It’s understandable if retail logistics executives are feeling like the overwhelmed ball players in that famous meeting on the mound in Bull Durham. As Crash Davis said, “We’re dealing with a lot of sh*t here.”
There is a lot going on in the world of logistics. Retail execs can either identify and lean into the trends to lower costs, improve customer service and increase revenue, or they can get run over. Here are three trends to get on now and two more retail executives need to start thinking about now.
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Building a virtual control tower
Logistics is already replete with technology. The next step is breaking down the walls among the various systems, so they can integrate into a central, virtual control tower that benefits both from advances in artificial intelligence and real-time visibility that enhances human decision-making.
Artificial intelligence (AI)
Transportation and warehouse management systems will increasingly use AI to most efficiently manage truckload and route planning, which will also communicate with inventory management systems to best analyze where certain goods are needed by when.
Real time visibility
Accurate, real-time inventory counts that are visible to everyone along the logistics chain is becoming expected. Knowing the status of inventory or material in route. Getting real time notifications of operational statuses, including trigger flags alerting people to pending exceptions or developing conditions. Having broad, system-wide visibility at points through the logistics map empowers managers and monitors to make data-based, real-time decisions quickly, to head off potential disasters or take advantage of a new set of circumstances.
Even better, being able to build a centralized control tower that can see the big picture and small details of an integrated network of in-house and supplier technology doesn’t have to be physically centralized. Using these technologies to build a virtual control tower requires fewer local resources and opens retailers to a broader talent pool.
The continued rise of third-party players
Technology is also creating new opportunities for retailers to use third parties to optimize their logistics operations. Third party logistics (3PL) players are providing more options for access to dynamic warehouses or even just rack space, as well as for fulfilling short-distance shipping needs. Uber is just one player getting into digital freight matching (DFM) or “crowdsourcing” freight. Indeed, Uber is looking to create a national DFM network. DFM apps are expected to help both retailers and truckers reduce the problem of unutilized freight space and the empty runs back to the warehouse after dropping off their loads that keep trucking costs high.
As 3PL technology and service offerings get more creative, it’s leading to the rise of 3PLs, and the growing of 4PLs that help manage it all, to take on the role of consultative service provider.
3PLs and 4PLs can create multiple IT touch points between their service and the retailer’s virtual control tower, from on-truck sensors to back-end integrations. The level of IT sophistication a 3PL/4PL can offer, along with the expertise to help retailers reap the greatest benefit from their services, will differentiate having strategically valuable logistics relationships and simply spending money on a fixed need.
The 2017 Third-Party Logistics Study, conducted jointly by Penske, PennState and Capgemini Consulting, found that both the majority of shippers and 3PLs felt that 3PLs are offering more innovative ways of improving logistics effectiveness, and that shippers are looking to take advantage of 3PLs’ expertise and improving IT services.
Winning the last mile
Many of these trends converge to help retailers win the last mile of delivery, that most costly mile. Especially for consumer-destined e-commerce. Innovative ways to deliver smaller loads to more drop-off spots can help minimize many of the costs of the last mile, such as missed deliveries requiring a second pass, and inefficient routing.
Look for more micro-delivery options, such as Uber tapping into its network of drivers to also deliver packages, Amazon using private drivers for same day delivery, and shippers offering alternative delivery options utilizing bicycle delivery or other light vehicle delivery. Winning the last mile also entails increasing the drop-off and return points, using retail shops e-commerce fulfillment locations, setting up micro-warehouse locations, and using parcel lockers.
McKinsey’s 2016 Parcel delivery: The future of last mile report recommends that any company operating in a high-labor cost market start laying down the foundations now to win the last mile based on upcoming delivery options and technology now.
Looking down the road…
Keep an eye out for these potential future trends. Right now, they can mostly be considered experimental and need work before rolling out in scale. Yet a lot of resources are being invested in these future trends as at the most optimistic, they represent a quantum leap in potential cost savings and efficiency increases.
Labor-replacing robotics in warehouse
Sophisticated AI paired with nimbler robotics will lead to robots taking on tasks now handled by human labor. Some robots are already being used for picking light, stackable items from shelves. Look for the capabilities of robotics to store, pick and pack to grow significantly. These expanding capabilities include automating retrieval so item bins are accurately and quickly brought to stationary humans to pack.
Robots can respond to AI commands to create “high volume/easy access” staging areas based on the most popular items needed to be packed that day, so human workers have a smaller area they have to navigate.
Autonomous delivery vehicles
Technology innovators such as Amazon and Uber are experimenting with autonomous delivery vehicles. Amazon is working both in driverless trucks and forklifts, and has patented a road guidance system to help autonomous vehicles operate safely and efficiently. Uber, having already masterminded the disruption of transporting humans, acquired Otto, a self-driving truck platform. Using Otto’s autonomous truck, Anheuser-Busch completed the first known driverless shipping haul, transporting beer in a semi 120 miles down a Colorado highway. There was a driver on board as a precaution, but the driving was done by the autonomous driving software.
Numerous technology companies are in the process of developing a commercially available, street-viable autonomous driving technology. No retail exec responsible for logistics should make the mistake of thinking these innovators’ vision is limited solely to moving humans.
Where do you stand with these trends? Take advantage of DecisionPoint’s expertise in retail and transportation logistics management to make sure these trends are working for you.
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