By William DiBenedetto
A big reason for the rise in mergers and acquisitions is that logistics, 3PLs and transportation companies realize they can create technological synergies and efficiencies along the supply chain by combining their e-commerce and transportation management platforms.
Earlier this month DHL and Cisco Consulting Services released a Trend Report noting that the so-called Internet of Things (IoT) will boost supply chain and logistics operations by nearly $2 trillion over the next decade. IoT is generally defined as the connected network of physical objects, or "things," embedded with electronics, software, sensors and connectivity to enable greater value and service through the exchange of data with the manufacturer, operator and/or other connected devices.
The numbers are huge. According to Cisco’s economic analysis, IoT will generate $8 trillion worldwide in "Value at Stake" over the next decade. This will come from five main drivers: innovation and revenue ($2.1 trillion); asset utilization ($2.1 trillion); supply chain and logistics ($1.9 trillion); employee productivity improvements ($1.2 trillion); and enhanced customer and citizen experience ($700 billion).
The $1.9 trillion in Value at Stake for the logistics industry over the next 10 years means that "bountiful opportunities exist for logistics providers to leverage IoT in their organizations in order to increase productivity, re-engineer existing processes and provide new services that challenge traditional business models," according to Rob Siegers, president of global technology at DHL Customer Solutions and Innovation. "However, (deriving) significant commercial value from IoT will ultimately depend on how well connected assets, such as containers or parcels, are networked along the entire supply chain. This of course entails close cooperation and collaboration between all players in the logistics industry."
"By connecting the previously unconnected, we create incredible potential for businesses to improve the speed and accuracy of decision making through the analysis and application of digital information," says Edzard Overbeek, senior vice president, Cisco Services. "It enables dramatically faster cycle times, highly dynamic processes, adaptive customer experiences and, through the ecosystem of people and technology, the potential for breakthrough performance gains."
This means that transportation and logistics will examine, or re-examine, how their TMS, WMS, smart containers, and digitization and communications protocols are connected and working together in the IoT age. DHL’s Global Connectedness Index last
year revealed the overall level of global connectedness remains somewhat limited.
Connectivity is occurring to a degree, but there’s work to do. Some recent examples:
- CMA CGM this month launched a real-time container tracking mobile application for its clients. This came after the company announced its investment in startup TRAXENS, which specializes in container geolocation.
- "Total logistics cost is only part of the picture for today’s ever changing, dynamic supply chains," says Damian Burke, a director of business development for Ryder. He says using supply chain scorecards, more granular metrics or key performance indicators (KPIs) can be tracked to gain insight from past performance, permit enhanced overall management and to proactively drive continuous improvements.
- Hong Kong-based SITC Shipping Group and SIPG container shipping arm Hai Hua announced in February they will upgrade their entire container fleet to smart containers using products from Loginno.
- Dot Foods and Victory Packaging recently upgraded their warehouse management systems to the "next generation" IBS Dynaman Warehouse Distribution Management System. IBS stresses the importance of building a company/supplier partner relationship that includes the right technical tools, functionalities, support and clarity on desired outcomes, KPI goals, costs and benefits.
IoT holds promise for "far-reaching payoffs for logistics operators and their business customers and end consumer," according to the DHL-Cisco Trend Report. "These benefits extend across the entire logistics value chain, including warehousing operations, freight transportation, and last-mile delivery." Areas such as operational efficiency, safety and security, customer experience, and new business models would be impacted. "With IoT, we can begin to tackle difficult operational and business questions in exciting new ways."