Every year around November here at Youredi we sit down and discuss what the next year’s logistics trends are. While Youredi is an iPaaS vendor, logistics is important for us: we understand the challenges logistics providers are facing in terms of data integrations. This is why following the global logistics trends of 2019 is vital for us. By gathering these trends, we will be able to provide better-managed integration services to our current and future customers that have extensive B2B supply chains.
In this subjective blog, we are listing eight trends that we find essential not only in 2019 but in the next few years to come. Let’s look at these now.
1. Big Data
Big data has been the buzzword of the last few years. The truth is that any logistics firm that wants to survive or want to lead the game needs to rely on big data.
Our friends at Transmetrics have written an excellent article on the topic that was published in the Youredi blog in early spring 2018. They argued that logistics providers need to catch up with behemoths like Amazon and Alibaba that have been redefining the way supply chains are managed. Transmetrics wrote the following:
“One study found that 98 percent of third-party logistics companies (3PLs) and 93 percent of shippers believed data-driven decision-making was essential to supply chain activities.”
This means that logistics providers have realized that big data has an enormous value that if they utilize well they will be able to transform the way they operate and become more competitive in the long run.
While big data is an opportunity, it states challenges for the logistics industry. First of all, the industry needs to overcome its legacy mentalities, like manual paper-based processes, lack of collaboration and lack of visibility into operations, as well as they need to find ways to overcome the roadblocks of legacy technologies (without changing them entirely). Change management will be crucial and appointing a Chief Digitalization Officer could be beneficial for any enterprises that want to compete with the Amazons of the industry.
A few other concerns regarding better utilization of big data are the data silos and the lack of connectivity among stakeholders, the low-quality data, the lack of data integration and data analytics experts, as well as security concerns.
2. Supply Chain Analytics Platforms
Recently, our sales and marketing teams have been going to a lot of supply chain and logistics related events. While you get to meet there a lot of logistics providers (and hear their inspiring speeches on how digital transformation is impacting their operations or what challenges they are currently facing), there are a lot of supply chain analytics vendors exhibiting and competing for the attention of logistics providers.
These firms all understood that data is like gold for logistics: those that don’t invest in analytics will go extinct. No one will want to cooperate with a company that does not understand its processes and incompetent in optimizing its processing for efficiency.
It would be impossible to list all the best supply chain analytics providers as part of this post. Simply there are just so many of them satisfying the different data analytics needs of different companies or even different transportation modes.
For example, Transmetrics provides inland transportation providers with data for better optimization. For ocean shipping, there are analytics providers like Xeneta or CargoX. While Youredi does not define itself as a supply chain analytics providers, we have been supplying one of the largest retailers with data regarding their air cargo shipments, so our customer can further improve its supply chain to ensure that deliveries are always just in time.
3. Internet of Things (IoT)
For the last few years, the internet of things (IoT) has been a hot topic in logistics. The vision has been very clear: put an IoT device on all your containers, shipments, packages and get real-time data so you will able to supply your customers with better updates and you’ll also gather information that you can use for optimization in the future. Besides simply just tracking shipments (that RFIDs and barcodes can be used for too), IoT can do much more: it is like a tiny computer that can follow for example the temperature or the humidity of the air to prevent goods from spoiling.
The adoption has been perhaps a lot slower than many have hoped for, but since the prices of IoT devices and sensors are falling, many more will start using it in the future. Also, the lifespan of the devices has increased, meaning that it is a safe and sound investment for those that are planning for the future.
To exploit the full potential of IoT devices, integration solutions need to be imposed to ensure that the right data will be in the right place at the right time. This is crucial for utilizing the information that you gather from IoT for analytics.
4. Artificial Intelligence (AI)
Everyone is talking about Artificial Intelligence (AI), but how correctly can it be used in logistics to reinvent the backend, as well as the operations and activities affecting the customers and the customer experience?
Logistics is still extremely old-fashioned. Little has changed during the last few decades. Processes are manual and inefficient, and improvements haven’t been happening at the same pace as in other industries. When the industry adopts AI, a lot will change: processes can be more efficient as companies will be able to remove a lot of manual work that will consequently result in better quality of work as well as the speedier execution of processes. When customers live in an ‘I want it now’ world, these improvements can be extremely meaningful.
To utilize AI, collecting, aggregating, and harmonizing accurate data (from many different sources – from legacy systems, cloud-based applications, and IoT devices and sensors) will be vital so that it can be processed for realizing trends and insights. The data works as the fuel for AI: the more information you have available, the better, the smarter you can use AI.
5. Machine Learning
Artificial intelligence and machine learning often go hand in hand, as machine learning is a subset of AI (and deep learning is a subset of machine learning). To put it simply, without machine learning, AI cannot be developed, and machine learning is like a blood vessel for AI.
The concept is not new – moreover, we are exposed daily to AI and machine learning. Just think about the last time you used Netflix and you binge-watched a season of a show that was right down your alley. Based on your history, the system has learned a lot about your preferences and taste, and now it can provide you with recommendations that can be a 100% correct. There are a lot of other real-life experiences that you as a supply chain or digital change leader can learn of and can make you think of how you could use AI and machine learning to transform your logistics and provide exceptional value to your ecosystem.
