Activities

2. Logistics 4.0, the new future of the supply chain

(c) Codognotto

The term industrial revolution refers to an evolutionary process in the economic and social field, which is characterised by the discovery of a new technological paradigm. Today, with the progressive growth in information technology and electronics, reference is made to the third industrial revolution. In the world of transport & logistics, developments in the global economy and science & technology have changed the traditional balance between customer and supplier. The growth of international and intercontinental flows given by the market globalisation process that has intensified more and more in recent years, and the process in digitalisation that makes giant strides every day, has led in 2021 to talk about logistics 4.0. According to McKinsey, trusted advisor and counselor to many of the world's most influential businesses and institutions, logistics 4.0 is the one that uses the Internet of Things, robotics, advanced analytics and Big Data in supply chain management, in order to significantly improve work performance. As a consequence, this new term refers to the close connection between logistics and digitalization, which thanks to the technological development applied to the sector, is transforming the internal handling process of goods, but also the delivery of products to customers, in an innovative and more efficient way.

 More in details, the keywords of logistics 4.0 are efficiency, flexibility, resilience, as well as risk management and mitigation. The purpose of supply chain management is to arrive - at the right time - at the perfect match between demand and supply. Since today's market is increasingly competitive, fast and volatile, 4.0 supports the digitalisation of companies operating in the logistics sector (but also in other fields) thanks to specific Business Process Management (a model capable of speeding up and simplifying the management of business processes) portals and document workflows. According to Joel Gurin, president and founder of Open Data Enterprise, an independent non-profit organisation that develops smarter open data strategies for government, businesses, and other non-profits by focusing on data users, data will soon be considered globally a fundamental resource for companies and for the management of daily life. For this reason, in this context the key point is certainly represented by the management of the workflow within the production process.

What’s new? With industry 4.0 the supply chain is revolutionised not only by the implementation of technological devices, but also by the introduction of the principle of collaboration. This collaboration refers not merely to the teamwork between humans and network interconnection, but also within information technologies. To be more accurate, in technical language, this collaboration would translate into data sharing. This is a crucial point, as one of the biggest problems in logistics is the lack of adequate information. For examples, this could occur in the following cases:•

  • disparity between customer demand and what companies think they might ask for•
  • breakdown of the production plants
  • lack of information between partners

It is precisely on this last point that industry 4.0 comes into play and the speech becomes even more interesting if related to multimodal (transport with at least two different modes of transport) and/or intermodal (multimodal transport with the same loading unit (Intermodal Transport Unit) which can be a container, a semi-trailer, or a swap body) transport, which take advantages of the different modes to have reliable, economic and sustainable transport.

  • Why reliable? Thanks to the digitalisation of processes throughout the logistics chain, the goods are tracked at each step and stocks are managed by automating their movements.
  • Why sustainable? One of the goals of logistics 4.0 is to reduce waste, energy consumption and pollutant emissions.
  • Why economic? Waste reduction implies lower delivery costs. In addition, good traceability leads to an increase in profits, as it satisfies the target customer more easily and faster.Why economic? Waste reduction implies lower delivery costs. In addition, good traceability leads to an increase in profits, as it satisfies the target customer more easily and faster.

4.0, applied to the above-mentioned types of transport, which already produces advantages as they implement a more efficient combination of different means of freight transport and handling by optimizing delivery times, reduces the margin of error in the management of logistics networks.

The current state of play of supply chain systems shows that the different platforms do not communicate each other directly. For example, transport booking platforms (independently from road, rail, sea and air) and the other parties involved in the process (such as the customer, the warehouse, the freight villages etc.) are not directly connected; this means that if the driver is late, it will be the logistics operator who will have to communicate the delay to the warehouse, the customer or in the case of intermodal transport to the operator of the next transport section and possibly change the booking.The current state of play of supply chain systems shows that the different platforms do not communicate each other directly. For example, transport booking platforms (independently from road, rail, sea and air) and the other parties involved in the process (such as the customer, the warehouse, the freight villages etc.) are not directly connected; this means that if the driver is late, it will be the logistics operator who will have to communicate the delay to the warehouse, the customer or in the case of intermodal transport to the operator of the next transport section and possibly change the booking.

From an ICT perspective, the data repository is also changing. If until now in logistics there has been talk of Data Warehouse, a method that requires data modelling before it can be stored, today IT experts are implementing a new system to fully exploit the value of data: Data Lake. Data Lake is characterised by the ability to store structured, semi-structured and unstructured data in the same way, regardless of the native format (which in Data Warehouse is structured by the database and is read in the default format (schema-on-write). Additionally, Data Lake offers a greater level of flexibility, as it easily configures and reconfigures live models, making Data Analytics a much less complex process. In concrete terms, the new method of data storage allows 1) greater availability of access to information in real-time, 2) the application of advanced Modern BI software, 3) and cost reduction, since scale-out storage of the Data Lake is potentially infinite.

This new model of data storage is particularly efficient, especially if considered that the field of data sharing lacks a common semantics. In this context, the European project FEDeRATED, formed by 15 partners coming from different European countries, aims to deliver a validated Master Plan for an EU federated network of platforms concept and a prototype of a data sharing environment for business and public sector use.

Despite the technological advancement, optimising the production process to the maximum is not a simple process, instead it still represents a challenge for many companies. The implementation of technological systems is strongly capital-intensive, which especially in the case of small and / or medium-sized enterprises is difficult to sustain. In addition, many companies that do not have the opportunity to fully understand both the short- and long-term potential and are still sceptical of making the leap into the future. This also applies to workers, who are afraid that the 4.0 change will lead to the replacement of personnel with machinery. However, it must be considered that 4.0 machinery would replace those high-risk or repetitive jobs for the worker, creating new jobs for the support and maintenance of those same systems.

In the specific case of 4.0 logistics, especially thanks to the cloud, the supply chain could be considered as a sort of platform to which the company itself, customers and suppliers interface, on the one hand to simplify and unify processes, on the other hand to collect the best practice in terms of time and costs to be implemented.

 

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This project is co-funded by the European Commission Connecting Europe Facility (CEF)