Staying ahead in the logistics market increasingly means keeping up with developments in information technology. But which IT developments are shaping the way logistics will be done in 2015?
The days when you could run any kind of logistics operation without an IT system are long gone. Some organisations might get by with a few spreadsheets, but most need increasingly sophisticated, and integrated, systems. And arguably developments in technology are shaping how logistics is done.
Who would have predicted the explosive growth in home delivery before the arrival of the world wide web – and by extension, online shopping. Did it ever occur to Tim Berners-Lee, when he created the world wide web, that he was also fathering a retail revolution?
The scale of these changes was highlighted at a recent FedEx seminar which revealed that in the past two years alone, more information has been exchanged than in all of human history. It estimated that £12 trillion in value could be created globally over the next decade through the Internet of Everything – the interconnection of billions of electronic devices from washing machines to bio-chip transponders on farm animals.
Not only that, by the end of the decade, it is expected that e-commerce will make up 50 per cent of retail sales.
There is also a change in the way organisations regard long-standing systems.
Steve Bayley, WMS specialist at OBS Logistics, points out that all too often companies are too willing stick with old systems rather than look for efficiencies from the latest software. “A new system is never going to be the easy option to financially justify. Most new IT systems are funded on a capital project basis. This then demands that some form of financial justification is made. SaaS has a role to play but many finance directors will argue that to really quantify the true cost versus the benefit over time any SaaS contract should still rolled up to show its total cost over the life of the contact and treated as capital investment which then has to be justified.”
And Steve Winder, vice-president UK & Eire at Epicor Software UK, points out that ERP users are moving away from the seeing systems as chained to the office desk to a device-centric mobile technology. He points out that a study by Redshift for Epicor found that 97 per cent of the 1,500 business professionals surveyed, wanted their ERP systems to be more accessible out of the office.
“Indeed the fastest rising methods of accessing ERP data are smartphones and currently 25 per cent are able to do so, with a further 43 per cent wanting to. Similarly, ERP on tablets is possible for 21 per cent but desired by another 38 per cent,” he says.
Winder points to research by Aberdeen Group on Mobile ERP, which showed that those with mobile ERP in place are twice as likely to have real time visibility into the status of all processes in the organisation.
“More specifically, they’re 138 per cent more likely to have a fully integrated view of customer information and also saw a 17 per cent improvement in the cycle time of key business processes in the last 12 months. ERP mobility is reducing process-lag and therefore accelerating an organisation’s ability to respond, which can only be to its advantage.”
The notion of putting an ERP system on a smartphone might seem to display a touching belief in the Tardis-like nature of modern smartphones.
In fact, Winder points out that: “One critical finding from Aberdeen’s report is that mobile ERP success cannot be achieved by simply dumping an ERP system into a mobile format. The mobile element is not about replicating the entire software but building function and role-specific ‘extensions’ that pull the right information, processes, alerts and workflows out of the core system for the people that need them.
“In doing so it’s important to first review and highlight the functions and roles that could benefit from mobile ERP. Where are the business’ process weak points, perhaps? Who has limited access to ERP through the traditional desktop due to their job – such as field engineers or sales people? Where is data being lost because it is not being inputted in an immediate fashion? Who could benefit from a simpler and more intuitive interface with ERP, due to limited IT skills? Who is engaging with customers and needs up to the minute information?” he asks.
While ERP might be going mobile, there are plenty of other functions that are going into the cloud. Oracle recently launched cloud-based versions of its Transport Management and its Global Trade Management applications – a move that recognised that this is the way customers increasingly want to access this functionality.
Derek Gittoes, vice president, value chain execution product strategy at Oracle, highlighted the fact that the cloud versions contained all the functionality of the existing on-premises versions. “They are not cut-down versions,” he said.
There has also been a strong movement towards the cloud for warehouse management systems, a function that, because of the high volumes of data being moved, has traditionally been seen as on premises.
Simon Sterland of Snapfulfil says: “Combining your current ERP with an RF driven WMS will of course manage the inventory receipts, despatch and stock location, but just as importantly, by directing the warehouse operatives around the warehouse via the most efficient routes, verifying every step in “real time” via the RF terminal, the specialist WMS will provide detailed reporting on each individual’s performance to management, ultimately increasing operator efficiency of approximately 20-30 per cent.”
