyzed by traditional computing. The cloud, artificial intelligence and high-speed networks are necessary.

Blockchain is a technology that has become known in the world of cryptocurrencies (like Bitcoin). A blockchain is a decentralized database distributed between several computers on which reservations, contracts, etc., can be stored. Blockchain is characterized by tamper-proof data security, as each individual record is based on previous and subsequent data records and therefore cannot be changed.

The augmented reality applies to technologies that add information about reality visible to the naked eye. This process is known for its use with connected glasses that display information in an unfamiliar universe, for example. We can also see its use in television during football matches, where lines are drawn and distances between two points are superimposed on the field. This technology can be used in logistics.

Several solutions are available to help track, analyze and if necessary optimize a complete supply chain between manufacturer and consumer. For example, to find an alternative to a transport route. The prerequisite is always reliable connectivity for all components involved.

Opportunities in logistics

Digitized business models have changed the relationship with the customer. Previously, a customer’s freight was taken over by the freight forwarder, who then arranged the onward transportation. Today, digital platforms allow each manufacturer, retailer or end consumer to launch a tender for each individual shipment by putting carriers in direct competition. Thus, transport customers have direct contact with logistics providers and achieve greater transparency.

This transparency appeals to the customer but in addition, it brings other advantages, for the benefit of the competitiveness of the company thanks to the optimization of the processes:

  • Optimal work, thanks to the various optimizations
  • Reduced costs and optimized resources thanks to comprehensive analyzes
  • Fewer errors thanks to automation

Anticipate future trends

A digital transformation project is never finished, it is a holistic process that constantly learns and adapts to new requirements and individual circumstances. In times of perpetual change and new demands for scalable systems, Logistics 4.0 offers companies invaluable potential to continuously optimize logistics performance and improve competitiveness. Some points will become even more important in the future:

Meet individual needs

Delivery and custom production are increasingly important. Thanks to Logistics 4.0, special customer wishes can be realized even on a very small scale. Automated and transparent processes as well as networking allow companies of all sizes to set up control and decision-making processes in a decentralized way using existing data and algorithms adaptive AIs.

Deliver quickly

With Logistics 4.0, logistics service providers and manufacturing companies will share warehouses, means of transport, distribution centers and reverse supply chains through computer networks. This will create global logistics super-networks that will enable much faster deliveries. In addition, web-based “logistics as a service” and virtual logistics marketplaces are emerging thanks to the Internet of Things.

Ensure data security

The digital transformation of logistics poses a number of challenges. Due to the large volume of data, their protection is a key element of Logistics 4.0, to comply with the General Data Protection Regulation (GDPR) of the European Union. We must create solutions that guarantee the security of personal data and company-related data. Blockchain-based applications are a modern choice. In many medium-sized logistics companies, the fear of cyberattacks is seen as an obstacle to the introduction of digital infrastructures. However, it is possible to secure your data networks with reliable partners, which contributes to a good image vis-à-vis customers. Security experts must be involved in the digital transformation process and employees made aware of security.

Logistics 4.0 requires stable and functional connectivity, wired or wireless.

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Digital transformation of logistics: challenges and opportunities

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