scm trends

Supply chain innovation: a glimpse at the future of logistics

The logistics industry is changing. Due to the increased ubiquity of internet technologies, new opportunities and challenges have emerged.

Several innovators, ranging from start-up companies to government associations, have come up with exciting ideas that help to meet the demands of the modern supply chain. I recently read an interesting article by Google titled ”The Changing Face of B2B Marketing”. It revealed that the B2B audience is changing – not just in how buying decisions are made, but also as to who takes them.

Essentially, the market is becoming younger and more online-savvy. 89% of B2B researchers use the internet to look for information and nearly half of these are digital natives. With this in mind, we are also reviewing our own digital marketing strategy at AEB so that we can ensure to remain close to our customers – now and in the future.

At the end of last year, we kicked off our “Digital 2016” project, which involves work with digital marketing experts to evaluate, develop, and future-proof our digital marketing assets. The world is changing and it’s crucial for us to meet our audience’s demands and improve engagement in our customers’ preferred channels.

Understanding ourselves and benchmarking our digital behavior against others in the business is an important part of this process. During our project research, we’ve discovered some surprising and innovative businesses that are changing the logistics sector with some really unique concepts. I’d like to highlight a few of those to you:

Disruptors and game changers

Matternet is a pioneer in drone transportation systems. Each drone can carry 1 kilogram over more than 10 kilometers without the need for remote pilot control. The California-based start-up company was founded in 2011 and has been running drone-powered last-mile deliveries of medical supplies around the world ever since.

Their customers include UNICEF and Doctors Without Borders – and the postal service of Switzerland has recently been conducting trials with them to explore mail delivery options. Apart from the cutting-edge hardware, the company has also developed software that enables their drones to actively analyze the best route, avoiding issues like inclement weather and even restricted airspace.

Matternet drone
Matternet drone

Another innovator that leverages cloud technologies is Ninja Van, a Singapore logistics business specializing in next-day delivery for e-commerce customers. They are arguably one of the fastest growing last-mile fulfillment companies in Southeast Asia. Last year, within a period of 6 months, their vehicle fleet has doubled in size to about 130 vehicles, and their customers include some of the largest e-commerce businesses in Asia. They have also announced that they secured US$2.5 million in investments in 2015, which will go into enhancing their courier services.

According to CEO Lai Chang Wen, technology is driving the business – both cloud computing and virtualization technology. These help them to quickly identify and leverage available capacity within vehicle fleets to accommodate the varying delivery demands and compute the most efficient fulfillment method. Speaking to e27.co, Wen said, “We believe that technology will set us apart. The whole system — the way we sort parcels [for delivery], route [vehicles], control our fleets, and run the whole operations basically — is configured by our technology.”

Their technology also allows them to tap into vehicle fleets outside of their own by leasing software to their partners. This is a win-win as it allows Ninja Van to take advantage of idle capacity within their partners’ fleets and enables the partners to use their own vehicle fleets more efficiently at the same time.

Asia rising

Apart from Ninja Van, there are other exciting developments within the logistics industry. Several other start-up companies have identified gaps and opportunities in this highly fragmented market, which is often handicapped by inadequate infrastructure and outdated logistics networks.

These developments are in line with assessments by investors who also see huge potential in Southeast Asia’s logistics market. In 2015, investment in regional logistics start-up companies exceeded US$28 million – a sharp increase by 110 percent compared to 2014.

Logistics start-up funding
Logistics start-up funding

Besides investors, some governments in the region are also supporting innovation in the logistics sector. In Singapore, the government will be setting aside S$20 million to support a pilot of integrated delivery systems for malls, in an effort to increase transportation efficiencies and reduce traffic and bottlenecks along the roads outside of malls. It is estimated that this could reduce the number of delivery trucks on the road by 25 percent and further cut the waiting and queuing time for deliveries by 65 percent.

Logistics sector transformation
Logistics sector transformation

An additional S$15 million has been set aside by the Singapore government to pilot the use of Automated Guided Vehicles (AGV) in warehousing. This will reduce repetitive work in storage and retrieval and hopefully increase efficiencies with the help of automation. My colleague Markus Meissner provides some interesting examples of latest AGV in his post “Digitization and a gigabit society” following his visit to leading logistics and IT exhibitions in March.

Watch this space

It will be very interesting to see how these innovations and initiatives come to life in the coming years. I’m looking forward to seeing more game-changing technologies developing as the industry continues discovering the power of the internet and digital technologies.

For our part, we are not standing still and are actively looking at how we can improve ourselves in response to the changing dynamics of the industry – be it in terms of our digital engagement or technological innovation.

Is your company also adapting to these developments and shifts in logistics and IT? Are there any other interesting concepts that you have noticed? 

Learn more about software solutions for efficient supply chain management from AEB