There are two kinds of disruption: positive and negative. An example of the latter would be when mile-long traffic queues disrupt travel and, inevitably, make you late for work. The status quo is disturbed; however, no one benefits.
Then there is the former: positive disruption. This is the kind we are talking about with Gopal R, Frost & Sullivan’s Global Leader for Supply Chain and Logistics Advisory Practice; the kind that causes radical change within an existing industry or market, often arising as a result of technological innovation.
For Gopal, disruptive logistics is particularly thought-provoking, and the benefits are manifold. “We noticed a lot of disruption in the supply chain and logistics space before the pandemic,” he begins. “Yet, as we enter a new world in the wake of Covid-19, there is now more disruption than ever.” But what exactly is disruptive logistics?
“There is quite a lot of confusion around the term,” admits Gopal. “But it can be
broadly defined as a focus on understanding inefficiencies and identifying areas of
improvement within the logistics space.
In doing so, and by providing creative solutions to persistent problems, one is
disrupting the sector.”
Boiled down, it’s about finding an inefficiency, identifying an area of improvement, and then developing a creative solution. By shifting the current paradigm, organizations are rewriting the status quo, thus creating a better and more connected world.
“If you look at things from a cost perspective, much relates back to storage and transportation,” Gopal continues. “Process and value-added services go along with that. As such, we can also define disruption as improvements that are made when shifting from legacy systems to new, optimized processes. Benefits accrue in various areas: digitalization, optimization, infrastructure and modernization enhancements, and so on.
“Whether you are dealing with a developed or developing country, transportation represents a significant part of any logistics spend, ranging anywhere from 50-to-70 percent,” he explains. “Hence, it is imperative that assets are fully utilized. Naturally, the first fragment of the logistics ecosystem to be disrupted was the transport business. Transport aggregation models, for instance, ensure trucks are fully utilized (since, typically, utilization sits at around the 50 percent mark). Models look at last-mile delivery and real-time monitoring to guarantee assets are aided by disruptive logistic practices.”
Another example Gopal points towards is the effect disruptive logistics has on warehousing. “Historically, at least, sales numbers and business volumes could be managed by human beings,” explains Gopal. “Not anymore. Today’s age of e-commerce and mass consumption means we must look towards robots, transforming the way goods are moved and processed within a warehouse.
“In Germany, many start-ups are going one step further, using Augmented Reality (AR) glasses to expedite the initial training period for every new employee – all they need to do is put them on, follow a set of instructions, and away they go.
“Indeed, if you look at Industry 4.0, it suggests a revolution, brought about by novel technologies and processes, will forever change manufacturing. The sector is evolving, and this has led to a new focus on Artificial Intelligence (AI), automation, and robotics. It’s never been easier to capture data and store it – there’s so much being collected right now. In a warehousing context, you have collaborative robots, which will continue to learn as they gather more data on what products are being picked and how often.”
While the pandemic certainly increased volumes from an e-commerce perspective, it also accelerated the pace of digitalization. “Prior to the pandemic, supply chain digitalization was talked about by companies,” reflects Gopal. “But now there is no escaping it. The times mandate immediate action. Moreover, demand for 48-hour, 24-hour, and same-day delivery has forced logistics companies to generate innovative delivery models and establish new micro-fulfilment centers.
“Powered by AI, real-time tracking provides the dynamic scheduling and (re)routing required for this procedure and allows logistics companies to optimize delivery processes without the risk of human error. Digital twins, moreover, support companies throughout the design stage, enabling them to withstand disruptions, or bounce back when they inevitably arise, learning from simulated events before real-world issues occur.
“Another important point to make is that in the pre-pandemic world everybody knew we were connected,” he goes on. “Yet, when borders closed, people soon realized that despite this we weren’t integrated. Consequently, this led to a complete breakdown in the supply chain. Integration requires real-time visibility and resilience, thereby ensuring seamless supply chains, regardless of geographies and supplier tiers, for instance.”
Looking ahead, the Internet of Things (IoT) promises to create a more interdependent network of data and communication stores. Gopal pinpoints how this will affect supply chains and, perhaps more interestingly, the ways in which IoT enhancements can lead to greater sustainability. “The IoT is central where supply chain is concerned,” he observes. “In fact, it’s anticipated that IoT devices will reach almost 50 billion units by 2030, enhancing visibility across freight and logistics services. This can be for monitoring products in a shipping container, revealing fuel consumption rates in vehicles, or measuring greenhouse gas emissions.
“These devices also facilitate dynamic scheduling and planning, alerting, for instance, delivery drivers of any disruptions or changes to routes in real-time. In short, IoT enhances the integration of assets and therefore encourages better visibility, which will make supply chains more resilient.
“In terms of sustainability, IoT has myriad applications for transportation and warehouse optimization since devices will show energy and material use. For example, one can track a variety of factors, like the amount of non-recyclable or recyclable materials available, aiding the emergence of a more circular economy.”
AI, digital twins, blockchain, IoT – all these technologies have an important role to play when it comes to disruptive logistics. Disruption is, of course, enabled by technology; but, as Gopal points out, it needs to result in solvable and advantageous solutions that are commercially viable.
“Indeed, viability is often overlooked – but it’s crucial,” he concludes. “That’s why, unfortunately, a number of new start-ups fail despite having the best technology. Underpinning this, however, is people – this factor is often taken for granted. With the right technology, individuals can increase their productivity tenfold. The future will present many opportunities for handling this people element better, and in doing so, it will bring about the next level of disruption in the logistics space.”