The logistics industry in India has come a long way, driving the growth of the Indian economy with full rigur, accounting for almost 14% of the country’s total GDP. The industry, which currently serves as fuel for the effective functioning of various other industries is currently estimated to be around US$ 160 billion, and according to the domestic rating agency ICRA, the Indian logistics sector is expected to grow at a rate of 8-10 percent over the medium term.
Technology and its extensive usage have played a miraculous role in bringing the industry to a critical growth juncture where it stands today. The focus on new, high-end techniques and the industry’s keenness to embrace this newness has led to an overall improvement in existing procedures, streamlined operations, enhanced productivity in the supply chain and of course, reduced logistics costs. Undoubtedly, the industry is evolving, taking a stronger grip gradually and getting ready for another round transformation yet again.
Out of the many technological breakthroughs that have rekindled the glory of the logistics landscape, the key ones that are responsible for driving maximum change are the use of Artificial Intelligence, IoT technology, and Automation.
Let us have a look at how the use of these technologies is reshaping the growth of the Indian logistics arena.
Internet of Things (IoT)
Before we delve deep to find out how IoT is impacting and fuelling the growth of the country’s logistics sector, it is important to first know what exactly is the Internet of Things. Broadly put, it is a network of interconnected electronic devices that can speedily and efficiently exchange data with one another over the Internet. Interestingly, the number of IoT-enabled devices and applications has been taking a jump each year and by 2020, it is estimated that around 50 billion devices would be connected to the Internet. Definitely, the opportunity is big and the logistics industry network has already been making use of varied IoT-based solutions which have yielded positive results.
So, now let us understand how does it work? Well, the enterprises leveraging IoT are easily able to connect all devices across a centralized cloud network. This facilitates data-sharing and helps enterprises gain real-time visibility into their operations. A report by IDC and SAP predicts that IoT will lead to a 15% productivity increase in delivery and supply chain performance. Moreover, IoT is even expected to deliver $1.9 trillion to the enhancement of SCM and logistics, as suggested by a recent white paper by DHL and Cisco. Clearly, IoT seems to be the future growth driver for the logistics industry.
By putting the right IoT solution in place, each aspect of the supply chain could be enhanced, the primary benefits: –
- a) Fleet management‑ Fleet management is a very critical aspect of logistics, especially for companies operating a large number of vehicles. Optimizing vehicle usage becomes extremely important for such enterprises, in order to ensure maximum resource utilization. The use of advanced IoT solutions like mobile scanners, RFID systems, etc helps companies effectively track the location and operations of their vehicles in real time, thus providing them with better visibility and a more transparent view of how efficiently the tools are being deployed and how resource allocation could further be maximized.
The use of these high-end solutions also enables enterprises to communicate with their drivers in real-time, so that appropriate actions could instantly be taken in case of any emergency situation. With smart sensors embedded in the vehicles, their condition could be autonomously monitored. Moreover, with the help of real-time insights, customer inquiries can also be responded to in a timely manner, and the tasks of the drivers could be shuffled anytime, depending upon any and last-minute requests which would need to be accommodated at times. Thus, the use of IoT can lead to effective management of time, enhancement of fleet efficiency and improvement in the organization’s overall performance.
- b) Location Management– The location-based data captured through IoT technologies allows enterprises to gain greater visibility and control over the entire supply chain. Location of each and every shipment could be easily tracked right from the manufacturing unit until the time it reaches its final destination. The quality of the goods can therefore, be checked upon at any point of time and the delivery status could be acquired or shared with ease. Once goods are delivered to a certain place, a push message is usually sent for notification. Location management is therefore one of the biggest advantages of using IoT technology, offering a more insightful understanding of each link in the supply chain and helps ensure higher efficiency.
- c) Inventory management – Monitoring the inventory, especially the perishable commodities and other sensitive goods, throughout the transit journey is an important responsibility of the logistics chains. One has to ensure that the goods are not damaged, and hence continuous monitoring is required. Cloud-based sensors can be embedded in the system which could keep checking the condition of the goods till they reach their final place. In case the goods get damaged at any point during transit, the real-time notification could be sent and corrective steps could be introduced to minimize the loss.
