Already upended for two years by the COVID-19 pandemic, the worldwide logistics industry is facing new challenges.
With gasoline prices reaching record highs, transportation managers must make smarter decisions that minimize road miles and associated costs. While demand is high, ongoing product shortages continue to cause supply chain disruptions, create unpredictable shopping behaviors and drive rapid delivery expectations. The industry’s well-documented labor shortages are not ending anytime soon. The energy crisis in China and the European conflict are bringing additional chaos in the form of production shutdowns, raw material shortages and blocked shipping lanes.
If there’s a bright spot anywhere it’s the fact that, as logistics challenges have grown, so has the availability of advanced technologies to manage these challenges. Artificial intelligence (AI), machine learning (ML), predictive analytics and robotics once seemed incredibly sophisticated and out of reach — but today they’re easily accessible to every company. Both anecdotal evidence and research studies demonstrate that enterprises leveraging these advanced capabilities have fared much better than other companies during the extreme volatility of the past two years. And it’s safe to assume that logistics digitization will continue to deliver a significant competitive edge as supply chain complexity and uncertainty grow.
For logistics teams seeking to manage volatility and deliver more predictable, profitable results, five advanced technologies should be in their toolkits: digital control towers, warehouse task automation, warehouse robotics, dynamic price discovery and digital freight bidding. Organizations that aren’t actively investing in these capabilities, which are described in greater detail in this article, are already falling behind — and they risk losing even more ground as business conditions become more and more difficult.
Digital Control Towers
Digital control towers sit at the heart of the supply chain ecosystem, gathering real-time data on current conditions. They enable logistics teams to identify disruptive events such as transportation roadblocks, missed incoming deliveries, asset downtime and labor shortages. They make it easy to share this information both internally and externally, so the end-to-end supply chain can immediately respond in a synchronized manner.
For logistics teams, digital control towers add maximum value when they’re integrated with the transportation management system (TMS). This allows all transportation resources to be leveraged in creating a response, including the extended carrier network. It also enables the control tower, enabled by AI and ML, to apply predictive analytics, run scenarios and make recommendations that are automatically and seamlessly executed by the TMS. This combination is helping the world’s leading logistics providers move closer to operating an autonomous, self-correcting supply chain that pivots at the speed of change.
As logistics organizations dynamically plan and re-plan carrier selection, distribution networks, delivery routes and frequencies, loads and capacities in real time as conditions change, the benefits can be enormous. In a study commissioned by Blue Yonder, it is estimated that a typical $10 billion company can save $14.1 million in transportation savings over a three-year period by leveraging a TMS.
According to executives who have benefited from this combination of advanced technologies, one of the greatest benefits is gaining real-time visibility across the extended logistics network. “We wanted to see inventory positions around the world compared to our forecast, compared to our actual demand. We wanted to see what things are in transit as well as identifying where there are delays and whether they would cause stock outages,” said the director of supply chain for a health technology business who was quoted in the report.
Warehouse Task Automation
Another advanced technology that’s becoming imperative is warehouse task automation. The study predicts that a $10 billon company can realize over $31.2 million in cost savings over three years by improving warehouse scheduling and processes, as well as reducing labor requirements via enhanced productivity.
Since a single warehouse worker represents $50,000 in annual costs — and talent is extremely scarce — it makes sense to optimize the accuracy and efficiency of every task. Digital warehouse tasking solutions rely on ML to continuously identify opportunities for efficiency and cost savings, then unlock them to optimize daily operations in real time.
In today’s volatile marketplace, it can be nearly impossible to meet customers’ expectations for service and delivery while still protecting profit margins. Keeping up with demand changes means constantly adjusting staffing levels, inventory positions, equipment placement, employee-specific task lists and priorities, and other warehouse parameters. Delivered in a software-as-a-service (SaaS) model, warehouse tasking solutions gather real-time, 24/7 operations data, flag issues and generate an autonomous response. As conditions evolve, so do labor schedules and priorities, driving a fluid, responsive and profitable warehouse environment. Warehouse operations are tied to a probabilistic demand forecast, but able to react to changes quickly and automatically.
According to another recent study, the worldwide market for warehouse robotics will increase from $4.4 billion in 2020 to $15.79 billion by 2030 — an annual growth rate of 13.2%. A similar report predicts that, by 2026, 75% of large companies will use some form of smart robotics technology in their warehouses.
