5/5 (1)

Augmented Reality (AR) is defined as the expansion of physical reality by overlaying digital or computer-generated information into the user’s field of view (Wang et al., 2020). In recent years, AR technologies gained importance and notoriety. Its market was valued at $3.5 billion in 2018 and it is expected to reach $200 billion by 2025 (Rejeb et al., 2020). Mainly, its presence is more pronounced in the gaming and entertainment industry, healthcare, tourism, and educational industry. Commonly, AR applications are utilized through a smartphone: for instance, barcode scanning and virtual modeling are two common utilizations of AR technologies. The latter can be utilized to visualize items such as clothing, houses, jewelry, cars, and many more.

In recent years, AR has been considered a valuable option to increase efficiency and decrease costs in supply chains. Specifically, in last mile logistics processes, which consist of the last leg of the supply chain, concerning the delivery of the product from the warehouse to the customer (Bányai, 2018), it appears that AR could decrease its costs. It is important to note that last-mile logistics processes contribute to 50%-75% of the total distribution costs, thus it is important to find a suitable solution.

Currently, AR has the potential to decrease downtime. One way is from increasing efficiency in the loading and unloading phases. For instance, Head-Mounted-Displays (HMD) can project in the user’s field of view the optimal loading of the truck, visualizing where to place each package in the vehicle, thus maximizing usage of the space available and reducing the number of trips (Wang et al., 2020). Once the deliverer arrived at the customer’s destination, HMDs can project which package must be picked for that address (Wang et al., 2020).

Moreover, AR has the potential to decrease the time of delivery and improve workers’ conditions thanks to HMDs. For instance, it has been tried out a windshield HMD display, which projects to the driver the route to take, speed, location of package delivery, package, and customer information (Lim et al., 2018). The benefits of such practice are increased efficiency, decreased mistakes and accidents, and better working conditions (Blümel, 2013).

Furthermore, in many industries, AR demonstrated to be beneficial for training procedures. Hence, new employees in the last mile logistics can be trained via HMDs, ensuring fewer mistakes and a faster training process (Ferrati et al., 2019). This benefit is of particular importance for last-mile logistics processes as employees in this sector are leaving their jobs frequently, thus increasing employee turnover rates. As a consequence, many costs are involved with turnover, such as downtime, looking for replacement, and training of new employees. AR could be the solution: by giving better working conditions, simplifying tasks, minimizing errors, and increasing efficiency. Also, training could be quicker and more efficient.

References

Bányai, T. (2018). Real-Time Decision Making in First Mile and Last Mile Logistics: How Smart Scheduling Affects Energy Efficiency of Hyperconnected Supply Chain Solutions. Energies, 11(7), 1833. https://doi.org/10.3390/en11071833

Blümel, E. (2013). Global Challenges and Innovative Technologies Geared Toward New Markets: Prospects for Virtual and Augmented Reality. Procedia Computer Science, 25, 4–13. https://doi.org/10.1016/j.procs.2013.11.002

Ferrati, F., Erkoyuncu, J. A., & Court, S. (2019). Developing an Augmented Reality Based Training Demonstrator for Manufacturing Cherry Pickers. Procedia CIRP, 81, 803– 808. https://doi.org/10.1016/j.procir.2019.03.203

Iqbal, M. (2022, June 30). Pokémon Go Revenue and Usage Statistics (2022). Retrieved October 4, 2022, from https://www.businessofapps.com/data/pokemon-go-statistics/

Lim, S. F. W., Jin, X., & Srai, J. S. (2018). Consumer-driven e-commerce. International Journal of Physical Distribution & Logistics Management, 48(3), 308–332. https://doi.org/10.1108/ijpdlm-02-2017-0081

Rejeb, A., Keogh, J. G., Wamba, S. F., & Treiblmaier, H. (2020). The potentials of augmented reality in supply chain management: a state-of-the-art review. Management Review Quarterly, 71(4), 819–856. https://doi.org/10.1007/s11301-020- 00201-w

Wang, W., Wang, F., Song, W., & Su, S. (2020). Application of Augmented Reality (AR) Technologies in inhouse Logistics. E3S Web of Conferences, 145, 02018. https://doi.org/10.1051/e3sconf/202014502018

