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The processes enabling the movement of finished products, and the various components that make them to consumers or from one organisation to another, are complex. Comprised of numerous moving parts, supply chains are fragile – and their vulnerabilities have been exposed in 2020.
Otherwise reliable and robust logistics models have been stretched and, in several instances, broken by the COVID-19 pandemic, with networks dependent upon goods crossing international borders having been affected most. Research conducted by the European Maritime Safety Agency has revealed that, in the first 34 weeks of 2020, 15.5% fewer ships docked in European Union ports than throughout the same period in 2019. The number of ships travelling from Europe to China fell by 49.1% and from China to Europe by 28.6% over the same period. In addition, 28.2% fewer ships travelled from Europe to the US; there was a 38.3% drop in vessels journeying from the US to Europe.1
In direct response, many organisations have looked to revise and strengthen their supply chains. Alternative sources of materials – even alternative and more accessible materials themselves – have been sourced. Routes have been revised and plans to make inventories more resilient have been realised. Further improvements, however, need to be made before chains can be viewed as truly robust. Processes must be made more efficient, with less reliance placed on people and more on machines. The following are prominent examples of how technology can enhance logistics models both now and in the not-too-distant future:
Introducing connected devices and robotics to warehouses can streamline processes and reduce costs. Research has shown that warehouse employees spend approximately 50% of their time travelling between the items they are tasked with picking and packing.2 Further studies have shown that labour costs account for between 50% and 70% of distribution centres’ expenditure.3
Robotic pickers, unlike their human counterparts, require little time to comprehend the locations of items and can also travel more rapidly meaning that they can fulfil orders with greater efficacy. And with deep learning powering their reported 99.5% accuracy rate4, these automatons are less error prone than humans, too.
Along with reduced staffing costs and faster fulfilment, connected devices can be used to maintain desired temperatures, turn off unused devices, automatically check stocks, etc. to optimise building maintenance outlay.
A digital twin is essentially a virtual replica of a physical object. Harnessing various form of leading-edge tech – including AI, spatial networks, big data and analytical tools – these renderings replicate the behaviours of their physical real-world equivalents. This allows decision makers to test hypotheses and their likely outcomes with remarkable accuracy.
The need for packaging that is both environmentally friendly and able to protect the item contained within it presents a considerable challenge. Digital-twin technology, though, provides a tool with which potential solutions can be tested whilst providing highly accurate results with little outlay.
Furthermore, this technology can be used to glean an understanding of how larger objects such as shipping containers, lorries or cargo vessels can be best utilised. Digital-twin technology will allow peak capacity to be determined by calculating how much cargo each can safely and securely transport.
For more than a decade, IMRG – an association representing online retailers in the UK – have conducted an annual survey amongst consumers who order goods and services online. These surveys consistently found that online shoppers believed that ecommerce was more environmentally friendly than the high street. Owing perhaps to the excess packaging mentioned previously or the increasingly large network of vehicles being needed to fulfil orders, the organisation’s 2019/20 report showed that the majority of online consumers now view online shopping as the less ‘green’ option.5
In addition to this, maintaining a large fleet of vehicles for deliveries is expensive and, with drivers needing to collect the orders for a specific area, deliver them, and then return to a depot to collect other items, inefficient. Following a landmark hearing in the US, however, a more environmentally friendly and productive solution could soon be available.
Retail giant Amazon have long intended to utilise drones in the final part of their logistics chain. The company’s plan was to use autonomous unmanned vehicles to transport items from small distribution centres directly to customers. Red tape has prohibited them from doing so to date, but with the US Federal Aviation Authority now approved their application to trial drone deliveries6, they are expected to begin trialling drone deliveries shortly.
As well as reducing the impact logistics has on the environment, drones are likely to enable speedier deliveries and offer lower transportation costs. They are, however, currently only able to cover 15 miles at any given time, have limited capacity and can only be used in daylight and when there are no adverse weather conditions. These problems are, however, likely to be addressed if the aforementioned trial is successful.
Blockchain is a virtual record of transactions that leverages automation for speed and convenience. The records that are generated are also shared across multiple devices and are impervious to doctoring.
This technology could be used to automatically notify parties of when an order has been dispatched, its successful arrival, etc. In doing so, the need to manually scan each item would be negated at both points. As it also serves as an effective data-cleansing tool, Blockchain can also help decision makers better understand how their supply chains operate.
There were, as noted above, significant declines in the number of seafaring vessels travelling from continent to continent in the first 34 weeks of 2020. In order to stop people from spreading COVID-19 throughout the international community, restrictions were placed on overseas travel. This, as well as a dearth of skilled crewmen brought about by a need for potential carriers of the virus to self-isolate, was behind declining traffic – and the resultant disruption to supply chains.
Automation and AI could provide a solution to such problems in the future: whilst they have received far less coverage than autonomous cars, the automated cargo ship is in development and its creator, Rolls Royce, expect to have a fully functional version ready by 2025. It will, the company claims, be able to carry cargo for 3,500 miles and 100 days without manual input.7 This would, of course, have completely negated the disruption the logistics sector felt when crewmen were unavailable and ports were unable to let manned vessels dock.
Of course, 2025 may prove to be an impracticable deadline for fully automated ships, but Rolls Royce have reported that they have been able to operate ships with smaller crews as a result of the technology they’ve created as part of the development process. It is feasible then that, as fewer people will be needed to operate them, the number of cargo ships in operation could increase. The costs of shipping cargo could fall considerably as a result, and this is likely to benefit both organisations and consumers.