Future of Technology in Logistics and Supply Chain

- Kai Lincoln

And here we are, 2021.  Only 8 years until cyborg wars will ravish the earth (according to The Terminator) and 6 years beyond hoverboards and self-drying clothes (according to Back to the Future 2).  Reality is that there have been some amazing technological advancements in the world since those movies were released in the 1980’s, but it seems we haven’t moved at the pace those writers had expected.

What do movies and logistics have in common? Not much really, however the concept of advances in technology that will apparently improve our lives, or at least the efficiency of our lives, is the new horizon for most industries.

As logisticians, we are not exempt from this groundswell of change.  While those of you reading this article might not be the ones actually building the tools, it’s likely that aspects of new technology will play a significant role in both the industry and your lives in the years to come.  In that vein, I thought it might be worthwhile to take a very simplified look at a few initiatives that you would’ve likely heard about, but maybe not explored the practical reality of – Artificial Intelligence and Block Chain Technology.

Though we’ve seen forms of “game changing” technology in the past that never really made the mark that we thought they might (RFID), these two are very real and have a lot of very real money behind them.

Artificial intelligence

For the tech purists reading this, I do note that AI and Machine Learning are different.  Machine learning is a more complex subset of AI.  AI is simply a machine that has been programmed to make decisions, solve problems and perform actions based on programmed inputs.  Machine learning involves a machine continually adapting based on new data flowing through it. 

Regardless of what you call it, AI & ML are already a part of our daily life and the end-game is simple: automate manual work wherever possible.

Everyone would’ve interacted with a customer service chat at some point in the last few years.  There’s rarely a human typing those messages out.  More often-than-not this is an AI chat-bot, who has been programmed to look for particular key words and questions to provide scripted responses.  Some freight companies are already using similar technology in their customer service teams.

For our industry, there are a range of administrative tasks that will see AI taking a front seat, from customer service to customs classifications.  The big one however, from a labour cost and safety perspective, are autonomous vehicles.  If you think I’m talking about an unrealistic future state, look at the mining industry, which already has autonomous vehicles for haulage, precise grading and digging.  As the technology continues to prove that it is safer than human drivers and as shortages of drivers continue to plague the trucking industry and drive up wages, the more governments around the world will begin to endorse and approve AI led vehicles on public roads.

Obviously the financial saving that AI will eventually generate through the removal of humans might be great for the P&L’s of companies, the societal cost of redeploying redundant drivers will play a material role in how aggressive AI driven innovation will appear in our daily lives.  These debates will carry on for years in both public forums and closed-door boardrooms, but there is no doubt that AI is here to stay and will fundamentally change our industry.

Blockchain

This one has confused a lot of people over the last few years, including myself.  On the surface it is best known as the engine room for crypto-currencies.  In supply chain it just seems like a really good tracking tool.  While it is both of these things, the understanding is really in the name itself.  I’ll get to that in a minute.

As freight forwarders, we’ve long been a key player in the world of completing transactions for trade.  When spending large sums of money with factories in foreign lands there has been reliance on shipping lines, freight forwarders and intermediary banks working together to complete a transaction between a factory and a buyer.  There were many pieces to the puzzle that could go wrong, leading to delays, angst, fraud and even theft.

Now, think of those pieces as independent blocks, lying around the supply-chain waiting for their moment to become part of something bigger and complete.  A chain even…

As each block reaches its completion point – mid-production quality inspection, final production check, goods loaded, goods delivered to port, goods sail, goods arrive, goods cleared, goods delivered, delivery inspection complete, etc. – it is added to a virtual chain on a cloud-based platform where all parties are active participants in the completion and coupling of the “blockchain”.  As an auditing tool, the blocks are preserved with specific time/date/notation information that paints a complete picture of the transaction.

Now, imagine these blocks becoming integrated with your financial system or with your warehouse management/inventory system.  Traditional purchasing terms may evolve to mirror the blocks in the chain whereby partial payments are executed every time a new block is added.  Warehouse receiving and balance sheet totals may immediately update prior to goods being put away in their final locations.  At the product level the blocks may extend down to the unit levels and then follow on to the end consumer, creating a life-span history of every widget you sell, from purchase order to consumption.

Though advantages in visibility and efficiency are obvious, as with all technology, there are serious drawbacks.  The biggest for our industry is the lack of readily available and widely adopted platforms that can be easily switched on, trusted and used at a competitive price.  While many of the existing blockchain platforms are open-source, meaning that you can freely integrate with them using your own developers, few companies in our space would employ developers to build and maintain in-house blockchain integrations.

First-movers are also key to seeing this become industry standard.  For those of you in retail related logistics, if you think back to the mid-2000’s when retail compliance was just becoming “a thing”.  The idea of specialised labels, barcodes and data transfer was a real punish and was reserved for large companies who had the budgets to invest in retail compliant technology.  Over the years, platforms like SPS Commerce have emerged to make retail compliance a reality for even the smallest of operators.  Blockchain will need something similar to gain momentum – major clients working with large factories will likely be the start.  Walmart, Amazon, Apple, etc., will drive this practice into the masses and platforms will emerge that will enable the technology to be easily used by all members of the chain.

So what does all of this mean to you?  Perhaps you can kick off a healthy debate at the next BBQ you’re at (though footy is probably a safer topic).  Maybe you re-watch The Terminator and nod more understandingly.  But possibly, somewhere in your subconscious, this article plants a seed and, at some point in the future, when the time is right, you recognise that your new business process or the new client requirements coming across in RFP’s are AI and Blockchain coming to life before your very eyes.  From there, whether to fight it, adopt it or promote it will be very much up to you (and Siri if you choose to consult her…).