As mentioned in our group blog, leveraging technologies is the key for cost advantages and operational excellence in logistics industry and different technologies has also applied into the logistics industry. In the following, the article will try to figure out how logistics automation improve the quality of logistics. But, before that, let's understand more about logistics and the evolution of the logistics sector during the past few decades.
Understand the Logistics needs
No matter which industry, logistics is an emerging business area in many countries that every companies or organization should consider. "Logistics" is referring to the flow of goods from origin to destination, it can be physical (such as materials and end products) or non-physical (such as energy, information flow). Within the field of logistics, there are many sub-category areas like procurement logistics, global logistics (freight forwarding industry is one of industries under global logistics and which has already discussed in our group blog before), distribution logistics and reverse logistics etc.
To achieve a higher logistics standard and quality, logistics management become very important for every organizations and logistics outsourcing also became more popular in 1980s-1990s in the last century. In 1970s, most of the companies were running business under insourcing, that mean if a company needs to keep her stock after production, she need to purchase or rent a warehouse for storage. However, after logistics outsourcing become more and more common, company can have the alternative to buy logistics service from logistics service provider (LSP) instead of doing by her own.
Evolution of the Logistics Sector
Outsourcing practice became more and more common and the term third party logistics (3PL) has also became a new concept for those external organizations to execute logistics activities on behalf of the product owners in 1980s'. Traditionally, 3PL can provide warehousing service, transportation service, custom declaration service etc. In 1990s', some of the 3PL can even support some value-added services for their customers, for example, a candy trading company which purchase candy from Europe and purchase candy can in China, then she can find a 3PL to support this kind of simple assembly in their warehouse instead of sending candy to the tin factory for production. This kind of 3PL also so-called as lead logistics provider (LLP). In 1996, Accenture, an American Consultancy company even announced the term of fourth party logistics (4PL) and registered as trademark. For 4PL, it refers to an integrator that assembles the resources, capabilities and technology of its own organization and other organizations to design, build and run comprehensive supply-chain solution. (Bade, 1999) As a 4PL, she can function as a "single point of contact integrated service" supplier. Service scope can cover cargo logistics, information flow, information technology management etc. Still, the logistics sector is transforming and emerging technology helps a lot for the transformation and automation in fact function a very important role for the industry transformation.
Source: Global Contact Logistics Report 2014, Transport Intelligence
Logistics Automation
When more and more companies find LSP to function as their 3PL or 4PL, the service quality of logistics become more and more important. As mentioned in our assignment 2, keen competition and fast changing market are two of the critical challenges that LSP is facing. Under this situation, a professional logistics service is the trend for LSP to achieve. In 2000s', when computer software and information technology has widespread use in many industry, logistics automation has also come to a new era. By applying different automation technologies into logistics, it can help to improve the operations efficient and the effectiveness. For example, by using RFID (Radio-frequency identification) in the warehouse, the warehouse operator can read the cargo information by using a wireless receiver. Therefore, no manual data input is needed during cargo inbound or outbound. Of course, the cargo data should already be linked up with the RFID in advanced. Should you want to know more RFID technology, you can refer to the below video.
Automation - Machinary
Automation is a very useful technology that helping many companies to improve their logistics operation quality, you may see automation in many areas. For example:
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| Auto-labeling machine |
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| Auto-wrapping machine |
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| Radio Shuttle System |
All of the above are some example of fixed machinery automation, for auto-labeling machine and wrapping machine, it can improve the labeling and wrapping efficiency and reduce human mistake. For radio shuttle system, which is a high-density pallet storage system which using a electric carriage so-called a "Radio-Shuttle". The operator performs all the procedures for storing and extracting pallets simply by using a remote control, then the radio-shuttle will move along the track to deposit the load in the right location. (Storact Log, 2012) By using the "Radio-Shuttles", it can bring out the following advantages:
- Less time for unloading pallet because radio-shuttles cab bring the pallets to the track entrance and forklift does not have to enter the land.
- More pallets can be stored because operator can maximize the usage of the warehousing space
- Lower risk of accidents and less cargo damage
To understand more about "Radio-Shuttle System", please have a look for the below video.
Automation - software
Apart from the fixed machinery automation, software automation is also commonly use in logistics industry. Many companies will also make use of software automation to improve their workflow as well as system management. With applying software automation in logistics, it can improve the effectiveness of the whole logistics management. Electronic data interchange (EDI) is one of the most common automation interface which being used in logistics industry. By using EDI, logistics service provider can get or send data with customer's system automatically, this is a process of data exchange between computer to computer. As no manual input is needed, it can speed up the data processing time as well as eliminate the manual mistake.
Moreover, some LSP may even apply automation in their warehousing management system (WMS) to improve the workflow accuracy. Let's make use of a real example to illustrate better. I have been working in a logistics company which is providing warehousing service to their customer. One of the customers is doing online sales and their are over 10 thousands pieces of items and around 1 thousand online orders per day. How to ensure order accuracy and efficiency is one of the critical issues that company is facing. In order to eliminate manual mistake and make use of IT support, the IT tried to do some automation programing to cater the needs of operations. Few automation alert system has been made, for instance.
- Automation on carton selection: make use of the dimension of each item to calculate the best fit carton size for particular online order. Improve the operation efficiency.
- Automation on Air waybill printing: make use of customer data and match with the express company waybill form
- Automation on weighing alert: make use of the gross weight of each item, carton box and packaging materials to calculate the estimated total gross weight of packed parcel. In case any big difference in gross weight, the WMS will reject the order until the worker find out the reason behind.
Leveraging technologies in logistics industries
In fact, under the fast changing and keen competition logistics market, service provider always need to think of different emerging technologies to sharpen her pencil. Otherwise, LSP can be very to be marginalized. Automation is one of the technologies that LSP can be applied to the logistics industry and there are still many technologies that can help the industry as well. For instance, mobile technology, virtual reality technology and cloud technology etc. Should you want to know more on these aspects, please go to blogs of my group mates. You should able to understand more and deeper!
In short, refer back to the Global Contact Logistics Report 2014 from transport Intelligence, no matter the new market structure will change back from out-sourced warehousing to in-house fulfillment or not. One of the key points from the report is, IT investment will become more and more important for the role in new logistics market structure. Thus, leveraging technologies is no doubt the key for cost advantages and operational excellence in logistics industry for now and future!
Source: Global Contact Logistics Report 2014, Transport Intelligence
Reference:
Bade, D., J. Mueller and B. Youd (1999). Technolgy is the Next Generation of Supply Chain Outsourcing: Leveraging capabilities of Fourth Party Logistics. Anderson Consulting.
Transport Intelligence (2014). Global Contact Logistics Report 2014. Retrieved 20 April 2015 from http://www.transportintelligence.com/market-reports/report-global-contract-logistics-2014/322/
Storactlog (2012). Radio Shuttle. Retrieved 20 April 2015 from
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