5/5 (3) During the International Marketing Research course of the International Business bachelor at the Rotterdam School of Management, my team members and I were instructed to research, analyse and evaluate the potential of Google Glass. Through focus groups and questionnaires we learnt that while most respondents found the product intriguing, and would like to try it out, very few of them would actually be willing to purchase it. Around two years later, it has become increasingly clear that the slick virtual reality glasses failed to gain commercial success. Why? Not only because of its price tag – but especially because Google failed to make clear to the customer what problem the product solved, or why they would need to have it. (Altman, 2015)

Although virtual reality glasses have not (yet) become a hit with recreational consumers (other than early adopters), its potential in the logistics sector is being increasingly explored. DHL, one of the world’s leading logistics companies, successfully carried out a pilot project testing smart glasses in 2014 (DHL, 2015). The company is setting an example in how augmented reality could create an industry disruption in the logistics sector, and how it could revolutionise the order processing, transportation, and delivery-services business models that are currently the standard in the industry.

The augmented reality glasses were developed in cooperation with Google, Vuzix and Ubimax, with which DHL will continue to partner to further optimize the glasses. In its Bergen op Zoom warehouse in the Netherlands, where it carries out logistics services for Ricoh (a Japanese electronics company), DHL asked 10 of its warehouse staff to test the smart glasses during the order picking process, for a duration of three weeks. During the pilot, more than 20,000 orders were picked, and over 9,000 orders were fulfilled. The employees were equipped with Google Glass or VuzixM100 glasses containing Ubimax’s special xPick software. The head-mounted devices display all necessary task information, along with aisle location, product location and the required quantity, so that the correct products are placed in the correct trolley boxes. (DHL, 2015)

The result? The project led to a decrease in picking errors and an overall 25% increase in efficiency during the picking process. It also proved popular amongst warehouse staff, who perceived the technology as user-friendly, intuitive and convenient due to its hands-free aspect. (DHL, 2015)

In early September 2016, DHL announced that it will start rolling out more pilot projects in the Netherlands, the US and the UK to further adopt the technology in its warehouses (Retailnews.nl, 2016). It is now also looking at how augmented reality could add value in transportation operations and last-mile delivery processes. M&A advisory firm Digi-Capital estimates that the augmented reality market will grow to $150 billion by 2020 (DHL, 2016).

As DHL further explores the added value of augmented reality in logistics, it is interesting to brainstorm about the economic feasibility of augmented reality glasses in other sectors. Think about the supermarket sector, for example; by equipping smart glasses with real-time stock information, the staff would be able to restock its on-the-floor products more efficiently. They would also be able to more quickly find the products that are overdue and need to be replaced.

Do you see the potential of augmented reality in other B2B or B2C sectors?

Sources:

• Altman, I. (2015). Why Google Glass Failed And Why Apple Watch Could Too. [online] Forbes.com. Available at: http://www.forbes.com/sites/ianaltman/2015/04/28/why-google-glass-failed-and-why-apple-watch-could-too/#7cb6915d58ec [Accessed 15 Sep. 2016].
• DHL, (2015). DHL successfully tests Augmented Reality application in warehouse. [online] Dhl.com. Available at: http://www.dhl.com/en/press/releases/releases_2015/logistics/dhl_successfully_tests_augmented_reality_application_in_warehouse.html [Accessed 15 Sep. 2016].
• DHL, (2016). DHL rolls out global augmented reality program. [online] Dhl.com. Available at: http://www.dhl.com/en/press/releases/releases_2016/all/logistics/dhl_rolls_out_global_augmented_reality_program.html [Accessed 15 Sep. 2016].
• Logistiek Totaal, (2016). DHL investeert in vision picking. [online] Logistiek Totaal. Available at: https://www.logistiektotaal.nl/marktnieuws/dhl-investeert-vision-picking/98923/ [Accessed 15 Sep. 2016].
• Retailnews.nl, (2016). DHL zet in op orderpicken met slimme bril – RetailNews. [online] RetailNews. Available at: http://www.retailnews.nl/nieuws/6jeruIAEROaoWv2sSmeiXw-0/dhl-zet-in-op-orderpicken-met-slimme-bril.html [Accessed 15 Sep. 2016].
• Woods, R. (2015). Can DHL smart glasses augment logistics reality? | Air Cargo World. [online] Aircargoworld.com. Available at: http://aircargoworld.com/can-dhl-smart-glasses-augment-logistics-reality-10245/ [Accessed 15 Sep. 2016].