Tag Archives: last mile logistics

Faster, Cheaper, Better – The Future of Logistics

As technology drives change in logistics, companies must meet increasing consumer demand. But what does it mean for traditional labour roles?

logistics

Logistics has never felt more fluid and subject to change. In this article, we’re going to look at the key factors driving all this change and then consider how technology will develop in the next 10-20 years. Then, in our second piece, we’ll consider how new business models will evolve before trying to draw some conclusions.

Faster, Cheaper, Better

Commercial interests have always demanded logistics move stock quickly, cheaply and in large quantities. Historically, transport improvements – from horses through to planes – answered this demand. But in the future, it will be the digital world that provides these answers.

The 21st Century customer is an unforgiving beast. However, while new shopping patterns are placing extra demand on logistics providers, they are also generating fresh opportunity. As end customers become more focused on flexible, fast and cheap solutions, logistics companies that optimise their digital usage are well-set to take advantage of weak competition at every stage of the supply chain, including retailers.

Technological advances, forecasting and new business models all offer glimpses of how these demands can be answered. There is even the possibility that much of the future supply chain will be autonomous and self-organised.

One thing for sure is that it will faster, cheaper and better – the customer won’t accept anything less.

Interconnected World, Interconnected Supply Chain

3D Printing

3D printing makes it possible to print exact working replicas of parts and products using metals, plastic, composite materials, and even human tissue. This can be done quickly, on demand and to a customer’s specification. This makes it a central technology in the development towards “batch size one” production.

It also means it will no longer be necessary to store large amounts of stock. Though it is possible there may be a counter-balancing increase in raw material storage.

In markets in which 3D printing is relevant (for example, spare parts), this has the potential to heavily disrupt logistics. And the best 3PLs will provide 3D printing services at the point of delivery to dovetail with other services.

Internet of Things (IoT)

The IoT is the developing ability for digital devices to communicate directly with each other across the internet. It’s estimated that by 2020, more than 50 billion objects will be “web-enabled”. And, if you consider that they will be able to “talk” to one another, the potential becomes clear.

Immediacy of communication can lead to many direct benefits. Creation of automated orders for domestic resources, lorry sensors informing maintenance schedules – all focused on improved speed, efficiency and cost.

From a customer perspective, the ability to track items through their RFID chips and via GPS will mean 100 per cent visibility across the whole delivery cycle. From a logistics perspective, one can also envisage other variables – such as location, temperature, pressure, humidity, etc. – being monitored throughout the supply chain for improved transportation efficiency.

However, the biggest single opportunity arguably comes from the unrivalled quantities of consumer data that will arise, feeding into forecasting and automated processing. For those who can embrace and take advantage of it, this goldmine of information is a very exciting prospect.

Automated Systems

Whilst the idea of automation can seem like something from science fiction, there’s no denying the groundswell of development this area has seen in the last 2-3 years.

Labour costs are always a critical element in any operating model. In logistics, the trade-off between quality of service and cost is central to success. Automation could re-write this equation by providing a faster and better service for less money.

Relatively simple loading and unloading systems are already available. But these will become more sophisticated as advances in optics and data processing mean forklifts can navigate autonomously in dynamic environments, and with less error than human drivers.

In addition, autonomous delivery is on the horizon. DHL and Amazon both plan to launch drones for last-mile deliveries. And the appetite for them is strong amongst manufacturers, retailers and customers.

Autonomous lorries are also a real possibility using the same optical and AI developments that underpin driverless forklifts.

Not only would driverless vehicles be cheaper – both in labour and fuel costs – they will also be safer and more predictable making them ideal tools for efficient supply chain management. Add to this the fact the whole transport industry is suffering from dramatic driver shortages, and it’s not a surprise this technology is very appealing to most industry segments.

Augmented Reality

Augmented reality (AR), overlays relevant information (such as sound, vision or tactile data) onto a user’s normal sensory input, generally via body suits/gloves, goggles or headphones.

Wearable devices are already available that offer a glimpse into the potential future of this technology. Smart phones, smart watches, and VR goggles all give indications of how additional relevant data can be communicated.

