Why IoT Drives the Logistics Industry

In the logistics industry, the increased requirements in terms of transparency, deliverability and on-time delivery, as well as the desire for individualised products or services, are the main market drivers of digitization. In this context, the Internet of Things (IoT) is becoming an important driver and an integral part of new service offerings. IoT solutions increase the efficiency of supply chains and provide competitive advantages. But what is the best way to get started if you want to advance digitization with smart IoT concepts for your logistics company? We have some answers for you.

Whether smartphones, exciting IoT solutions for a smart home, the use of artificial intelligence or music from the cloud: in many private households, future technology is already part of everyday life. At the same time, many companies are still very hesitant when it comes to digitizing their processes. Digitization offers unseen opportunities - for the logistics sector in particular. For example, can you imagine online retailers like Amazon or Zalando being so successful without digitized logistics? The consulting firm Roland Berger picks out four trends that will shape the future of the logistics industry.

1. Networking: Customers are directly connected with logistics companies via online platforms, which optimizes processing and transport capacity and reduces freight costs. Simple shipments will in future be processed much more efficiently and cost-effectively. To be able to act together as neutral platform providers, logistics companies should, therefore, consider cooperation models.

2. Platforms: Freight carriers and terminal operators will in the future need to use the latest technology to optimize operations and costs. By putting together special freight packages, they are not only dependent on orders made on the booking platform. Companies with simple logistics chains in particular, for example in shuttle transport, can thus save on platform booking fees. Setting up their own online platform in cooperation with other freight carriers and terminal operators is another possibility.

3. Automation: If industry-specific know-how is required, supply chain specialists will continue to handle complex delivery processes. But to make the increasingly complex supply chains more efficient and transparent, specialist niche providers need to automate their processes more extensively. The challenge here is keeping up with technological leaps and staying innovative. They also need to remain competitive in terms of price. To this end, it makes sense to cooperate with digital service providers.

4. Partnerships: Service providers are at the heart of digital logistics: as well as many other services, they provide software products and solutions for the collection and systematic evaluation of large amounts of data. This could be online payment systems or GPS tracking systems, but also automated customs clearance.
For all these points, the Internet of Things is a critical component for continuously improving processes.

Transport logistics 4.0

Due to the increasing importance of e-commerce and B2C market presence, logistics volumes are becoming ever larger, while individual orders are more complex. Overall, logistics will have to process more damages and returns in the supply chain in the future. The Fraunhofer Center for Applied Research on Supply Chain Services has summarised the state of digitization in the logistics sector in a study under the heading “Transport Logistics 4.0”. It shows how heavily the transport industry has already been affected by digital transformation and why developments have only just begun. In short, the study defines it as follows: “Transport logistics 4.0 is the data- and network-based support of inter-company transport using digital technologies for more transparent, agile and efficient control, organization, execution, and handling.”

According to a Bitkom study from March 2017, the vast majority of companies are already using digital technologies in logistics. 84 percent of those surveyed use special solutions, six percent are specifically planning to use them, and at least another six percent envisage doing so. In terms of current and future IoT maturity, logistics is ahead of other sectors in almost all aspects. Its equipment is currently better networked and it has more IoT project experience. As digitization and the availability of IoT solutions progress, expensive warehouse inventory management, the forklift trucks that carry pallets back and forth and the trucks that ship orders to distributors may soon be outdated concepts.

The future is here

Logistics will change completely thanks to IoT – and the Bitkom study refers to specific examples: three-quarters of companies surveyed expect that data glasses will be widely used and support logistics staff, for example with additional information displayed. Two-thirds believe that self-learning systems will take over many logistics tasks, such as planning the best route or initiating the order process. 58 percent of respondents anticipate that autonomous drones will carry out the inventory of warehouse stock. Autonomous vehicles are already being used to transport goods. According to the survey, drones and delivery robots will bring products to customers in the future. “Logistics is already one of the most digital business units,” says Dr. Bernhard Rohleder, CEO of Bitkom. “But with drones, autonomous systems, and artificial intelligence, it is not only an optimization of business processes that lie ahead for logistics but a genuine revolution.”

IoT was very important in logistics at an early stage – long before the term even existed. For many years, packages have been shipped with a bar code or QR Code, which contains information about the sender, recipient and the freight itself. Thanks to constant data entry by a scanner, it is almost possible to track packages in real-time. But nowadays, the Internet of Things can do considerably more. Fully digital supply chain management thus provides many opportunities for increasing productivity and efficiency, as well as for improving customer satisfaction. But simple tracking is no longer enough. Today, customers don’t just want their goods quicker, they also want to know at any time, where they are, when they are expected to arrive and perhaps even, what condition they are in – for example, for perishable goods.

From manufacturing to the front door

For example, a completely digitized supply chain begins with the inventory of raw materials being monitored by sensors and protected against theft, in order to prevent shortages of raw materials from the very start. For production, machines interact both with each other and with people. So, technicians know in advance if certain functions in a machine are threatening to fail. Thanks to the IoT, machines can be serviced remotely or repaired with software updates. When the finished products are delivered, packages can be tracked and their status can be continuously monitored – even from overseas. Delivery vehicle routes can be optimally controlled with current locations and traffic conditions being constantly transmitted to a control center. The basis for the networking of raw materials, machines and packages is the radio technology Narrowband IoT, which is designed for the regular transfer of small amounts of data and the cost-effective networking of multiple devices. Even behind thick walls and deep underground.

Because one thing is clear: to stay ahead of the competition, digital logistics needs to operate and communicate more interactively, more quickly, more securely and more reliably. For companies, IoT is an opportunity to consolidate information in real-time, analyze it and as a result, better manage resources, optimize processes, reduce costs and enhance customer relationships.