The Logistics Industry is ripe for disruption and consolidation

Technology is poised to disrupt the supply chain and logistics industry after a tough year

During the Covid-19 crisis, many people across the globe realized how vital it is to add as much intelligence as possible to our supply chain and logistics networks. Logistics providers were overbooked and overworked, and supply chains were stretched to their limits. Somehow, fortunately, the system held together.

It has become apparent that this is an area that is ripe for disruption. Technology initiatives such as the Internet of Things, mobile apps, artificial intelligence, and potentially blockchain technology promise to remake the logistics sector.

As with everyone else, logistics companies are becoming software and data companies. As a result, there are many opportunities for technology professionals and entrepreneurs seeking to make a difference.

Scott Sureddin, North America CEO of DHL Supply Chain, has been watching these opportunities unfold firsthand and agrees this is a sector ripe for major disruption. The industry “has attracted a lot of attention from entrepreneurs, innovators, and technology investors who are looking at opportunities to disrupt the industry,” he says. “Logistics is an industry that has huge potential to benefit from technology, due to the fact that many companies still employ a lot of manual processes in their operations,” he says. In addition, “there is a huge amount of data generated — often processed inefficiently — and there is a lot of inefficiencies, both in the utilization of capacity and in areas such as the last mile.”

While disrupting an industry with massive fleets of trucks, trains, planes and ships is not an overnight process — “we do not think that it will be easy to fundamentally disrupt the sector with technology – due to cost pressure and the vast number of variables in any supply chain,” Sureddin says — technology will certainly upend the traditional ways business has been done. “We strongly believe in the power of technology to significantly boost productivity, increase efficiency and give companies better visibility and forecasting ability,” he says.

DHL is investing more than $300 million in emerging technologies alone in North America, Sureddin says. Technologies such as cloud, AI, digital will help boost businesses in this space. “Artificial Intelligence can impact companies’ supply chains both directly and indirectly,” he says. “Directly, it can enable them to better analyze the vast amounts of data that are generated within any supply chain and provide enhanced forecasting ability, which in turn allows them to optimize inventory levels and reduce exceptions. Indirectly, it can provide the platform on which new technologies – such as collaborative robotics and autonomous vehicles – can operate and continuously improve their performance and effectiveness.”

Logistics and supply chains will be transformed by at least 14 technologies, Sureddin says. He notes that collaborative robotics, autonomous vehicles, and artificial intelligence have had the greatest impact on productivity for DHL. Using collaborative robotics, in particular, has already improved productivity in our customers’ operations, reducing labor costs and improving safety. Other benefits include “reducing manual errors, increasing pick rates, and even reducing onboarding time for new hires from weeks to just two days.”

Moreover, DHL plans to have more than 1,000 LocusBots in operation at 12 locations in North America, he says.  

The sector is also seeing new types of business models evolving as well. “One of the biggest drivers of change within our sector is e-commerce, both in terms of retail and also the use of e-commerce in other sectors,” Sureddin says. “For example, in industrial sectors, where some manufacturers are starting to bypass distributors and other intermediaries with direct-to-consumer offerings.”

This is reshaping the supply chain, “with the profile of SKUs changing — usually becoming smaller and more varied — and customers being challenged to implement omnichannel strategies to serve their customers via different channels,” he continues. He also is seeing the rise of digital freight platforms, “which have the potential to increase the efficiency of freight transport by connecting more available capacity with shippers and improving utilization.”

Compared to 3-5 years ago, the supply chain and logistics sector has already changed significantly,” Sureddin says. Technologies are being deployed at a faster rate across all sectors, and this is being accelerated as they become more advanced, more accessible, and more integrated. As a result, more solutions are becoming interoperable, including collaborative robotics that can communicate across activities.”

In addition to changing shipments and batch sizes, e-commerce has also changed transportation networks by increasing direct-to-consumer orders and challenging businesses to embrace omnichannel access. “Technology has become even more important as companies seek to make their supply chains more flexible, responsive and efficient, while also addressing the labor shortage in the warehousing and transportation sectors.”