Given ongoing labor shortages, as well as the health risks and physical vulnerabilities of human workers that were emphasized during the COVID-19 pandemic, warehouse robotics make good business sense. By leveraging robots to pick items, move pallets, deliver goods and complete other tasks, companies can increase speed, accuracy, efficiency and reliability — while significantly reducing labor expenses. Today’s robots incorporate new levels of intelligence, agility, guidance and environmental awareness, which means they can execute a range of warehouse tasks with little to no human intervention. As demand ebbs and flows, they can easily be scaled to match execution requirements.
In identifying a warehouse robotics solution, a key consideration is the amount of time and effort required to onboard the new technology, integrate it with the warehouse management system (WMS) and begin earning a return on investment. DHL Supply Chain is implementing robotics at 2,000 operational sites around the world. By using a new robotics platform it developed with Blue Yonder and Microsoft, DHL can quickly connect robotics with an existing WMS. The new platform quickly reduced robotics integration time by 60%, and DHL is targeting a 90% reduction as the platform is rolled out globally.
Dynamic Price Discovery
As extreme demand shifts continue, transportation planners are spending enormous amounts of time and effort to ensure that carriers have the right capacity, at the right price, on extremely short notice. A dynamic price discovery solution addresses this challenge by providing on-demand access to real-time market rates.
Dynamic price discovery solutions act as a single point of integration for shippers and their partners, replacing tedious manual processes with single-click speed and accuracy. Transportation planners can dynamically access the best freight rates across both contracted and non-contracted carriers, enabling them to procure additional capacity during peak demand periods. By seeing real-time prices — which reflect current demand-and-supply effects — they can make better informed, more profitable tendering decisions.
Executives interviewed in the study mentioned above confirmed that dynamic price discovery capabilities have contributed to a more strategic use of carriers and a significant transportation cost savings. “[Dynamic price discovery] has allowed us to significantly increase our use of primary carriers while reducing our spot market use,” said the director of a manufacturing and supply chain systems for a food service products company. “Our primary carriers are now at 90%, up from 75%, while our spot market use has gone from around 2.5% to less and 0.5%. With spot market rates frequently 2 to 3 times our primary carrier rates, this change has been huge for us.”
Digital Freight Bidding
In today’s fast-moving logistics landscape, freight bidding is a powerful tool for balancing service with cost control. However, the process of managing bidding engagements, receiving carrier proposals, optimizing bids, facilitating awards and managing contracts via manual methods is time- and cost-intensive. It slows responsiveness and drains scarce labor resources.
Leveraging a digital freight bidding solution, delivered via a SaaS model, automates and accelerates this process. By connecting a logistics team with its entire carrier network in near real time, digital freight bidding solutions provides one unified platform for this process, configured to optimize collaboration and communication. Incumbent carriers can easily be renewed, while back-up carriers can also be specified.
Digital freight bidding solutions enable logistics teams to quickly define rules and constraints, invite carriers to participate and achieve maximum cost savings in mere minutes via a robust bid optimization engine. By also considering carrier performance metrics, the decision engine can intelligently balance cost with service. By leveraging digital freight bidding capabilities, companies have reduced their truckload costs by up to 12%, with value realization within 12 weeks enabled by a SaaS hosting model.
The Stakes Are High — But So Is the Return
Chaotic supply chain conditions have impacted every business function, but logistics
teams have been hit especially hard. Because warehousing and transportation represent significant cost centers, logistics organizations are under special scrutiny — pressured daily to make intelligent, profitable decisions on the fly.
The five advanced technologies outlined here can help, by making frameworks as seamless as possible, increasing collaboration across organizations, and enabling both inbound and outbound visibility and control. Forward-looking logistics organizations are already earning a high return on their investment in these solutions as they identify upstream and downstream changes, analyze possible actions and execute a synchronized response that automatically balances costs with service outcomes. As global disruption continues, digitization is the way to win in this high-stakes environment.
Terence Leung is Senior Director, Solutions Marketing at Blue Yonder. He has a keen interest in digitalization and the value it generates throughout the supply chain. In this role, he leads his organization to drive thought leadership and go-to-market strategy for supply chain execution and logistics solutions. In addition, he works with customers to understand requirements and drive best practices in the digital journey.
Prior to joining Blue Yonder, Terence was the leader in product marketing and value engineering at One Network. Previously, he was in leadership positions in industry management at Savi Technology and solutions and management consulting at i2 and Deloitte Consulting, respectively. Terence holds an MBA from the University of Texas, Austin and an Electrical Engineering degree from MIT.