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Five Logistics Trends to Look Forward to in 2018
By Dhruvil Sanghvi, CEO, LogiNext
The year 2017 has been exceedingly good in terms of logistics innovation. We saw logistics management take center stage in many high-profile shopping extravaganzas such as Singles’ Day, Black Friday, Big Billion, etc. We saw last mile delivery being used as the key input in all omnichannel strategies. We also saw localization in distribution strategies centered around making last mile delivery more effective. We saw the transport industry open up to ‘freight-as-a-service’ where full-truck load shipments were optimized for route, time, and capacity, giving the service providers (and the companies availing the service) effective economies of scale. We also saw machine learning being, not just talked about, but also implemented successfully in logistics and field workforce planning.
These trends would be the greatest influencers in 2018 for logistics and field workforce management.
Omnichannel Integration to Spike with Smart Stores
Smart stores will be coming up in a big way in 2018. Multiple stores under a brand would be interconnected among themselves and interlinked with the website. Consider the situation where you are ordering a printer online. The brand promises to deliver it in a day. Behind the scenes, the model would be checked along the available inventory in the stores. If the nearest store (Store A) doesn’t have the item, the order would be sourced from the next-nearest store (Store B). The order would be processed at Store A, bought in from Store B (on the same day of order placement), and then added to the delivery schedule on the next day for Store A.
Alternatively, the order can be processed at Store B and added to their delivery schedule depending on the distance between that store and the destination. In this situation, the route taken would be optimized to include this new delivery while maintaining the ETAs of all other deliveries scheduled at Store B.
Either way, the customer would receive the order on-time as promised. The technology behind enabling the omnichannel strategies for retail and e-commerce is executed in three steps:
• schedule planning and order allocation
• delivery route optimization and real-time tracking
• electronic proof of delivery and feedback capture
Companies would use cloud-based optimization to better manage their omnichannel strategies. LogiNext is currently enabling the omnichannel integrations for companies such as Al-Futtaim and Landmark in the middle east. These companies would then join the global omnichannel bandwagon with other stalwarts such as Walmart, Amazon, Alibaba, JDA, Lazada, etc. The year 2018 would see many more companies turn omnichannel using cloud-based last mile delivery optimization as a leveler.
Growth of the New Last Mile Infrastructure
There is an uptrend in last mile delivery management which deals with localization of distribution. The idea is to leverage pre-existing last mile distribution infrastructures and optimizing them through technology. The recent Singles’ Day saw the State Post Bureau partner with Alibaba to ensure same day deliveries. It has proven time and again that effective last mile deliveries push e-commerce and retail sales. With omnichannel strategies spreading, last mile delivery management is the key factor which would shape the new marketplace.
The upcoming logistics trends would be either influenced or centered on technology, especially cloud-based technology
New last mile infrastructure is about doing more with less. Our resources in terms of vehicles and delivery personnel are limited and would not scale as fast as the demand grows. Cloud-based optimization is the load-balancing platform which would help logistics and supply chain companies satisfy the fluctuations in demand through better planning and scheduling of orders and parcels.
Many retail and e-commerce companies are vertically integrating with logistics partners to streamline their last mile deliveries. Late in the year, Target acquired Shipt for the same reason. Shipt is a fresh-food delivery aggregator which has more than 21,000 drivers optimized for on-demand deliveries. Shipt will boost Target’s same-day delivery capabilities. Target had previously acquired Grand Junction for the same reason. Localized ground-level intelligence would show more such acquisitions and consolidations soon.
Orders Returns to be a Necessity Feature
Parcel returns were a luxury not a few years back, but 2018 would see returns become a necessary feature for all retail and e-commerce companies. Returns add the assurance of post-sales service and make it easier for customers to fulfill their buying decision. While returns become a necessary feature, the feasibility of reverse logistics would have to be simultaneously improved. Promising quick and east returns is one thing, executing them on the ground is another.
Here again, cloud-based optimization would be the driving force. Dynamic schedule planning can allocate pick-up requests to the delivery personnel nearest to the return’s origin point. The delivery person can pick-up the returned parcel directly from the home of the customer and drop it back at the hub. These reverse logistics processes can function in parallel to the last mile delivery schedules. The balancing between both schedules would be done through dynamic route optimization where an algorithm suggests the ideal sequence and pick-ups and deliveries to be done to ensure maximum efficiency.
In a nutshell, reverse logistics market is going to get a huge uplift through the growth in returns.
Growth of Freight-as-a-Service Markets
Freight management industry is an upswing across the world. However, due to resource constraints such as shortage of skilled drivers, or road-infrastructure bottlenecks, the freight management industry would adopt more technology-backed optimization in the near future.
A key segment that would see more growth is the Freight-as-a-Service (FaaS). Aggregated shipments give these companies the economies of scale which can be passed back to the clients in terms of competitive freight rates. Specialized FaaS companies would be better equipped to localized and skilled drivers leading to more efficient freight movement.
This is not to say that companies would not prefer to use their own fleets for their shipments. They would just be more comfortable than before regarding partnering with FaaS companies.
Logistics Application of Machine Learning
As we have seen in some of the above points, the upcoming trends would be either influenced or centered on technology, especially cloud-based technology. With internet penetration increasing across all major countries, manufactures, logistics partners, retailers, and customers are all much better connected than before. This interlinking of communication and visibility of operations is best orchestrated through cloud-based optimization technology.
When you look into this technology you would find the most beneficial applications of machine learning. Machine learning has been talked about for years, but right now we are at the juncture of realizing its potential. The year 2018 would see more and more applications of machine learning.
For each of the above-mentioned cases, machine learning backed algorithms could make the processes much more optimized. For FaaS providers, machine learning would streamline their delivery points to maximize their carrying capacity while complying with all service level agreements with their clients. For the returns market, machine learning would optimize the address locating mechanism to ensure that the delivery personnel doesn’t waste time in locating new pick-up points. Within the new last mile infrastructure and the omnichannel shift for companies, the applications of machine learning are more profound. Machine learning would power the smart stores and the connected last mile infrastructure to enable faster deliveries and better customer interactions.
The future holds bright for logistics, and next year would embrace more than we ever did before. The tech adoption rates would sour, and customer-centered logistics and supply chain movement would become a priority for many companies. It’s time to realize this future, now.