- d) Warehouse management‑ Warehouses are an essential part of any supply chain, and the use of IoT could prove to be effective in their management. Few of the concerns of warehouses are better utilization of spaces, ensuring safety and security, risk control, etc. The use of IoT helps in optimizing the warehouse spaces and also allows warehouse managers to remotely control doors to the warehouse by using IoT sensors. This ensures safety and security of the warehouse items. Moreover, the use of IoT can also reduce the risk of accidents in warehouses to a great extent. In case of any mishap, the IoT-powered machinery could raise the alarm instantly, thus alerting the user.
1. e) Traffic management–The use of IoT can curb the idle times spent in dealing with the traffic. The traffic commotion has been growing each year, and the value of time lost due to traffic jams is projected to reach $11.8 billion by the year 2025. The solution to this is effective route utilization and real-time inter-vehicle communication, which could bring down the overall cost by almost 50 percent.
- f) Optimizing fuel usage‑In a year time, traffic jams lead to costs of about $117 million due to fuel usage. IoT can reduce this number to half, thus eliminating fuel wastage.
Automation is all about looking for a repetitive task, which consumes huge amounts of time and that commonly lead to errors. Once these tasks are found in the process, we can start to think about automating them. Warehouses also have these repetitive cumbersome tasks. Sorting, categorizing, and storing items over and over. All of these repetitive tasks are an opportunity for automation. A rapid move towards automation is one of the biggest changes across the logistics sector. It allows the process to be more efficient, productive and free of human errors.
Of course, automating production lines is nothing new. Many have put forth their views and plans of introducing robots into the production processes in the past as well, especially in the automotive sector. However, the current scenario is a changed one, an innovative one and a disruptive one.
Logistics companies look at these developments as they will lead to direct and indirect transformative pressures on the industry. To begin with, the production strategies of their clients are likely to undergo a massive shift. By adopting the latest robot technology for basic and repetitive tasks such as ‘pick and place’ there is an opportunity for employers in the Middle East to greatly reduce labor costs. Robots are especially good at performing functions where precision or consistency is required. This ofcourse, would rebalance manufacturers’ labor costs, and reduce the competitiveness of remote markets. This trend would be strengthened by manufacturers increased awareness of global supply chain risks and other near-sourcing pressures. This could lead to manufacturers preferring to establish new facilities in or near to the major consumer markets in the Middle East.
Secondly, there is a direct impact which development of technologies could have on the logistics industry. Currently, the sector employs labor on a high scale to fulfill the warehousing and driving requirements. However, over a period of twenty years, the scenario may change dramatically. Google is already testing technology that will result in driverless cars, and it seems reasonable that, once regulatory and labor organization barriers are overcome, we will see a growing proportion of driverless trucks on the roads. This would have obvious benefits in terms of costs, but would also reduce tachographs and hours of service to minimal, thus improving supply chain efficiencies.
One could easily say that automation is more likely to drive the future of the Indian logistics industry, adding tremendous value to the entire supply chain.
Artificial Intelligence has successfully made its way into the functioning and operations of a wide range of industries, and logistics has certainly been no exception. A lot of Indian businesses have integrated AI with their supply chain logistics to streamline their core strategies, to improve their decision-making capabilities related to issues like costs, inventories, vehicles, deliveries, etc, and to increase their competitive advantage in the industry.
With the help of AI, logistics firms can efficiently optimize their delivery routes, which in turn take care of their shipping costs. This is done with the help of location-based services, which helps companies gain real-time insights into traffic, weather, etc and suggests quicker routes to the drivers to reach their destination. Certain AI technologies are designed well to even use image recognition to monitor the condition of their inventories and shipments.
Artificial Intelligence is also allowing machines to dig deep into volumes of logistics data and then suggest appropriate winning strategies to the logistics firms. Anticipating consumer demand, supply projection etc can be easily handled using the AI technologies.
A recent survey conducted by Data Pulse has revealed that only 38% of the organizations in India have implemented AI in their supply chain and logistics operations, whereas 51% of organizations in the Asia Pacific have done so. Clearly, it will take some time till AI penetrates deep and establishes its root in the logistics industry. What is important currently is the real value that it has been adding to the logistics chain.
Remember, the real power to bring the desired change vests in the hands of technology!
CEO & Co-founder,Fareye