Technology in logistics: is it really worth the investment? Here are 5 things you need to know!

Summary

As companies grow, their distribution and warehousing needs increase. Eventually, there comes a point when alternative methods should be incorporated into logistics processes to meet demand. One of the most effective solutions is to integrate technological systems into warehousing and distribution facilities. These systems can be implemented through digitalization, automation, and artificial intelligence, potentially helping you achieve greater efficiency, reduce costs, improve consistency, and control fulfillment times.

That said, automation may not be the best choice in all cases, and in this article, we are going to discuss the pros and cons of digitalization. It’s important for companies that are experiencing growing pains in their warehousing and distribution operations to consider all facets of adopting automation, including the pros and cons as they relate to your specific business. Whilst there are many benefits that can be obtained through digitalization, it is not a magic solution that solves all problems. As with any technology, it comes with its limitations. Therefore, understanding what considerations need to be made is critical to making it work in the best way for your company. 

INDEX

1. NEW TECHNOLOGIES IN USE IN LOGISTICS
2. PROS
3. CONS
4. QUESTIONS YOU NEED TO ASK YOURSELF
5. DIGITAL SOLUTIONS THAT CAN WORK FOR YOU

TECHNOLOGY IN LOGISTICS: IS IT REALLY WORTH THE INVESTMENT?
5 THINGS YOU NEED TO KNOW

Now more than ever, technology is pushing boundaries and changing how the world does business. Today, more people find it easier to shop online instead of in retail stores, and distributors are constantly racing to keep up. Customer demand for faster deliveries is pushing warehousing professionals to overcome packaging and inventory challenges to move goods more efficiently.

Whilst digitalization makes it easier to meet demand and reduce human error, like any technology it comes with its disadvantages. If you are an industry professional debating whether technology can help your business, you must educate yourself on what options are open to you.

1. NEW TECHNOLOGIES IN USE IN LOGISTICS

Here are some of the recent technological and digital advances that are shaping the logistics industry. Familiarizing yourself with these options will help you decide which ones suit your needs.

• Automation is the process of using specialized equipment, storage, and retrieval systems to perform repetitive tasks that are being handled by unskilled or semi-skilled labor. Automation can be integrated at varying levels within warehousing and logistics to improve operational efficiency – from moving goods within spaces, package labeling, to streamlining sorting systems.
• Robotics refers to the use of automated systems, robots, and specialized software to transport materials and perform various tasks to further organize warehouse processes.
• Drones are aircraft devices that can fly and carry materials. Whilst they are recognized more for their potential in coordinating new forms of express consumer delivery, they are increasingly used in warehouses for patrol and scanning functions.
• Cloud computing allows storage and access of data by multiple parties and vendors at the same time. It has the potential to lower costs in IT maintenance, increase information accessibility, and provide quicker solutions.
• Internet of things (IoT) or connecting physical items to internet-enabled devices and systems is gaining popularity in warehousing. Today, the logistics industry uses IoT in diverse ways, from temperature and humidity sensors to monitoring quality control, to RFID tag sensors­­­­­ that can detect tampering on a product.

PROS AND CONS OF USING TECHNOLOGY IN LOGISTICS

However advanced, no technology is perfect. That is why you need to be made aware of the pros and cons of how artificial intelligence is being applied across warehousing and logistics.

