That things are moving faster than ever in the world of logistics is no news to most managers. But recently I was asked if I thought logistics could be one of the big game changers in the commercial world. My response? It already is. And companies not able to play by the new rules might just be looking at an early bath.
I mean look at Uber and Airbnb. If what they’ve created in their sectors isn’t a revolution, I don’t know what it is. And on a more modest scale, right now 1000s more newcomers are shaking up local markets around the world, by leveraging the potential of logistics.
A typical example is Picnic here in the Netherlands. This virtual supermarket charges no home delivery costs, has competitive prices and still delivers a positive business model. How? Simple. They only offer you a few delivery slots during the week to choose from. That’s far less choice than competitors, but since most people aren’t home before 4pm and only do their groceries a few times a week, what does it matter? With smart planning linking time slots to postal codes , Picnic also has way more efficient delivery runs than rival supermarkets. Throw in the fact that they’re a cloud-based clicks business, without the bricks that weigh down their rivals, and you’ve got yourself a winning business model.
Don’t respond, anticipate.
But if it’s really so simple, where does this leave traditional businesses? Well, I think companies first need to be aware of their potential vulnerability to this new kind of challenge and anticipate the offerings with which rivals could enter your market. But while new players may not have the business legacy and service expectations you have to meet, on the other hand nor do they have your depth of market knowledge or the brand loyalty you can leverage. But perhaps most important of all, you need to make sure you can compete with, and ideally outstrip, newcomers on the technological front. For example, by having smarter optimization and analytics technology.
Didn’t see that coming…
My advice would be: expect the unexpected. Ten years ago, no one outside the book trade, and certainly no 3PL, would have thought that Amazon could become a serious competitor. Or that local taxi services could be undercut on price and flexibility by a global company based on the other side of the planet. So when that same person’s next question was what do I think will be the big shake-up in logistics in the next 5 years, my first thought was that if I knew that, I’d be too busy setting up my billion-dollar brainchild to answer his questions. However, I think one can make a few fairly reliable predictions.
Given current technological developments and the fact that we all now have smartphones and access to apps, clearly things will become increasingly dynamic, flexible and real-time. In particular, this also means more possibilities in the spheres of forecasting and optimization.
See ahead, plan ahead
Simple example: you run a large office. With the internet of things, you can predict when lightbulbs will likely expire. So rather than react to each burst bulb, you introduce a bulb changing schedule that uses the repairman’s time extremely efficiently and avoids wards going dark, while also minimizing capital costs.
Another example: at ORTEC we do lots round work scheduling for clients and see two main technological trends. First, better planning and forecasting tools to predict the upcoming volume of work, people/shifts required, etc. Secondly, more flexibility round schedule execution. Such as more use of apps that empower employees to influence their own shifts. So if you get a last-minute party invite or your child falls ill, you can trade or exchange tomorrow morning’s shift. Simple, yes; but big quality of life impact.
The power of data sharing
Another area where I believe logistics is proving a game changer is sharing data and information. The ORTEC Control Tower, for example, gives all stakeholders (managers, suppliers, stores, customers, whoever) access to information. So a delivery company’s logistics plan as a whole — and real-time info on every detailed element of that plan (e.g. what’s in a truck now on the road) — can be viewed by those stakeholders via a portal or app, and they can then optimize their parts of the chain accordingly.
Say there’s a ½ hour traffic delay. The store’s offload team can do something else for those 30 minutes. And be rearing to go when the truck arrives, reducing the stop time.
For B2C, information sharing of this kind is invaluable. Better updates to the consumer on expected arrival times not only mean much higher odds that he’s home when you arrive, but also that he’s waiting at the window. All of which means significantly less no-drops and stop time on a delivery run, and across a whole depot… Well, you do the math.
Optimization solutions can also take account of all these real-time changes to continually re-optimize a plan during its execution. Then later use the ever-richer historical data available to ensure its next logistics plan is even more accurate. And we haven’t started to discuss all sorts of other areas that can improve forecasting. Like weather data (as you can imagine, webshop activity and gas station sales both increase during bad weather), major sporting events on TV, currency exchange rates… you name it.
Optimizing the optimizer
This virtuous circle can get fairly extreme. For example, we use Microsoft Azure servers to run ORTEC’s cloud-based routing solutions. And to predict how many servers we’ll need the next day, we use… forecasting tools. Which is as good an example as any of the huge number of game changing possibilities there are within logistics — unfortunately we’ve not yet produced the software to predict just how many…
To learn more about ORTEC’s work in the field of logistics, or what we could do for your business, mail Goos Kant or call him on +31 88 678 3265.