Logistics plays a key role in boosting the economy of a country. In the context of the 4.0 technology revolution, technology is vital to a logistics business. So what companies and trends need to be aware of in 2018?

The potential of logistics, especially e-logistics (logistics in e-commerce), is enormous and has high growth, in the context of e-commerce strong growth (which in turn has the major impact on logistics), the high proportion of smartphone users & internet penetration in Vietnam, as well as policy support from the government. [1]

According to the statistics of the Vietnam Logistics Association, the average logistics cost in the world is about 10-12% of GDP, while in Vietnam this ratio is up to 25% of GDP, which means there are problem & opportunities for businesses in Vietnam.

What is Logistics?

Logistics is a specialized term that is of Greek origin. In the simplest sense, logistics is a part of the supply chain that covers the whole of the works including packaging, transportation, storage, and preservation until the goods are delivered to the final consumer.

Apart from the important factor, which is people, technology is the key competitive advantage in the logistics market, which is full of potential but packed with competition. As the table below, we will look at technologies such as IoT (with AI, large data), robots and automation, and enhanced real-world (AR). will explore some of the key technologies in the forthcoming 4th Industrial Revolution having the impact on logistics over the next five years; business technology & trends will be covered in another article.

Business & Technology trends in logistics (Source: DHL)

Robots & automation

This technology will mitigate errors in the logistics process and increase productivity to a new level. The concept of “cobot” – the robot collaboration to human beings – helps to unlock manpower from manual work, thereby improving productivity through automation.

Amazon is pioneering the use of cobot to scale the fulfillment process, based on technology from Kiva Systems (a startup of Amazon Robotics acquired in 2012). The cobots are equipped with high-resolution cameras, pressure sensors, and self-learning capabilities that can be easily programmed to assist workers with tasks such as picking, packing and sorting. In addition, the cobot can be easily moved between warehouses, better support for e-commerce orders, and greater flexibility in warehouse administration.

In addition, DHL is also testing the Sawyer robot (1 arm, weighs 19kg) to support the distribution process. In addition, the robot also supports the loading and unloading process.

Cobots (Source: HBR)

According to Gartner, more than 50 billion objects will be connected to the Internet by 2020, providing a tremendous opportunity for $1.9 trillion markets of logistics. IoT will solve various of problems, which applied in many stages of the logistics process.

IoT can be integrated with warehouses through the sensors installed in the shelves, goods. Locations, order status, the volume will be updated in real time from the pallets, sent to the warehouse management system (WMS), helping to reduce the workload.  Scanning cameras at the gate can be used to detect defects and track defects.

IoT also offers better fleet management solutions by optimizing car vacancies or providing auto maintenance forecasts based on vehicle sensor updates. IoT delivers a comprehensive delivery solution for consumers through intelligent delivery capabilities such as the Amazon case: Delivering to your car trunk through code encryption, delivery to your home through via smart lock.

Amazon has installed additional sensors and equipment throughout the conveyor system. Sensors will automatically scan barcodes of packages. Because the package is scanned to a specific location, the sensors allow Amazon to track the location of each package. Also, when Amazon employees put the packages on delivery trucks, the scanners on the front door would warn employees if a package was wrongly placed on a delivery truck.

Source: einfochips.

Going hand in hand with IoT in logistics is AI, big data, which are trends having rapid growth in recent years because of the huge amount of data generated in the supply chain. Big data helps optimize capacity, enhance the user experience, minimize risk, and create new business models. Performance can be improved by using large data to optimize resource utilization, process quality, and performance, and to increase speed and transparency in decision making. For example,  data such as delivery information, weather, traffic can be utilized for real-time planning, optimizing load sequences and predicting arrival times in real time. In addition, artificial intelligence (AI) technology will help develop self-learning capabilities, help analyze and make predictions (e.g predictive maintenance) in the industry.

Virtual reality (VR) & augmented reality (AR)

AR is rapidly becoming an important technology, helping to connect the real world and the virtual world. In logistics, this technology can help workers quickly identify shipment information and facility the shipment process. DHL tested ARs in Europe and the United States by equipping AR smart glass for warehouse workers with features such as real-time identification, which shows the optimal route to collect orders and help reduce inventory time. In addition, workers do not need to scan packages, the use of barcodes, the glasses can do the same. Image recognition software will help whether the workers have reached the correct location or not when picking goods.

The benefits of AR include increased efficiency, reduced errors, reduced training and optimal manpower utilization. However, there are some technical issues such as performance, battery life, size, and volume, but analysts say that these technical barriers will be resolved in the next few years.

Picture Source: HBR.

This 4.0 technology trend will be fundamental for logistics to take off in the next 5 years. In the future there will be many scenarios, large companies will make a big impact on logistics. However, not only large companies are involved in solving logistics problems, but also startups that offer breakthrough solutions in each stage of the supply chain in general and logistics in particular (further information in next article).

Although Vietnam currently has a low starting point in the 4.0 technology revolution (according to WEF’s latest report), there is a lot of potentials to compete in the future with the logistics industry, one of the backbone industry of this country.

[1] Refer to the Google-Temasek 2017 data. Two decrees include: The Prime Minister signed Decree 163 / ND-CP regulating logistics business. Expected to facilitate foreign businesses to develop e-logistics in Vietnam: The Prime Minister signed Decree 163 / ND-CP on logistics service business. The Decree is expected to facilitate foreign businesses to develop e-logistics in Vietnam and Decision 200/QĐ-TTg dated February 14, 2017, of the Government of an action plan to improve the competitiveness of logistics enterprises in Vietnam by 2025.

Hoang Nam Le

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