Supply Chains and Logistics Need a Digital Transformation

Shipping goods via multi-modal transport requires steps and controls, handovers between multiple parties, and plenty of document exchanges. Each participant in the supply chain either creates or possesses data that increases the predictability and visibility of the shipment, but unfortunately, stakeholders are either unable to share that data digitally, or they need to incur an operational cost to maintain ad-hoc electronic interfaces. Despite efforts to optimize and automate the delivery process at specific stages, like cross-docking, substantial benefits are achieved only when digitalization addresses the entire process, from the origin to the final delivery destination.

Participants in the supply chain are connected—just not to each other or not at the right time. Data in itself isn't necessarily helpful. However, when relevant data is shared with the right counterpart in a timely manner, it becomes actionable and useful information. Being able to acquire information from the other parties and automatically detect the position and status of parcels or containers increases the situational control, predictability of delivery, and quality of service as perceived by end-customers.

The lack of information sharing creates a murky outlook and leads to a fragmented, low-margin market. The Internet of Things (IoT) will help improve this information sharing problem and increase the volume and quality of digital data.

The Manual Supply Chain

Many assets in the logistics sector are neither digitized nor described in terms that are usable for other stakeholders in the chain. Document handling alone is an arduous process. We’ve seen a single air shipment require 21 documents to be sent 40 times across 20 different steps. In addition to complexity, this manual process creates a considerable amount of paper and introduces room for human error with the need to re-type the same info during handovers.

Digitizing these assets would profoundly increase efficiency at every step, including handovers. Tracking creates greater visibility. This is particularly critical in international trade due to the multiple modes of transport and interchange terminals that are involved in the service.

Digital Transformation of The Supply Chain

As the IoT continues to expand, it connects goods, packaging, vehicles, and transportation hubs. Greater information sharing lets stakeholders collect actionable data so that they can control critical assets remotely, monitor the physical status of goods when transport conditions need to be guaranteed (e.g. cold chain compliance or shocks), predict risks, anticipate bottlenecks, and recover package handling errors. They’ll have deeper end-to-end transparency to adjust business accordingly and take advantage of real-time data. Ecosystems and cooperation will create new, multi-modal mobility services on a regional, national, and international level.

In the near future, expect to see an environment of informational silos that use legacy technologies migrate toward a comprehensive and active ecosystem. Cooperation will improve processes across transport modes, industry sectors, and borders, enhancing the customer experience and innovating business models.

The Rise of the Internet of Logistics (IoL)

The emerging “Internet of Logistics” (IoL), or “Logistics 4.0,” provides a secure, flexible, interoperable data exchange infrastructure. It'll have a long-term impact on the industry. IoL supports the interchange of load units/container data, container identification and location, multimedia files, and documents across the entire multi-modal transport network.

Adopting data exchange standards, e.g. the Semantic Web framework, opens new possibilities for the digitalization of multi-modal freight services. Semantic Web data formats and exchange protocols, such as the Resource Description Framework (RDF), allow the creation of a digital infrastructure where information about every shipment can be shared along the entire multimodal delivery chain, while each participant retains control over the data that it publishes. The multi-party nature of freight logistics calls for a data exchange technology that maximizes information sharing without the pains of traditional systems.

The freight and logistics sector now uses automatic detection and telemetry technologies because shippers, carriers, and freight forwarders wish to gain full visibility into cargo positions, conditions, and expected arrivals. These technologies also reduce the complexity and effort spent in handover operations as well as document and cargo validation.

Achieving this digital utopia will require buy-in from many different entities, each having an important role in the evolving Internet of Logistics. Transport providers must embrace and adopt emerging technology like IoL to remain competitive. Regulative bodies must understand how these technologies benefit their industry. They should instill a global standard to ensure that all parties communicate in a common digital language.

Telecom operators must scale their networks to support the exploding amount of data. Then, all stakeholders in the supply chain will experience more efficient processes, increased accuracy through real-time data and, most importantly, better bottom lines through stronger business models.

Written by Claudio Diotallevi, Partner Manager in Transport & Logistics at Ericsson AB