2023.02.13
How are innovation and digital responding to supply chain disruptions?
The ability to innovate is key in the ultra-competitive world of logistics.
The arrival of new market players, changing consumer expectations, the emergence of new technologies, and the outbreak of the pandemic have caused an upheaval in the logistics sector over recent months.
In order to remain competitive and to offer better services that are both more efficient and more eco-friendly, the shift towards leveraging big data has become a preferred solution. This entails data analysis, blockchain, or even the creation of common languages: digital logistics innovations that are revolutionizing supply chains in response to the disruptions shaking up the sector.
What are the newest trends of the logistics sector?
In order to truly appreciate the interest and implications of this digital transformation, we should first conduct a brief assessment of the current situation, given that the logistics sector has changed dramatically in recent years.
New innovative players competing with the mainstays of the sector
The stakeholders within this ecosystem are not necessarily the same as before. Those long-established organizations, which have been using the same technologies for over 40 years, are naturally still in place. But they must now keep up with new competition: for example, from carriers, which use their higher profit margins to shift to 3PL (third-party logistics) status or even from digital natives.
New businesses began entering the market as early as 2015, focused mainly on last-mile delivery services. They subsequently went on to diversify their activities. Around 2018, without other players even considering that they had their sights on physical assets, (like Aircraft or terminals which represent new constraints and are often less profitable), the newcomers began to invest, managing to raise vast sums of capital. These new players understood that in order to succeed, they would need to mix digital and physical, and create parallel business streams. They also created interesting new niches, such as visibility platforms, which we will come to later.
In the beginning, they were not really considered serious competitors. But it later became clear that these brands, regardless of their actual profitability, were indeed able to embrace the complexities of the logistics sector...
In turn, certain corporate customers also entered the logistics game, eager to become competitors in their own right. The most familiar of these is of course Amazon, which today works together with all players, but could well come to replace them, or at least replicate their models. The distribution giant Walmart is also making up lost digital ground, now offering new services — digital, physical and human — to its own clients and partners.
Individual players will need to take inspiration and to learn from others. Within a network market that is dynamic and fragmented, any notion that logistics is closed to competition is now redundant. For customers, it is through partnerships that the world of logistics will continue to innovate and to thrive.
As for recipients, and for individual customers in particular, here the expectations have also changed.
Younger people, more than most, seem to feel a sense of irritation at inflexible logistics, due to the lack of choices. They want to be able to say, “I live in a large town, I want my delivery done by electric cargo bike”, or “and if the truck isn’t filled, I'd prefer to have my delivery in two days when it's fuller”, or even to receive their deliveries to an self-serve pick-up point nearby. In short, they want to enjoy customized delivery and are mindful of its carbon footprint alongside their social aspect.
In the same vein, these younger generations want to be sure that delivery personnel have compliant employment contracts, that they receive proper employment benefits and protection, and overall that they are properly paid.
In other words, the supply chain has become a loop, in which individual players now need to venture beyond their previous limits. Urban logistics, in particular, will need to evolve in step with new expectations, as explained in this article on the Sprint Project website. Traditional stakeholders have taken on a different role, with others such as “organizing authorities” and citizen-consumers also vying for space. They want to exercise influence on the decisions taken at certain points in the chain.
A global wake-up call with the pandemic
At the outbreak of the Covid crisis, we all became very aware that when essential services are at stake, logistics plays a central part.
See also: Blockchain: logistics innovation to transport vaccines
If a major digital player were to become owner of the digital twin for global logistics, as some industry professionals are predicting, we are entitled to ask certain questions: would masks not have been delivered to the highest bidder? Would it have been possible to organize dedicated air bridges? Would we have secured vaccines when the global situation was critical?
Quite clearly, the issue of sovereignty has become unavoidable since logistics has become a strategic issue.
All of these changes and upheavals have led to unprecedented levels of innovation, which are revolutionizing logistics while responding to new expectations.
Data, blockchain or common standards: how is innovation shaking up the world of logistics?
In this ultra-competitive world, where the needs and expectations of all stakeholders are constantly evolving, the ability to innovate is key.
Insight and data have become integral values in their own right
While it has long been a talking point, data produced by this complex, multi-modal and multi-partner logistics sector as a means of optimizing efficiency (tracking of goods, estimation, etc.), has only been feasible for a relatively short time.