However, he points out that this is often thought to be difficult and expensive. A WMS provided as software as a service can make the interfacing straightforward, he argues.
“A managed service will also help the recipient company balance sheet and cash flow as there is no requirement for capital expenditure. All of the RF hardware, infrastructure, implementation and training, along with the actual software licence are included on one monthly payment, based on the number of concurrent users. This means that the solution can be funded directly from revenue, once the system is ‘Live’ and delivering savings to the operation. It becomes effectively ‘self-funding’,” says Sterland.
Bayley reckons that in its sweet spot SaaS is a good model, but as demand from users becomes more sophisticated there are always those who are going to want uniqueness that cannot be built into an off the shelf product.
“The traditional SaaS model will have to evolve to accommodate these requirements. The initials are the same but now SaaS means Solution as a Service. In this evolution the pure provision of just software also morphs into a supply of some of the peripherals and added value services that go with solution provision.”
RFID technology has been making steady progress in the logistics market, but, according to Infiniti Research, it is set to grow at 22.4 per cent a year to 2018.
At the moment, most systems bolt on RFID as an afterthought, but Red Ledge managing director Andy O’Donnell argues that by taking RFID as its starting point a production and warehousing system realises the true potential of this game-changing technology. “RFID increases automation, accuracy and efficiency. RFID is up to 90 per cent faster than bar coding, where employees have to physically scan every asset. Product visibility is high, inventory control is optimised and process knowledge is maximised, leading to improved performance in both factory and warehouse.” He says the technology is suitable for any organisation with assets that are distributed across a wide area on multiple sites including supply chain, automotive, project engineering and construction.
Warehouse: Flexible technology to meet the Christmas peak
Christmas 2014 saw online shopping reach new heights with MetaPack, the e-commerce technology provider, reporting that online delivery volumes on Manic Monday were 25 per cent up on 2013. And that is after record volumes on Black Friday and Cyber Monday.
Not surprisingly many retailers have struggled to keep pace with this boom in online demand. At times, access to some retailers’ web sites has been glacially slow. And often there have web sites have contained warnings of delivery delays.
Darrel Williams, regional director of Honeywell Vocollect Solutions, highlights the importance of flexibility in warehouse systems to enable companies to deal with the peaks and troughs.
“Humans can only do so much,” he says, pointing out that voice technology gave the flexibility and agility to enable companies to deal with the peaks.
“We have been working with our customers and planning for this for more than six months,” he says.
Good planning and preparation last year meant that the Christmas peak was not a problem for customers, he says pointing out that voice technology enabled warehouse workers quickly to become expert in a range of different tasks from picking to put-away.
The pre-Christmas period contained a series of peaks starting with Black Friday at the end of November, followed by Cyber Monday. Each succeeding Monday saw an online sales peak. But Williams points out that it is not just the pre-Christmas period that contains peaks for the logistics operations.
He points out that number of peaks that retailers and their logistics suppliers face over the Christmas period. There will be another peak in January as goods are returned after Christmas. And that will be followed by a sixth surge for replacement goods. And it’s at times like these that the flexibility of voice technology comes into its own.
Messaging: Simple technology for sophisticated service
Sometimes the simplest technologies can deliver remarkable results. Take the SMS. Not only is it a quick, simple and cost-effective way to deliver a message, it can reach anyone who has a mobile phone – and these days that means almost everyone.
A recent round table sponsored by OpenMarket highlighted some of the ways businesses can use SMS messaging to improve their business operations and efficiency as well as providing service and support for customers.
“The mobile phone is becoming the place of choice for interactivity,” says Adrian Sarosi of OpenMarket. “If you are trying to communicate with 220 million people, or your 80,000 staff – half of which have not been given an email terminal – what is the easiest way to get to them? It will be by SMS.”
It can be used to increase the visibility of the flow of goods to allow far more accurate and speedy shipment handling, and improved in-transit security. It can improve communication with employers and facilitate collaborative operations. It can also help reduce costs through more efficient route planning and give access to real-time business analytics.
