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What is Logistics 4.0.?

clock 4.5 minutes | 17 Dec 2019

Delivery drone in a smart warehouse

There’s a lot of talk about Industry 4.0 and the advent of the smart factory, with artificial intelligence, connected devices and automated systems transforming the way we manufacture goods.

But what about the ins and outs of these smart facilities — literally?

Logistics 4.0 centres on smart supply chain management: what comes into your factory or facility, how it’s pushed along the processing line, and where it goes next. In this article, we’re taking a closer look at Logistics 4.0: what it is, how it’s already changing the logistics and manufacturing industries, and some of the challenges — and benefits — we can expect to see in the coming years.

5G: the driving force behind Logistics 4.0

The biggest driving force behind Industry 4.0, and consequently Logistics 4.0, is the wider roll-out of 5G internet. Anywhere from 20 to 100 times faster than 4G, 5G will see the proliferation of connected devices and systems.

And because 5G promises reliability, increased capacity, and ultra-low latency rates, we can expect to see a huge increase in manufacturing plants that are entirely — or almost entirely — reliant on internet connectivity.

Smart logistics shown with an industrial robotic working in a factory warehouse

Supply chain logistics

Let’s start with an overview of the supply chain, geographically speaking.

Plenty of manufacturers still operate primarily on a local level, with individual facilities being managed independently of one another, often using discrete operational and technological systems.

With the introduction of a reliable, ultra-fast 5G connection, it’s going to become a lot easier for businesses with a local operating structure to go global — essentially, for local centres to “talk” to one another, share data, and make manufacture and supply decisions based on that information. You can learn more about Industry 4.0 in the supply chain here.

Inbound logistics

Right now, most manufacturers operate on a hybrid push/pull delivery process.

They use the data they have to estimate the amount of stock that needs to be manufactured, but there’ll also be a human element. For example, extra material and components will be ordered when needed.

Logistics 4.0 is expected to usher in increased digitisation and automation, including autonomous inventory management and, ultimately, predictive inbound logistics management. How? Think intelligent containers, smart warehousing, smart ports, smart shelves — sensors, cameras and systems all monitoring the exact quantities of stock moving from one place to another.

Man holding tablet in front of automation machine in a smart factory

Warehouse management

We’ve already taken an in-depth look at Logistics under the influence of Industry 4.0, with manual processes shifting increasingly towards the digital. We’ve also examined how Industry 4.0 is affecting warehouses.

But one idea that technologists and operations experts are floating is that, ultimately, there may not be a need for warehouses at all. We’ve already seen the traditional warehouse-based stockpiling of inventory abandoned by many businesses in favour of distribution centres (DCs) with a much faster, semi-automated throughput.

With the proliferation of connected devices geared up towards online shopping, and our increasingly throw-away society, retail supply chains now move more quickly than ever.

Distribution centres are expected to handle a wealth of tasks beyond simple supply:

  • Omnichannel capabilities: managing orders from a variety of sources, on behalf of multiple vendors
  • Reverse logistics: collecting end-of-life goods from consumers, often while delivering new items, and arranging their disposal in compliance with environmental regulations
  • Returns handling: communicating directly with consumers on behalf of vendors; managing the collection, storage, and sometimes repair, repackaging and resale, of products
  • Specialist storage: DCs are increasingly expected to store a broad range of goods, many of which will require specialist storage; this introduces issues of quality control, and compliance

In reality, it’s probably more accurate to say that warehouses will evolve, replaced by ever more sophisticated DCs.

Outbound logistics and logistics routing

While manufacturers, retailers and distributors work to improve the quality, efficiency and breadth of their services, customer expectations are rising.

The last mile of a product’s journey can often be the make-or-break of customer experience. It’s also the hardest to track: once an item has left the distribution centre, it’s at the disposal (often the mercy) of the frequently harassed and overstretched delivery driver.

Lost and damaged items, deliveries that don’t show up on time (or at all), and distribution centres and drivers who can’t be reached — there are a lot of things that can go wrong during the last leg of a delivery, all of which add up to unhappy customers and lost future revenue.

Warehouse workers processing packages on an assembly line in the logistics sector

Logistics 4.0 is set to tackle the issue:

  • Automated and predictive delivery management: customers receive automated notifications to their email or phone letting them know exactly where their item is, and if its estimated time of arrival has changed
  • Real-time item tracking: customers can check on their item’s status at any point by accessing a user-friendly system with access to every part of the delivery process
  • Real-time route planning: rather than planning a route at the start of the day, drivers will have access to real-time route planning technology, helping to save time and fuel, and avoid delays
  • Centralised data: no more phone calls to staff who have no information on your item — 5G connection will allow for delivery information to be accessed quickly and easily
  • Automated communication: Artificially intelligent chatbots and personalised automated messages will keep customers up to date without taking up staff time. One chatbot can serve multiple users at once
  • Machine learning: technology used by distribution providers will be able to learn from every delivery made, taking the data collected and using it to plan better future journeys

And leaving all that aside, we’re already seeing the first fully automated deliveries taking to the streets.

Delivery giant UPS has purchased a stake in an autonomous trucking start-up that’s been moving cargo between Phoenix and Tucson, Arizona, since May 2019. Meanwhile, Kroger — the US’s largest supermarket chain by revenue — is involved in creating a fleet of driverless grocery delivery vehicles.

With driverless vehicles set to become a fixture on our roads, who knows whether the delivery driver will soon become a thing of the past.


What can manufacturers expect from Logistics 4.0 as a whole?

Digitisation. More connected devices, more technology, fewer discrete process management systems. Traditionalists are going to suffer — the way we do almost everything is likely to change.

Visibility: product tracking, stock management, globalised operating structures: with 5G, we’ll have access to real-time data we’ve probably never been privy to before.

Customer expectations: where improvements are made, more improvements are demanded — such is the nature of today’s consumer. The supply chain will get shorter, move faster, and require more flexibility than ever.

Time will tell how manufacturers will cope with the challenges presented by Logistics 4.0 but one thing is clear: this is one train that’s not stopping.

Logistics: under the influence of Industry 4.0​