One thing is now self-evident: innovative logistics is fueled by data. It has opened up interesting new niches, such as visibility platforms with players like Shippeo, Project44 or Wakeo.
These platforms — also called Real Time Transportation Visibility Platforms (RTTVP) — are used to manage transport disruptions, to monitor and estimate ETA, and to react rapidly to unforeseen events. Some are already starting to offer end-to-end supply chain traceability.
As Shippeo explains, the promise is to “use automation and artificial intelligence to provide real-time insights, enable better collaboration and unlock your supply chain’s full potential”
To achieve this, the company monitors over 28 million data streams per year, over 151,000 carriers across 75 countries.
With such an extensive database, they are able to provide their customers with accurate real-time information for each delivery.
The formula seems appealing. In 2021, the French startup Wakeo attracted 9.5 million euros from two investors, after raising 2 million in its startup phase. And its annual revenue increased by some 300% in 2020.
This type of service provider is sometimes even set up as an intermediary between logistics specialists and their customers. They are after all neutral, objective, and safe from any conflicts of interest.
Data can also be used to develop benchmarking tools in order to provide real-time price estimate for freight or for transport in general. The startup Upply is a perfect example of this, with one of its services offering customers the ability to continually adapt their pricing in line with market developments.
Harnessing blockchain to rethink the delivery model?
Blockchain is another technology attracting the market’s attention. In concrete terms, this is a tamper-proof, distributed database which logs the entire transaction history between different users.
It serves to provide tamper-proof of events. Let’s use the example of a delivery. When the customer receives their parcel, they are asked for a signature, on a smartphone or dedicated mobile device. A digital version of this proof of delivery is sent to the company and is notarized. It is recorded as definitive proof that the shipment has been delivered. Payments can then be triggered and the transaction completed, without working through other stages in the process.
Blockchain also addresses the issue of responsibility: as the goods change hands, you can see where they are at each step in the process and who has responsibility for them. In insurance terms, the entire supply chain is then reinforced by clear and precise processes.
What might we envision going forward?
Let’s imagine, for example, that a driver needs to deliver a pallet of drinks, but the restaurant owner is not present at the scheduled time and cannot be contacted. Could the driver, in just one click, activate a bidding system to other restaurant owners in the vicinity to supply the goods to them instead? Interested parties would enjoy a discount, as delivering to them would ultimately be cheaper than completing a full return of the product.
Going forward: the development of a common standard?
In the logistics market, which represents some 6,000 billion dollars, it is rare that any one player has more than a 1% shareholding. Logistics is a market of networks. Players who want to fully support their customers cannot afford to do it alone, especially not within the context of an extended enterprise... And here again, digital is a sizable lever.
Here at GEODIS, we do not merely intend that data serves a supply chain approach, but rather that it enables us to move from supply chain to “supply ecosystem”.
Standardizing the supply chain is no simple feat, however. Until now, individual players worked within the frame of their own organizations, using their own language and practices. Former technologies were used to computerize supply streams, regular and recurring. However, with even a slight change in organization, they required complicated customizations. They were not capable of handling more precise queries. For example, if a truck is half full, and another carrier passing nearby has room on board, wouldn’t it be better to team up?
In order to change tack towards a multiple subcontractor approach involving different modes of transport, to move from a supply chain to a supply ecosystem, we need to be speaking a common language, which so far does not exist.
Of course, a number of players have already tried to make this happen. But all too often, these attempts were for their own gain, serving only to better control their supply chain using their own language.
At GEODIS, we promote the development of a common approach founded upon the principle of shared data. We are looking into developing a glossary, to serve as both an industry-wide standard language as well as a means of implementing digital communication between different players. Our aim is to make these tools available to all, free of charge, in order to create an integrative digital ecosystem composed of datasets that, rather than being assembled statistically, are combined dynamically in real time, according to requirements and incidents.
As you can now see, innovation is at the core of all logistical developments. Individual players can become architects of change and build for themselves a sufficiently robust and comprehensive digital toolset to tackle new challenges – first and foremost, a different social impact, at an environmental level in particular. Their own attractiveness, and indeed their survival, is at stake.
