Technological change has always been at the heart of human progress, and as we all know, business is all about progress. The last few years have seen a massive wave of digitization sweep across entire industries. Still, amidst this wave of disruption, one constant remains – the customer.
“There is only one boss. The customer. And he can fire everyone from the chairman down, simply by spending his money somewhere else.” – Sam Walton, Founder of Wal-Mart
The 2016 Third-Party Logistics (3PL) Study – The State of Logistics Outsourcing, stresses that in order to successfully serve a customer, it is essential to put him/her first in every process. With that goal in mind, it becomes much easier to streamline internal processes to deliver the most value in the shortest time possible.
The above study highlights technologies that 3PLs should be investing in to keep up with the increasing demands of customers for faster, better and cheaper. Execution and transactional-based capabilities such as warehouse/distribution center management (WMS), transportation management planning and scheduling (TMS), electronic data interchange (EDI) and visibility via web portals for updates are no longer a “good-to-have” but a “must-have”.
The Fourth Industrial Revolution has arrived.
The dawn of Industry 4.0, will see the next phase in digitization within the manufacturing sector, characterized by the exponential rise in data volumes, computational power and connectivity. This in turn drives high functioning analytics and business-intelligence capabilities; complemented by improvements in the way machines communicate with us. Think augmented reality, holograms and artificial intelligence; assistants that actually work (sorry Siri).
Can we still rely on traditional technology?
Traditional technology solutions were built with the mindset of the old world, a paradigm that has existed since the 1980s but which is rapidly losing currency. Although these solutions are still vital to business functioning, companies need to look outward instead of trying not to rock the boat. In recent years, a new range of technologies have surfaced which will very likely shape our future for better or for worse.
The rapid adoption of Unmanned Aerial Vehicles (UAV) or “drones” as they are more commonly known as is one trend that Industry 4.0 has birthed. Be it Google’s parent Alphabet, Amazon or United Parcel Services (UPS), famous advocators of disruptive technologies have been rushing to develop automated drones for delivery. Amazon recently announced that the Civil Aviation Authority (CAA) in the United Kingdom has given it permission to test the viability of delivery of small parcels in three key areas: operations beyond line of sight, obstacle avoidance and where one person operates multiple autonomous drones. If this trial is successful, drones would be en route to becoming an accepted form of last mile delivery.
One of the last obstacles to drone acceptance would then be whether the end customer enjoys receiving a parcel from a drone instead of a human.
“We want to learn how people feel when they’re receiving a package by air… Technology is shaped and changed as it makes contact with the real world.” – Astro Teller, Captain of Moonshots, Google X
Although drone delivery will not happen tomorrow, it would be wise for solution providers and 3PLs to plan for the future and consider how to incorporate this technology into their existing systems.
2. Bots in, Humans out
The growth of e-Commerce has put extraordinary strain on fulfillment operations. The larger number of smaller orders and returns has increased complexity and warehouse activity levels. Compounding this, customers want their goods and want it now. Thus, warehouses and distribution centers (DCs) are increasingly situated near to urban areas which are more costly and limited in area. Furthermore, labour costs can only increase with young people shunning manual work.
Amazon anticipated this back in 2012 and acquired Kiva Systems, a manufacturer of mobile robotic fulfillment systems, for $775 million. With a valuation multiple of seven times Kiva System’s revenue at that time, there is no clearer indication that the future of warehousing lies in automation.
Automated warehouses serve to reduce the three largest costs of warehousing in the high-cost, low-margin retail industry; labour, time and real estate. Symbotic’s system which is being tested by Wal-mart, Coca Cola and Target, claims to be able to cut labour costs by 80% and operate warehouses that are 25% to 40% smaller with robots able to access any-case at any-time in any-sequence at 25 miles per hour.
This technology has been gaining momentum in retail over the years and is definitely something 3PLs should consider implementing as well.
3. VR vs AR
In comparison, AR is already being deployed in warehouses. Even back in 2011, KiSoft Vision, the visual picking technology by Knapp AG used AR to reduce error rates by as much as 40 percent. Pickers wear a headset which provides vital information including accurate guidance along the shortest distance to the next location. In addition, the integrated camera captures serial and lot ID numbers and performs real-time stock tracking. With both hands free, pickers are better able to handle items.
We need to take a long and hard look at our customers even more so than in the past. Technology advancements have surpassed our expectations and our customer’s demands have only increased as a result. It is crucial to understand the array of solutions out there, and merge the limitless possibilities of technology with the reality of our customer’s needs. In doing so, perhaps we’ll find a balance that pleases the boss.