For example, stock control data (SKUs, pallet contents, BBEs, etc.) could be accessed without leaving the warehouse floor, displaying data for on-the-spot planning and organisation. And when incorporated into transport, it could offer intelligent last mile assistance (navigation, traffic information, etc.)

Essentially, AR enables greater collaboration between systems and workers. As such, all logistics companies need to consider how AR can ensure all the elements work well together.

Whither the Worker?

With more automation, traditional labour roles will diminish. As such, redefining the place of the human worker within a more technologically advanced environment, will be vital.

In some areas, we will see happy confluence, such as a diminishing driver workforce being superseded by automated delivery solutions. But elsewhere there will be less need for human skills, and an increased need for other skill sets that, historically, have not been required.

For example, automated pick and pack solutions make warehouse operatives less relevant. However, at the same time air and sea transport are both chronically understaffed, with no expectation that the industry demands will drop.

The onus will be on logistics companies to identify future HR needs and pay close attention to their recruitment. In addition to recruitment, the whole sector will need to become more proactive in training, encouraging transferable and future-proofed skills to ensure an engaged and productive work force.

Central will be the development of technically proficient workers. Low-skilled roles will diminish markedly and ICT-related knowledge will be vital.

Zupplychain employs algorithmic matching of customer’s search requirements to warehouse availability to show warehouse pricing, along with an automated and structured process to progress enquiries and a cloud based system to manage customer stock in provider’s warehouses.

Unlikely Alliances on the Rise in Disrupted Markets

Amazon’s disruption of the grocery, food delivery and home-care industry could spark unlikely alliances. And these alliances could help take the fight to disruptors.

alliances

With Amazon’s expansion of its grocery deal with Morrisons, its launch of Amazon Restaurants, and a rumoured housekeeping service, incumbents could see unusual partnerships as a means to fend off the retail juggernaut.   

Amazon’s recent advances into the homecare and food delivery market, have followed the much vaunted expansion of its pre-existing delivery deal with Morrisons. The company has also recently announced plans to introduce ‘Amazon Go‘, a shopping experience without checkouts.

There is also a rumoured launch of a new housekeeping service, as well as Amazon Restaurants and Amazon Fresh services. These moves could result in incumbent players taking drastic measures to combat the e-commerce giant.

This is according to Nick Miller, head of FMCG at Crimson & Co, who predicts that Amazon’s competitors could form unlikely partnerships in order to avoid losing ground. 

Shopping on the Go

Amazon announced a couple of weeks ago that it would be extending its existing delivery deal with Morrisons’ to offer one-hour grocery deliveries to selected postcodes in London and Hertfordshire to Amazon Prime Now customers. The service has been named “Morrisons at Amazon.”  

Meanwhile, advertisements were seen in the US media two weeks ago for ‘Home Assistants,’ who would work with customers to tidy people’s homes, do laundry, put groceries away and “assure that customers return to an errand-free home.”

If true, this new service would be another convenience to Amazon Prime Now customers. These customers already have access to Amazon Restaurants (a home food delivery service), as well as both Morrisons at Amazon and Amazon Fresh for same-day deliveries on a massive range of fresh and frozen grocery goods.

When you further consider the potential for an Amazon Go grocery store in the UK, it’s clear the online giant is keen to expand its reach. 

Convenience is King

Miller commented on the moves, and what it means its competitors. “It’s pretty clear that Amazon’s aim is to be the one-stop-shop for all domestic-life conveniences. Whether that be shopping, groceries, takeaways or cleaning, they want to lead the market. It’s an incredibly obvious and yet aggressive strategy,” says Miller.

“Convenience is the key word. The customer, for an annual fee (a Prime subscription), has a central platform where they can access a wide variety of services and products at their leisure, and with confidence in Amazon’s established reputation.

“As this service becomes more and more engrained amongst users, loyalties to competitors will increasingly be challenged. Why go to four places when one does it all?” 

While on paper these plans are impressive, there are questions Amazon needs to address. The key consideration is that these markets often entail more complex service demands and delivery requirements.

