The fourth industrial revolution or Industry 4.0 has begun to emerge from the “Smart Factory” initiative led by the German government as part of its efforts to reinvigorate the nation’s manufacturing. It was during the World Economic Forum Annual Meeting 2016 in Davos that the phrase ‘fourth industrial revolution’ was first officially used. After only two years, the term is now widely used across a number of industries as well as in our daily lives.
In this special two-part series of white papers, we’re going to look at how Industry 4.0, already touching everything in our daily lives, is being applied in logistics and what Samsung SDS is doing to lead the trend. This first white paper explores an overview of Logistics 4.0 and cases in logistics and SCM.
Logistics 4.0, a New Beginning of Logistics
With the rise of the fourth industrial revolution, logistics is now at the forefront of transformation. How is Industry 4.0 reshaping logistics and SCM?
What is Logistics 4.0?
Innovation in logistics began a long time ago with mechanization of transport enabled by trains, cargo vessels, and automobiles. After being evolved to systemization of logistics based on electronic communications, logistics is increasingly moving towards automation with the help of key Industry 4.0 technologies, such as IoT, AI, and big data.
Key Industry 4.0 Technologies & Logistics 4.0
Key technologies driving Industry 4.0 are AI, big data analytics and IoT. Advanced logistics facilities and services developed by these technologies are ushering logistics/SCM to the age Logistics 4.0.
Now, as supply chains become ever more complex with different stakeholders involved, there are so many documents to verify and long processes to go through. Logistics, which connects each part of a supply chain, is no exception. Under such circumstances, blockchain is expected to bring a paradigm shift by reducing human errors used to occur during the long logistics processes and guaranteeing reliability. IoT devices and big data analytics will help retailers figure out inventories spread all over the world. Robots will deployed to do simple, repetitive warehouse work. Using VWS1), warehouse managers will be able to know the current status of their warehouse from distance. In addition, self-driving trucks, drone delivery and other advanced technologies and services are leading Logistics 4.0.
1) VWS: Virtual Warehouse System
How Logistics 4.0 is Transforming Logistics Operations
These are actual cases of how Logistics 4.0 is transforming operations in different logistics processes.
Cases by Logistics Process
1. Inbound Logistics – BMW’s Connected Supply Chain
BMW receives parts as many as 7,000 sea freight containers from 1,800 suppliers worldwide. Describing logistics as the “heart of BMW’s production system”, the auto company works to sync its global supply chain with production lines and maximize productivity, using robots, IoT and big data analytics.
2. Transport – DB Schenker & MAN Truck Platooning
In addition to self-driving vehicles that we hear quite often, truck platooning tests are actively underway. Platooning involves a number of trucks closely following one another, connected wirelessly using vehicle-to-vehicle communication. The truck at the head of the platoon acts as the leader, with trailing vehicles reacting and adapting to changes in its movement. If it’s used in real life, it will help reduce labor costs of drivers and lower fuel consumption as air-drag friction is reduced significantly.
3. In-Store Product Placement, Inventory Management – Levi’s IoT
Clothing company Levi’s collects in-store customer traffic data using IoT solutions and analyzes how they’re related to sales to create strategies for product placement. Also, IoT solutions show how many stocks are left on each shelf, helping store managers decide when and how many they need to order.
Cases of e-Commerce Retailers
Amazon, the world’s no. 1 e-Commerce retailer, has been using data analytics to offer faster delivery long before Logistics 4.0 has become mainstream. Amazon uses a method called “Anticipatory Shipping” to ship items to a local hub where it thinks particular items will sell well by figuring out what a person might want. A customer’s previous orders, product searches, wish lists would all be analyzed to do the work.
Alibaba, the biggest e-Commerce company in China, runs online-to-offline (O2O) supermarket Hema Xiansheng, using its fintech and logistics infrastructure. At Hema stores, shoppers don’t need to push trolley down the aisle or stand in line for checkout. All they need to do is scanning a QR code of the items they want to buy and paying with Alipay, Alibaba’s mobile payment app, and their order is placed.
British online supermarket Ocado is one of the leading companies at the forefront of adopting robots in warehouse operations. Instead of older conveyor-belt style systems, the retailer installed a grid system which consists of 250,000 storage locations in its new fulfillment center. Around 1,100 robots glide across the grid, picking up items as ordered and taking them to a pick station.
We have so far looked at currently unfolding Logistics 4.0 and its cases. From these cases, we can summarize how logistics will be reshaped as follows.
First, intelligent supply chains will be developed. Using big data analytics and AI, companies will analyze previous purchase history of their customers, make a highly accurate demand forecasting and adjust their inventories accordingly from the start of manufacturing process to avoid stock-outs or overstock of their final products. In retail, the rise of smart SCM will be accelerated. Retailers will be able to secure items in advance which they think will sell well and recommend them to customers while reducing inventory levels as well as delivery lead times.
Second, it will become essential for retailers to provide global shipment visibility, manage cargo at their best quality and offer instant delivery. They will need to be able to inform customers of shipment location and status through real-time tracking and monitoring, using their integrated logistics platform covering the entire logistics process. Also, they will aim to provide instant delivery in which the current three-day shipping turns to a 24-hour delivery or an instant delivery.
Third, companies will continue to lower product prices and reduce costs by driving innovations with new emerging technologies. Robots, self-driving vehicles, paperwork automation will eliminate simple and repetitive work scattered across logistics processes, which will then lead to cost reduction and higher service quality.
To find out more about smart logistics of Samsung SDS, visit Cellologistics.com and download the white paper.