You could perhaps use it for detecting fraudulent invoices or to predict the future, like delays in air freight or demand for goods so you can plan supply accordingly, it can be used for managing risks (for example material shortages) or to improve route optimization.
6. Supply Chain Integration
This trend is close to our hearts here at Youredi, as enabling the logistics industry to improve supply chain integration is our mission as it can have significant impacts on the global economy.
Supply chain integration means that all stakeholders (both internal and external) are connected so they will be able to share data for better collaboration, visibility, and transparency.
B2B supply chain integration has strategic importance for enterprises, as the efficiency can result in serious cost savings, so gross margins can be significantly reduced that will improve profitability. Additionally, it will enhance one’s relationship with its trading partners and can have a positive mark on the customer experience as well.
For many reasons, supply chain integration has been a challenge. Integrations have been traditionally expensive, thus it could just mean another cost for firms that kept lowering their margins. Even worse that while the invoices were extremely high, most of the integration projects failed. Many tried to do the integrations themselves, but without adequate tools developing integrations can be time-consuming (especially that there is a lack of integration architects as well). Nevertheless, the most significant barrier is probably the fact that enterprises use a large variety of systems. Many of them still operate on on-premise legacy systems built decades ago, while others have started to use the cloud or use SaaS applications. The data format mess is also something that integrations need to tackle: in Europe, companies use EDIFACT, while in the US and Asia ANSI ASC X12 is more common, there are newer formats such as XML, JSON, but many uses in-house proprietary data formats that often poorly documented. The integration solutions need to tackle these challenges, and you need the right tool for that.
These supply chain challenges a few lines above are the reason while adoption of integration platform as a service (iPaaS) has been skyrocketing in the last few years. Modern cloud-based integration platforms can be the savior of logistics firms. An iPaaS is extremely versatile: it can be used for system integration, data integration, B2B integration, IoT integration, SaaS integration, API Management, as well as Enterprise Integration Platform as a Service (EiPaaS) vendors can work as a hybrid integration platform (HIP) to overcome the on-premise and cloud connectivity challenge.
There are a lot of iPaaS vendors on the market. Some offer services for citizen integrators to connect cloud-based applications with just a few clicks. Others provide an integration platform that your IT team can utilize for building, deploying, and maintaining your integrations (this is something enterprises often do themselves), or you can invest in a fully managed iPaaS solution, so the vendor will not only provide you with the iPaaS (the toolbox), but “build the house for you”, meaning that all your integration solutions will be developed, deployed, and maintained by the integration experts of the iPaaS provider.
iPaaS can simplify how you connect with your stakeholders and how you share information with them. Whichever of the trends mentioned above you want to apply for your operations or supply chain, an iPaaS can have a significant impact on the implementation.
In this article, we do not want to go into too many details about key functionalities of an integration platform or how the iPaaS architecture looks like. If you want to know more, we suggest reading our extensive guide on iPaaS.
And at last, but not least, we need to mention the blockchain. Without a doubt, there is a lot of discussion going on about blockchain these days on logistics forums, and perhaps this is the current hot topic of the industry.
Hackius and Petersen (2018) defined blockchain as the following:
“Blockchain is an emergent technology concept that enables the decentralized and immutable storage of verified data.”
They also shortly and clearly explained how the blockchain technology works:
“All members keep their local copy of the ledger. It is verified because the members sign the transactions using public-private-key cryptography before sharing them with the network. Therefore, only the owner of the private key can initiate them. However, the members can stay anonymous because the keys are not linked to real-world identities.“
“A distributed system, like a Blockchain, holds benefits over centralized architectures as it provides the same, verified information to all network members. It creates trust between the parties by eliminating the need for trust. Blockchain can record the transfer of assets between two parties, without the need of a trusted intermediary.”
It has emerged as Fintech companies have started to look at it as a tool for securely improving payment handling. For logistics and supply chain, the blockchain could bring more transparency that many are looking to improve over the years to come. Massive logistics enterprises have started to look into use cases to utilize blockchain, like verifying the origin of fuel in ocean shipping, identifying counterfeit products, or tracking the source of goods.
It’ll be interesting to see what other blockchain use cases companies will come up with and how it can revolutionize logistics processes.
2019 Will Be the Year for Digital Transformation in Global Logistics
Whichever of these technologies you decide to use to improve, transform, or even revolutionize your logistics, one thing is sure: 2019 will be the year for digital transformation. Digital change management must be on your agenda and you’ll have to look for technology providers that can help you to execute your logistics strategy.
However, before investing a lot of money in all the fancy technologies, you must get right one thing: integrations can make or break your logistics operations. Make sure to have an integration strategy in place that considers all those above-mentioned technologies and trends that you want to use in the future. Then you and your integration team or integration vendor can come up with the best approach to use integrations for implementing these cool game-changing technologies, so you can be sure that you’ll benefit from them on the long term.