October 2014 | Commentary | 3PL Line

Logistics Sector Leads the Internet of Things Revolution

Tags: Logistics I.T., Supply Chain Management

Vittorio Aronica is Senior Vice President of Information Services and Solutions, CEVA Logistics, 832-348-4500

The Internet of Things (IoT) has been hailed for years as the technology wave of the future. But while we were waiting for refrigerators that order from the store when we're low on milk, the logistics sector has been making the first tangible forays into a real IoT environment.

Using connected devices such as sensors and cell phones, logistics providers have begun improving efficiency, tracking packages with unprecedented accuracy, and giving shippers delivery time and shipment updates. GPS-enabled tracking allows providers to optimize shipping distances, times, and costs. Smart containers and carriers provide location and status of raw materials, parts, and products throughout supply chains.

The Future of Logistics

In the near future, shippers and logistics providers will coordinate through a connected, standardized ecosystem to provide the most efficient delivery experience for businesses and consumers. For example, imagine consumers ordering online from several stores, and having goods routed to a single consolidation center that ships them all in one box.

New, specialized players in high-density population areas might materialize, using technology-enabled smart containers. They will operate as multi-tenant distribution service providers that share capacity, tracking, and visibility across multiple logistics providers. It's easy to foresee market segmentation between last-mile distributors and larger logistics operations that are focused on hub management and orchestration. Each segment would require a high level of specialization, and coordination between the two types of companies would be critical.

New Technologies, New Regulations

The extended adoption of new technologies will be capital intensive due to pervasive implications along the entire supply chain—including physical assets—that will require a strong governance framework supported by regulatory and open standards. This is similar to what happened with the adoption of broadband and wireless services, but still difficult to predict.

A one-to-many environment could mean segregating duties between infrastructure owners and business users. A high degree of complex standardization will be involved in routing packages in a metropolitan area and returning proof of delivery to shippers.

Yet, most carriers who currently provide last-mile services run three-level local partner distribution systems to ensure the widest ZIP code coverage. Local, independent players—most not exclusive—often provide the second and third legs. So logistics operators already know the challenges of providing end-to-end traceability across multiple players.

Electronically embedded routing information in packages, supported by a near field communication technology, may reduce complexity in some ways, but getting all links in the chain to agree on and adopt common protocols will remain a major challenge.

Many people continue to look at the Internet of Things as a fanciful, futuristic notion that might not have any major impact on their lives anytime soon. But supply chain and logistics professionals are taking steps to turn goods, containers, and vehicles into smart "things" that can communicate in ways that significantly improve people's daily lives.

So, the challenge is: who will shape the future and who will stay behind?






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