Services like Handy and Hassle are dominating players in the homecare market. Deliveroo, has developed a leading position in London’s ‘last-mile’ food delivery market, but this has recently seen threats from Uber with the entry of UberEats.

Meanwhile, many of the big supermarkets maintain grocery delivery services. Ocado, the online grocery specialist which supports Morrisons’ website, saw its shares fall by 8.5 per cent in the wake of the Morrisons news. 

Innovating to Remain Competitive

As Amazon refines and expands its services, these incumbent players will likely need to innovate to remain competitive. Ocado, for example, is likely to suffer considerably as Amazon moves into the food delivery market.

Companies looking to remain competitive will have to match Amazon on convenience, as well as breadth of offering. However, there is potential for innovation across the space that could help organisations here. And this is also where the unusual alliances could come in.

Miller highlights how a ‘last-mile’ deliverer, such as Deliveroo, could partner with a supermarket to offer grocery shopping and takeaways in one service. There’s strong potential and attractiveness in making this service possible. It could also put both in a position to challenge Amazon on ‘Restaurants’ and ‘Fresh’.

As Miller also states, both parties would see major benefits from such an alliance. Deliveroo would access a wider customer base, while the supermarket would get expertise in ‘last-mile’ delivery.

It goes to demonstrate how unlikely partnerships could provide a route to superior service in delivery. Joining forces with local transport businesses, such as taxi firms, could also provide a boost to delivery speeds.

Either way, thinking laterally and tapping into pre-existing networks could help companies to compete with Amazon.  

Still Obstacles for Alliances

These ideas, however, do not come without their own obstacles.

Miller commented on some of these, “These kind of innovations would undoubtedly bring a number of logistical challenges. Not only the alignment of the delivery chain to enable the fastest and best possible experience for the customer, but also the coordination of logistics and digital platforms between two companies.

“However, approaching the problem from this angle could prove vital for any company attempting to see off Amazon.”

Innovating the Last Mile of the Supply Chain

From Amazon delivering your groceries, to a host of companies delivering your dinner, the competition for the last mile of the supply chain is heating up.

Last Mile Supply Chain

At the Big Ideas Summit 2016 last week, there were a whole host of discussions around the future of the supply chain. Paul Markillie discussed the future trends in manufacturing (and you can watch Paul’s Big Idea video too), while Lucy Siegle discussed the increasing need for transparency and ethics in the supply chain.

Ahead of the Summit, we also asked the Procurious community about their Big Ideas for the future of the supply chain, and logistics, industries.

David Weaver, Online Marketing Manager, INFORM GmbH

Big Ideas Supply Chain - David WeaverIt truly is an exciting time to be involved in the supply chain industry. Over the course of 2016, technological advancements in the field of robotics will continue to reshape manufacturing and warehouse facilities.

Based on what I saw at some of the events I attended in 2015, I believe picking bots in large warehouses will become a reality, sooner rather than later. Additionally, the migration of supply chain planning into the Cloud will continue to expand and the implementation of advanced analytics to successfully plan across all supply chain functions will experience an upward trend.

Furthermore, companies will have to get creative with their methods for increasing transparency across their value network. However, in order for companies to be successful, the 4 important T’s of transparency must be fulfilled:

  • The topic must have traction within the organisation,
  • Internal and external trust must be established,
  • Appropriate supplier training programs should be in place, and
  • Today’s available technology needs to be implemented.

Next to all of these leading topics, I expect some of the biggest ideas to be aimed at solving the “last mile” logistics problem. Over the last few years we have seen several last mile logistics providers introduce their innovative approaches to solving the problem (Doorman, Roadie, Deliveroo, etc.).

I expect the fight for control of this market to continue, and as a result of the high level of competition, we will continue to see new, innovative problem-solving methods. 

Even although the event itself is over, there’s still time for you to get involved with the Big Ideas Summit 2016. Visit theBig Ideas Summit website, join our Procurious Group, and Tweet your thoughts and Big Ideas to us using #BigIdeas2016.

In the coming weeks, we’ll be sharing exclusive and unique thought leadership, Big Ideas, and discussion that will shape the future of procurement. Don’t miss out – get involved, register today.