2. PROS

• Automation: Automation is the most important benefit of using artificial intelligence (AI) to control supply chains. AI-powered warehouses mainly rely on robots to store, locate, and select goods.
  By introducing automation to your logistics processes, pre-programmed machines can perform most of the routine repetitive work, thereby speeding up processes. This has the potential to take productivity to a whole new level. It also has the following advantages:
  – Reduces operating expenses, overheads, and unnecessary costs from errors.
  – Increases efficiency and productivity of human resources.
  – Minimizes manual processes and handling of stock-keeping units.
  – Maximizes warehouse space utilization, layout, and flow.
  – Coordinates how material handling equipment, such as barcode scanners and mobile computers, are being used.
• More efficient inventory management: By incorporating digital warehousing management systems into your business, you can accumulate, filter, and analyze large databases faster and more efficiently.
  Cloud-based AI can further improve inventory management as it allows for remote coordination and information sharing. Smart AI systems can analyze consumer habits and manage supplies to meet demands whilst keeping stocks to a bare minimum. This helps you operate at maximum utility without disrupting the supply chain.
• Timely delivery: Digitalization and smart warehousing management systems make logistics simpler and more accurate.
  New technologies can track multiple factors simultaneously, such as weather forecasts, alternative routes, traffic, delays, etc. making them capable of creating highly accurate estimations. This allows you to deliver more quickly and reliably.
• Improved safety: By introducing digital automation across logistics, supply chain processes get more organized and workplace safety is ensured.
  Effective internal procedures create a safer environment, whereas the use of machines and robots eliminates the risk of any manmade accidents.
• Reduced operational costs: By adding AI to your supply chain, work becomes automated and you can employ fewer people.
  As machines can work 24/7 without a break, there are fewer mistakes, and workplace incidents decline. Your supply chain becomes more profitable, benefitting you in the long term.
• Better customer service: Digitalization allows for chatbot technologies. Fast becoming the norm across most business websites, chatbots can help companies save on customer service costs by speeding up response times and answering 80% of clients’ routine questions.
  Artificial operators are available around the clock and they get smarter with each conversation, so they are likely to fully replace human agents in the near future. Your logistics operations could be available 24/7 to answer questions and queries in real-time and deliver better customer service and response.

3. CONS

Whilst there are many benefits of incorporating technology and digitalization to your warehousing business, you need to be made aware of the downsides as well, which can include:

• Skill gaps: Upgrading to new technologies to allow more AI integration requires time and expert knowledge, which can be a big burden for companies.
  If you are switching to digital systems, make sure you understand software development, data science, and how the upgraded systems work. Otherwise, you will be left with a lot of tech and no one who can operate it!
• Technology needs operators: Although capable of doing many great things, AI is not a self-sufficient system.
  On the contrary, you still need to control it and give it inputs to ensure effortless functioning. This means hiring tech professionals, who can be an additional burden to your wallet.
• Difficult to spot mistakes: AI systems not only process information but are also learning all the time to become more intelligent.
  As you become dependent on complex monitoring systems, it is sometimes harder to identify mistakes when they occur.
  
• Security issues: Digital systems monitor and administer lots of sensitive business information.
  This can be a potential threat if you don’t invest in high-quality protection systems with state-of-the-art safety mechanisms. A single security breach can jeopardize supply chain performance.
• Not suitable for all businesses: Digitalization and automation of processes provide the greatest benefit when used at a consistent level – near to maximum capacity. For businesses that experience varying levels of order volume, such as those engaged in markets impacted by seasonal factors, this can be a big problem.
  In such cases, automation systems are operating significantly under capacity during the down seasons. Equally, during peaks in the business cycle, the warehousing capacities are incapable of managing surges. In either case, the result is an ineffective allocation of resources that can have a ripple effect through other areas of the business.
  
• Substantial monetary investment: Initial and ongoing costs of digitalization can simply be too much for smaller warehouses to take on.
  Whilst modern technologies and robots help lower labor costs by eliminating the need to pay for health insurance and employee benefits, you still have to pay for digital maintenance and programming. Since skilled programmers are scarce, you could be paying a hefty sum to maintain your digital technologies, robots, and drones, etc.

4. QUESTIONS YOU NEED TO ASK YOURSELF

Having reviewed the pros and cons, you may still be wondering if introducing technology can help your warehousing enterprise. Here are some questions you need to ask yourself before you commit to investing in AI and digitalization:

• Are your current processes labor and time-intensive?
• Are you struggling to get orders out on time?
• Is order fulfillment inaccurate?
• Have you had to increase headcount to check and recheck order accuracy?
• Can you trust your inventory levels?
• Are counts on inventory correct?
• Do your legacy solutions require too much upkeep?
• Are your customers unhappy no matter what you do?

