How an industry digitalizes behind progress

Global shipment tracking via RFID chips, GPS tracking of containers, trucks, ships and trains, digitized processes in traffic management, automation in the warehouse – logistics today is not only global and multimodal, but also digital in many places. But the industry is far from exhausting all possibilities. Only a few companies rely on augmented reality (AR), blockchain or AI.

As early as 2019, a study by the digital association Bitkom showed that among more than 500 companies with logistics processes, 79 percent stated that they were faced with major challenges as a result of digitization. Two years earlier it was 74 percent. After tolls (80 percent) and the rising fuel and energy prices (91 percent) due to the changed climate policy, digitization is the largest construction site in the logistics industry.

However, as in many other industries, the Covid 19 pandemic has also highlighted the need for digitization. For a long time, scientists and trendsetters have been showing a variety of ways to further automate and digitize logistical processes under the leitmotif Logistics 4.0.

Better networking of the modes of transport

In the past few years, logistics has made great strides on the so-called last mile and the better networking and use of multimodal components in the modes of transport. The essential parts of the mostly globalized supply chain have already been digitized to such an extent that they meet the requirements of both the B2C and B2B segments.

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The latter became necessary simply because of the introduction of the so-called carbon footprint into the supply chain. For all those involved in the production and supply chain process and, if desired, also for end customers, the CO2 balance of a product should be transparent and fully visible. “An efficient transport of raw materials, components and goods is just as economically sensible as it is economically and ecologically necessary. Digitization helps to reduce CO2 emissions in logistics and protect the climate, ”said Bitkom Managing Director Dr. Bernhard Rohleder.

As important as climate protection is, digital processes can optimize value creation in every module of the logistics chain: These can be software solutions to improve order processes or to manage inventory. Digitized solutions in the form of robots or extensive data acquisition also have the potential to automate the entire warehouse.

Simplified customs procedures

With the help of the digitization of receipts, the large amount of paper used in administrative processes can also be eliminated. A few years ago, the digital processing of still complex customs formalities was a major step forward. For example, long before a container is loaded onto a ship, a charterer has to report information about the freight, quantities, materials and the entire route of the container to the US authorities if the container in question even touches a US port. What used to be necessary for files in folders is now going digital.

But despite great advances, the industry still faces obstacles. According to a study by DHL, responsible for express, global forwarding, freight and supply chain in the Deutsche Post logistics group, 95 percent of the 350 experts from the logistics industry surveyed said that they could not fully exploit the possibilities offered by the digitization of logistics processes or want. Biggest problem: At many different intersections of supply chain management, potential innovations arise in parallel. Progress often takes place at such a rapid pace that companies can hardly keep up with the analysis and implementation.

Small businesses are often overwhelmed

These changes are influenced, for example, by innovations in the field of robotics, blockchain, augmented reality, artificial intelligence (AI) and sensor technology. Different systems complement each other and cooperate, but are often not compatible with existing processes. Or they require personal know-how and resources, especially in small and medium-sized companies, which often overtax the possibilities of this segment of the company – from the independent truck driver or inland boatman to the medium-sized shipping company with two to three coasters. According to Andreas Rükgauer, Professor of Production and Industrial Management at the University of Applied Sciences Würzburg-Schweinfurt, many of the modern concepts have little to do with today’s reality in average logistics companies. “There are a lot of efforts in the area of ​​data-supported work, for example AI and Big Data, but the successes have been manageable so far,” said the logistics expert last year when he presented a study by TÜV Nord on the status of digitization in the industry. Digital processes are mainly used to reduce the costs of existing processes. Overall, experts name four aspects that speak in favor of digitization: higher speed, lower costs, lower susceptibility to failure and optimized environmental protection.

Technology companies in particular are helping the industry to make better use of the advantages of digitization. One of these companies is TeamViewer from Göppingen. The remote pioneers are now making their know-how available for various branches of industry and services, such as augmented reality applications for logistics. “Due to the visual support provided by AR technology, people make fewer mistakes and can work much more efficiently and adequately,” says Hendrik Witt, Chief Product Officer at TeamViewer. “At the logistics company DHL, for example, we see an efficiency gain of around 15 percent through AR.”

Chance of better utilization

A completely digitized supply chain ensures greater efficiency and effectiveness. Unnecessary transports are avoided, the capacities of modes of transport are better utilized and storage and personnel costs are reduced thanks to better planning.

As a result of a development boost in drone technology, automated deliveries to companies and end customers are being tested in initial pilot projects. But this example in particular also shows risks: The deliveries themselves can thus become considerably more efficient and punctual. However, the last mile to the end customer is precisely the segment in which an entire profession – the parcel or delivery driver – is often employed under precarious conditions. If automation is used here, this wage segment is no longer available for often low-skilled workers – with an impact on the labor market.

This is one of the reasons why the industry is still struggling in many places. Anyone who has ever experienced the driverless transport vehicles in a large container port, which drive as if by magic from the parking space to the container bridge and vice versa, has an idea of ​​”human-free logistics processes”. Even in the Bitkom study mentioned above, logistics companies complain of 72 percent high personnel costs and a 70 percent lack of skilled workers. Increasing automation should therefore come in very handy for companies.

Ease of use of the technology varies

Because the technology used is often not fully developed, people remain an irreplaceable factor in logistics, says Professor Rükgauer. In addition, the technology is not always user-friendly. His colleague Christian Kille, Professor of Retail Logistics and Operations Management at the FHWS in Würzburg, agrees: “The cases in which smart glasses are used for order picking can still be counted on one hand.” One of these cases is Coca -Cola Hellenic Bottle Company, a soft drink bottler active in 22 countries. When picking orders, employees are supported by smart glasses. The data glasses linked to SAP order management replace hand scanners and tablet PCs on the pallet lifters. This increased the picking accuracy to almost 100 percent. “The use of wearables makes workflows easier,” says TeamViewer AR expert Witt. “Your commitment is a win-win situation for companies and employees that we are observing more and more often.”

According to the two professors Rükgauer and Kille, the development will proceed “slowly and evolutionarily”. This applies to storage systems that are already being tested and implemented using robots. However, many activities in logistics are difficult to automate because they are too diverse. Andreas Rükgauer brings contract logistics as an example. Many hundreds of people are employed here, for example pre-assembling parts for automotive suppliers. Workflows are simple, but they differ greatly. “Digitization can help here, but people remain irreplaceable”.

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