DHL advocates that by 2025, IoT has the potential to generate up to 1.9 trillion USD in additional value for international logistics industry . Gartner describes the situation more broadly that by 2020 half of major new business processes will incorporate some elements of IoT . Being competitive in the industry where every dollar counts and price for services plays a big role requires using every possible opportunity to increase efficiency. IoT might revolutionize the whole value chain by streamlining processes and therefore increasing net margins of companies that rely on international and local deliveries . In the last 5 years, DHL launched several initiatives with IoT leaders such as Cisco and Huawei, with the ultimate goal of optimizing DHL’s operations – from fleet management to employee monitoring . In other words, and rephrasing the famous saying, if you can measure something, you can improve it.
In 2015 DHL and Cisco jointly run a trend research on the implications and use cases of IoT for the logistics industry . The conclusion is that once more objects become connected to the Internet and tracked in real time, the main challenge will be to effectively manage the information flow and corresponding flow of physical objects such as containers or parcels. DHL and Huawei launched a pilot to improve “inbound to manufacturing” (I2M) logistics for an automotive site in China . I2M logistics in the automotive industry requires the right automotive parts to be delivered to the right location and at the right point in time. As it can be seen from the Toyota case, even the smallest deviation from the process can greatly affect the overall productivity, so the speed and accuracy of this type of logistics is a vital part of the customer promise .
The solution that is piloted in China is fairly simple – each batch of automotive parts is tagged with a chip that uses the cellular connection and constantly transmits data about a truck’s location and status. Similar tracking devices are also installed in the receiving docks. A real-time system analyses the data and directs drivers to the most appropriate dock. The greatest value of this system is its timeliness – each of 100 trucks should be at the right dock (out of 30 docks) when the particular part is needed at that specific dock. Another similar system, this time in collaboration with Cisco, is run in smart warehouses in Germany and identifies on the fly how operational activities of employees change in different areas of the warehouse. These are just pilots that yet have to show their return on investment, but they can be implemented on a company-wide scale in 5-10 years from now .
As more devices and physical objects are becoming connected to the internet, an appropriate focus on security becomes vital . The more current supply chains rely on the digital world the more they become vulnerable to cyber threats. With the benefits of more data sources comes a new vector of attack through multiple entrance points – each one of millions of sensors can become an open door for hackers. For instance, in June 2017 cyber-attack Petya almost shut down TNT Express, FedEx’s ocean freight subsidiary, and it might not fully recover in the foreseeable future . It seems that logistics companies are following the trend of using data to streamline operations, however, I would recommend significantly investing in the resistance to digital attacks from day 0. This does not mean developing a solution from scratch or acquiring a startup right away, but it is important to at least design the data flow and exchange with an eye on safety. Companies, such as Gemalto  or CyberX, provide a ready-to-implement solution that is installed as a proxy between data-suppliers, e.g. sensors, and data-consumers, e.g. warehouse management. For an initial pilot and implementation, this might be enough, but the main question is – what’s next?
- As all companies have an opportunity to implement some sort of IoT, how would a particular company, e.g. DHL, gain a competitive advantage over its competitors, e.g. Fedex, that is also following the trend ? Should DHL rely on someone’s else expertise, build its own department or buy another company?
- Companies do a lot of things to protect their assets physically – guards, fences, security cameras. How can a company ensure that by relying on IoT it doesn’t expose its crucial operations to villains that are thousands of miles away from the assets at risk?
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