You are the head of transportation for a large apparel company with say, 2,000 stores spread over 900 cities across India. Every week you ship over 20,000 boxes through 15 logistics partners from 6 warehouses.
- You get a call from Head of Sales, who is blasting away that a shipment of latest designer wear for shop in Palladium Mall has not reached 30 days after order.
- Three states have just declared lockdown and you are no longer allowed to deliver material to stores or consumers. You have to ensure shipments are stopped on track.
- Your boss wants to release contracts for the logistics partner. He wants you to analyze the performance of 20 plus partners over last one-three years and give him feedback. He also wants to check if there is any impact of monsoon, festivals, marriage seasons etc. on delivery time.
Technology is the key to handle the above situations. Being consistent with real-time tracking, responsive transaction systems and data analytics will help.
Traditionally, the logistics industry has seen itself as a physical infrastructure industry with massive investments in vehicles, warehouses, ports, ships etc. Also, most of the workforce is unskilled or semi-skilled. Thus, investment in information technology was limited and was meant to handle only specific functions of a company.
But the advent of global supply chains changed this dramatically. Companies source components globally to manufacture today’s products. A problem in a chip-making factory in Taiwan creates production issues in car plants in Europe and India. To handle such a scenario, supply chains need to be connected digitally and information needs to flow between companies and countries in real-time.
In the last few years, there has been a massive investment in technology start-ups that digitize various parts of supply chains. Today, you can get data from a range of sources such as GPS trackers, IoT devices, Sensors in cold chain, Ship and Flight tracking systems, Warehouse control systems, and Smart CCTV feeds. The mobile phones used by delivery vans and bikes generate an immense amount of GPS data, Geo-codes of delivery locations, images of products and delivery documents.
In less than ten years, logistics has made a jump from too less information to an unlimited torrent of data. With the increasing application of Artificial Intelligence and Machine learning, a number of tasks are now automated. Despite all the advances in technology, human decision-makers continue to play a central role in most logistics operations – especially in responding to exceptions.
And exceptions are galore. Covid-19 pandemic created massive chaos in global supply chains and the same is yet to become normal. When Suez Canal was blocked by Ever Given ship for less than 7 days- it created massive snarls in supply chains. The number of extreme climate events such as Floods, Storms, Droughts is increasing every year. Most mathematical models fail to handle such outliers. Thus, human decision-makers will always be needed to steer supply chains though.
The need of the hour is Techno-Logisticians. Much like a weather forecaster, a Techno logistician will interpret data from a range of sources, apply data science models and adjust them with emerging data and take decisions. Much like Air Traffic Controllers, they will monitor a part of the supply chain and interact with their counterparts and “handover” movement of vehicles, ships, aircrafts and cargo in them for further control.
There are many challenges for wide adoption of such a model:
Limited talent pool. The current workforce of logistics companies is yet to adopt technology as a way of doing business. Some Business Schools have already started programs combining logistics theory and technology but we need many more.
Fragmentation. Logistics execution has multiple layers. India has more than 4 mn transportation companies with most owning less than 5 vehicles. To reach the deepest corners of India, consumer companies sometimes work with 30-40 partners – all of them with basic systems or none at all. There is a need to offer easy to system at a low price to a large number of such players.
Lack of investment. Most end-customers do not put a premium on the technology capability of service providers and focus on the lowest cost model. This results in lower investment in technology and tech-enabled manpower.
Many more challenges abound and not all will be solved in short term. But things are changing on the ground quickly and many times with simple solutions.
Also, a slew of Indian start-ups have identified the “unorganized” sector of logistics as their key market. They see opportunity in scale and also in offering a range of related services to logistics such as lending, brokerage, sales of equipment etc.
On a whole, we can see that logistics and technology are combining rapidly and helping logistics managers to control their supply chains much better.