Imagine that every single shipped item in the world would be actually connected to the world wide web real time and packages would be delivered in front of your door by drones with record speed. No, that is not a daring dream! This is the next decade ahead mankind.
Information technology is getting more and more important in the 21st century. It has already become the fourth most important production aspect and requirement for competitive advantage after resources, human labour, and financial capital. Two great examples about information technology developments in the logistic industry are Big Data utilization and drones.
Firstly, we all know that the Big Data revolution is transforming several industries (e.g. oil & energy, agriculture, and manufacturing) in the world of business. The logistics industry is not an exception as well. By the exploitation of Big Data utilization, logistics companies have already been able to increase their operational excellence, customer satisfaction and experience. In addition, Big Data utilization have also helped them to build unprecedented and performance enhancing business models.
Moreover, numerous logistics companies are still pioneering and investing into the utilization of Big Data. Honourable companies to mention in the logistics industry are DHL, UPS, and Maersk. For instance, UPS spends more than one billion dollars on Big Data yearly. It helped the company to save huge and unnecessary costs by cutting on fuel use (1.5 million gallons of fuel savings). Furthermore, they utilize RFID (Radio Frequency Identification) and NFC (Near Field Communication) technologies to improve their tracking and delivery services. These technologies also help them to get more precise data to analyse in order to advance their services.
Secondly, another significant innovation in the logistics sector are going to be drones. Drones were developed by armies for military operations. However, they could be also used in everyday life in order to facilitate normal operations especially in the logistics sector. So in the near future, drones will help companies to operate more effectively, quickly and customer friendly. For example, Amazon has already been testing its drone delivery service for its clients. Imagine how the global trade would evolve by using drones in logistics. However, there are some legal issues and dilemmas about the utilization of drones (e.g. privacy, transport). These rules are needed to be laid down in the near future. So, we still need to wait a little bit for the complete utilization of this ground breaking technology.
In the near future, there will certainly be even more powerful developments in the logistic industry by Big Data and other technological developments e.g. drones, better online connectivity and sharing economy. We can expect that the importance of these advancements are going to raise quickly and soon.
If you have any question or opinion about this post, please do not hesitate to comment below!
References:
https://www.talend.com/blog/2016/02/18/big-data-logistics-7-current-trends-to-watch
http://www.dhl.com/en/about_us/logistics_insights/dhl_trend_research/bigdata.html#.V_U8d_mLTDc
Click to access CSI_Studie_BIG_DATA_FINAL-ONLINE.pdf
http://www.maersk.com/en/the-maersk-group/about-us/publications/group-annual-magazine/the-data-drive
http://www.bloomberg.com/news/videos/b/b8ac38a8-adec-4495-bb88-99331fe6613f
Thank you for your post Zoltan.I really found it informative and insightful. I’ve also been looking at Big Data and Logistics lately and agree that we are only at the brink of its application. As you said, all the major companies are trying to implement Big Data in their logistics system and investing large sums on it. While now, it seems that Big Data is only used to enhance customer satisfaction, later on we could use it to cut all kinds of costs (ex. labor costs, transportation costs). Who knows, we might end up living in a world run by robots in the near future.
Dear Mounim,
Thank you for your comment!
I could not agree more with you. I think there is a high probability that we will live in a world with robots soon.
Great and interesting article since i’m interested in supply chain.
Drone has some advantage for both consumers and companies. On one hand, consumers have quick and flexible delivery service. On the other hand, companies will increase their customer service and decrease their costs. The costs will be decrease because it’s less costly to have several drones than to have several « traditional » deliveries, such as truck transport. However, the implementation of drone delivery can also be beneficial for the society by, for example, reducing road congestion for example.
I think that the drone delivery will be part of tomorrow’s world and the question is « when? ».
As you said legal issues and dilemmas about the utilization of drones that needed to be solve before seeing drone as a delivery option. I think that when the restrictions will be gone, drone delivery will not be a source of competitive advantage but will be vital for the companies in order to stay in business. And it will be present in almost every firm.
Hi Mathieu,
Thank you for your interesting comment!
I agree with you that drones will be part of the logistics industry soon. Furthermore, I also think that drone services will be commoditized in the long-term. However, I think that in the short-term logistics companies will be able to gain competitive advantage and differentiate themselves by drones.
I agree that the application of drones in delivery services is going to be introduced, but I don’t see it happening in the near future. First of all, the importance of the legal background is often overlooked and most don’t realise its significance. An entire new field of law needs to be introduced (just like in the case of autonomous cars and internet privacy) and countries need to deal with this issue by themselves, although the EU has somewhat of an advantage here because of the centralised legal system. However, the fact that most military inventions – GPS, microwave, duct tape, etc. – reach public adoption (with a delay of some years) suggests that it is only a matter of time until we will be using drones throughout everyday delivery.
Dear Balázs,
Thank you for your thought provoking comment!
As I have also mentioned in my post, I totally agree with you about the huge legal concerns of the utilization of the drones since it is one of the primery obstacles to tackle. However, law always changes so I believe that the responsible bodies will come up with the new laws/solutions about all concerns in the next decade as they have done before with other ground breaking solutions.