The world is changing – growing customer expectations, individualisation, and demographic changes are influencing the way we need to run supply chains (SCs). SCs need to become faster, more granular, and increasingly precise compelling organisations to adapt or face the risk of digital Darwinism (Exhibit 1). Many firms are turning to disruptive digital technologies to facilitate productivity gains, enable new business models, and fundamentally change the way SCs operate to remain competitive.
Managers at DHL embraced the digital revolution to meet increasing customer service expectations and the granularization of orders through on-line trend. This impetus to act is compounded by growing customization/individualization as SKU ranges grow across industries.  Internally, DHL managers are facing ageing populations and potential labour shortages in the in the developed world. Notably, the US Census Bureau predicts that more than 60 million “boomers” will exit the workforce by 2025, whilst only 40 million will take their place.  Facing an ageing workforce, DHL must act swiftly to bridge the gap between new recruits and existing staff via ergonomic innovations.
Leveraging AR in the face of digital Darwinism
DHL are enhancing human-machine interactions by rolling-out augmented reality (AR) glasses in warehouse picking operations which are estimated to account for 55-65% of total warehousing costs.  Pickers are equipped with AR glasses which display the location of each item and where it should be placed on the trolley (see Exhibit 2) resulting in ~15% efficiency gains, increased employee satisfaction, and reduced error rates.  Although picking errors rates are very low, estimated at 0.35% using pick-by-paper methods, every error must be prevented as it typically results in high follow-up costs.  Digitally enhancing the picking process has increased the speed and precision of the SC to meet growing external demands, whilst improving productivity to relieve internal labour pressures.
In the medium term, managers are looking into additional applications for AR including trainings/dimension calculations. Most notably, DHL is testing the application of AR in planning processes as warehouses are increasingly used to house additional value-added services (e.g., product assembly/labelling) hubs must adapt to accommodate for new services.  Modifications are overlaid in the real environment to ‘field test’ adjusting planned redesign measures via AP to support and reduce the cost of warehouse redesign and planning.
Expanding beyond human-machine interactions, DHL is considering applying Internet of Things (IoT) into its warehousing operations to optimize efficiency in real-time via responsive graphical visualizations of operational data aggregated from sensors on scanners, material handling equipment, and warehouse management systems. By 2020 there will be 50 billion connected devices  with the potential to streamline employee operations, and trace goods through the SC improving employee safety whilst generating significant efficiencies.
Recommendations for a long-sighted strategy
To complement the deployment of disruptive digital technologies across the SC, DHL must run extensive training programmes to ensure employees are part of the change.  Upskilling the workforce expertise to match advancements in technology is crucial to capitalising on digitalisation opportunities. Moreover, if employees are not encouraged to embrace new ways of working in the SC, the change may be met with resistance.
DHL should continue innovating to identify additional AR applications across the SC (i.e., beyond warehouse operations). For instance, AR has the potential to optimise transportation completion checks required to register a delivery as complete and ready for pick-up. AR devices could capture pallet/parcel numbers, and volumes using markets or object recognition technology to accelerate checks. More generally, DHL could investigate new forms of human machine interaction allowing machines and humans both work in closer proximity and machines can ease previously strenuous tasks for humans. An example is the Festo ExoHand, which emulates the physiology of the human hand and can support straining manual movements (worn as glove) and transmit human hand movements to robot hand.  As a result workers can remotely pick up products – picker sits in remote location and directs robots – enabling the remote handling of dangerous goods.
Going forward there are several questions for DHL. Whilst AR is already providing tangible benefits across multiple industries, have we overcome the technical and societal challenges including high investment costs, network performance issues and public acceptance necessary for wide adoption?
Moreover, the high cost of AR solutions means many organisations (including DHL) are obtaining core software from open source platforms to reduce costs. This runs the risk of inadvertent or targeted exposure of coding and ultimately information to third parties. As regulations continue to lag behind technological developments/adoption, will corporate and government insurance frameworks prove effective in dealing with new forms of crime? How can DHL mitigate against these concerns?
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 McKinsey & Co., Supply Chain 4.0 in Consumer Goods, April 2017
 De Koster, René et.al. (2006): Design and control of warehouse order picking: A literature review. European Journal of Operational Research.
 DHS Press Release – February, 2017 “DHL Supply Chain makes smart glasses new standard in logistics
 DHL, “Augmented Reality in Logistics – changing the way we see logistics – a DHL perspective”, 2014
 Mobile World Live, “DHL: Adding digital logic to logistics – Mobile World Live”, 2017
 Supplychaindigital.com, “Training workforces in digitisation of the supply chain: Q&A with DHL | SCM | Supply Chain Digital”, 2017
 Festo Website. “ExoHand – Human-machine Interaction.” 2015