THE AI REVOLUTION IN LOGISTICS
AI is redefining the art of the possible when it comes to logistics. Early adopters are already experimenting with use cases in route optimisation, inventory forecasting and customer service but many are finding it harder to scale to deliver true transformation across the enterprise.
Although there’s lots of work being done in specific use cases, there’s not enough being done in how these use cases can be strung together to deliver bigger change.
Mark Briganti
Global Post and Parcel Lead,
Accenture
The temptation to pilot projects in discrete business areas is understandable, particularly given the reputational costs of getting it wrong in such a highly competitive industry. However, some providers are starting to embrace transformation across the business in order to really harness the potential of AI.
According to Eeuwe Kamsteeg, Director of Digital and Agile Transformation at PostNL, it is those companies that take a holistic enterprise-wide approach, embedding AI and innovation into the DNA of the company, that will reap the greatest benefits, with potential double digit growth in net margins.
90% of customers believe that the accuracy and reliability of the delivery is more important that the time it takes to deliver.
Eeuwe Kamsteeg
Director of Digital and Agile Transformation,PostNL
‘It’s no longer about being a logistics player but about being a technology player who delivers parcels and mail,’ says Kamsteeg, adding that 90% of customers believe that the accuracy and reliability of the delivery is more important that the time it takes to deliver. ‘It’s not just about speed, it’s about will you deliver exactly when you promised. It’s about intelligence, more than just logistics.’
We caught up with Mark Briganti, Global Post and Parcel Lead, at Accenture to find out his views on the industry’s use of AI:
Even though it’s still early days, logistics providers report that AI and automation are already yielding material productivity gains. ‘When it comes to operations, we can track everything, we have digital scan gloves for easy scanning and with robotisation, we can process 1.5 million parcels a week with just 45 people,’ says Eeuwe Kamsteeg of PostNL.
It’s not just in the warehouse, however, that AI is making an impact. Many expect predictive intelligence to help tackle the challenging areas of last mile delivery and out of the home delivery, by drawing on real-time data flows and heavy-hitting analytics to continually calibrate routes, respond to last minute customer changes and provide smarter batching of orders. Already, as reams of data flow through analytics platforms, deliveries are becoming intelligent, creating opportunities to delight parties at both ends of the transaction. A parcel being sent from a Spanish warehouse to a customer in Germany, for example, no longer follows a static route but is instead tracked and optimised on an individualised parcel basis, with decisions continually updated based on a wide range of variables, including the consumer’s behaviour and preferences.
This level of intelligent real-time routing requires a lot of data, and that in itself can be a challenge for supply chains that rely on many different parties, each with their own fragmented data sets and legacy systems, to fulfil a delivery.
You have to clean up and harmonise the data…It’s really hard work and takes time.
Boris Scholz
Managing Director, Digital,FIEGE
‘You have to clean up and harmonise the data, and translate it into one language that our digital products and recommendation engines can understand.’ says Boris Scholz, Managing Director, Digital at FIEGE. ‘It’s really hard work and takes time.’
Here’s Fredrik Lindqvist, Senior Vice President, Value Chain & Digital, Posten Bring on the work he’s doing to implement AI in a 370+-year-old organisation:
With this solid data foundation in place, companies can plan for an AI-powered future, building an analytics platform and layered architecture in the cloud to gain agility, speed and scale. At this point, the build versus buy analysis begins, although many organisations are now opting for a hybrid approach, buying in some solutions from vendors and building others inhouse.
‘Having control over those areas critical to the business and the customer experience is key,’ says Fredrik Lindqvist, Senior Vice President, Value Chain & Digital, Posten Bring, ‘while more generic processes, such as route optimisation and payment systems, can be bought off the shelf.’
Maersk takes this one step further, building its own ecosystem platform while using its investment arm to buy tech companies that have already developed useful solutions and capabilities.
The ROI is simple. You have to do it because otherwise your customers will go to a company that can meet their requirements.
Stein van Est
Senior Director, Regional Head of Ground Freight & E-Commerce,
Maersk
‘We used to be very asset heavy company but more and more we see technology coming into play,’ says Stein van Est, Senior Director, Regional Head of Ground Freight & E-Commerce at Maersk.
This digital transformation is inevitable, he adds. ‘The ROI is simple,’ he says. ‘You have to do it because otherwise your customers will go to a company that can meet their requirements. There’s really no choice.’
Transform to survive; there’s no more compelling ROI.
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