If the majority of your answers were ‘yes’, then you need to consider introducing digital processes to better streamline your productivity.

Essentially, warehouse digitalization is needed when the burden of handling warehouse processes manually, with paper, spreadsheets, tribal knowledge, etc., has exceeded the needs of the organization. When this happens, you may need to rethink your options.

5. DIGITAL SOLUTIONS THAT CAN WORK FOR YOU

As businesses like yours grow and evolve, they experience a wide variety of pain points when it comes to certain aspects of logistics operations. When this happens, it is important to recognize the signs and consider how digital automation may be a smart move.

Digitalization can help you address issues and set the stage for future growth and success. If your business is experiencing some of the recurring problems we mentioned above, then it may be wise to consider an investment in automation and technology.

Here’s how five leading logistics technologies can be incorporated into your business to help you improve your warehousing capabilities:

• Drones for enhanced monitoring
  Whilst Saudi Arabia still has some way to go, drone capabilities are expanding in conjunction with international demand for rapid distribution, which has led to increased interest in the multiple uses and potential of drones. For your warehousing needs, drones can help monitor and patrol premises smarter and faster, delivering increased vigilance and security. This means you have more eyes on the ground that can do the job without tiring or taking breaks.What’s more, with drones being put to more innovative uses regionally, their potential is huge across 3rd-party partnerships. This can offer an untapped area of profit for companies that can provide this service.
• RFID tags to expand inventory visibility
  Radio-frequency identification (RFID) tags use electromagnetic fields to automatically identify and track tags attached to objects. An RFID tag consists of a tiny radio transponder, a radio receiver, and a transmitter. When triggered by an electromagnetic interrogation pulse from a nearby RFID reader device, the tag transmits digital data, usually an identifying inventory number, back to the reader. Some RFID tags are powered by a battery and can be read at a greater range from the reader (up to hundreds of meters). Unlike a barcode, the tag doesn’t need to be within the line of sight of the reader, so it can easily be embedded in a tracked object.With the rise of the Internet of Things (IoT), smart warehouses can provide real-time, accurate visibility into inventory situations, locations, and the supply chain as a whole. Internationally, the use of active and passive RFID tags has increased the amount of product data that can be accessed remotely for any individual item.

  With RFID tags, warehouse operators know where their inventory is and where it’s going in real-time. This advanced location tracking can greatly improve the speed of order processing as it provides a new level of reliability in planning.

  

• GPS capabilities for better deliverability
  By coupling RFID tags with GPS, it is possible to track shipments in real-time (and with greater precision) during transportation. Adding these advancements to your logistics solutions can provide you with a consistent, end-to-end view of the logistics delivery channel. Better visibility facilitates improved communication between retailers, distribution centers, and end consumers. This will help you deliver faster and to greater customer satisfaction.
• Artificial Intelligence technology to boost efficiency and accuracy
  The use of collaborative mobile robots within warehouses boosts picking efficiency and accuracy. These mobile warehouse robotics systems are capable of choosing the best movement routes whilst eliminating longer paths in the warehouse.
• Automation-as-a-service – scaling to meet shifting demands
  Balancing supply and demand is an important function for warehouse owners to maximize utilization from their space. However, doing so requires flexibility. That’s why hiring automation-as-a-service is on the rise internationally. This means introducing part-automation to your warehouse to readily scale resources up or down to accommodate shifts in demand. These systems can provide more flexibility when it comes to managing costs, priority deliveries, and distribution channels. For instance, international companies like 6 River Systems allow warehouse operators to rent collaborative robots during a peak period and return them when demand returns to baseline levels, avoiding major investments in equipment that would sit idle during non-peak periods. This is something worth investigating as it allows for a softer introduction to digitalization for you to test the waters.It’s clear that innovations in logistics technology will continue to have a noticeable impact on the entire supply chain landscape well into the future. Warehouse operators who are able and willing to continually adopt new and effective warehouse capabilities will give themselves an edge in a challenging environment.

To find out about efficient warehousing solutions and logistics support that can help your business grow, get in touch with SBT here.