Ashrit Cheepirishetti and Peter Murphy take a look at how modern supply technologies can be applied to the logistics sector
Blockchain, Internet of Things (IoT) and Artificial Intelligence (AI) are tools that have all come to global prominence over the past five years. Pioneers in the supply chain sector are only just starting to discover the potential of these technologies as part of Industry 4.0 to tackle inefficiencies, realise the benefits of the circular economy and grow their business. The opportunities for manufacturing to unlock value from Industry 4.0 and new technological development are vast.
Automation within the existing supply chain will increase. But it’s the growth in AI and Big Data that will have the most profound impact. It’s not just the e-commerce businesses of this world that will increasingly rely on algorithms to compete. And this is where we see the potential to use a supply chain data network to create optimisations and collaborations that couldn’t have been dreamt of otherwise.
Blockchain may be associated with cryptocurrencies like Bitcoin, but the underlying blockchain technology is just a way of creating an unalterable record of events. So, everything that happens to goods on their way through the supply chain can be recorded, and that record can be verified. Having a blockchain verified record of every movement of goods – and of their condition – will help build trust all the way along the supply chain, right to the consumer. And this trust will also help enable much deeper and more valuable collaboration across supply chains.
This sort of disruptive technology is what will add new value, reduce waste, and drive new revenue streams – as well as make our supply chains massively more efficient and less environmentally damaging.
Illuminating the supply chain
An example of disruptive technology in action is the enablement of manufacturers to obtain full visibility of their supply chain. Each year, FMCG companies suffer significant product losses within their supply chain. One of the problems is understanding the location of lost inventory to identify where product leakage and waste takes place, and where deliveries go missing.
By using advanced software technology to better illuminate the supply chain, the FMCG sector can take proactive steps to avoid pallet and stock losses, and establish any bottlenecks or inefficiencies impacting performance.
For example, we have created a simple tracker which fits between the slats on a pallet which enables product pickers, delivery drivers and stores to work as normal. But the key innovation is held within software which is connected to our tracker. This is a cloud-based ‘network of networks’ developed by Brambles company BXB Digital – which allows us to turn data into valuable insights and information about where there is loss, inefficiency, and spoilage in the system.
As a result, we can see the pallet destination and avoid the pallet/ product loss and subsequent customer claim. We can also come to data driven conclusions which inform a proactive action plan to reduce leakage in the supply chain. This example also highlights a key principle of successful disruption – the emphasis on collaboration and sharing lessons with all stakeholders that have been involved in the process and applying lessons to customers across UK and Europe to avoid unnecessary stock loss.
Combining technologies to enhance value
Where Industry 4.0 gets even more interesting is in the ability of pioneers to combine technologies to disrupt. So, the software and hardware needed to execute one task – in this case illumination of the supply chain – can be used at the same time for another purpose. For example, enabling the creation of the smart store.
Our tracker can detect a Bluetooth enabled device and, through the Mobile App of the store, push a promotions message according to consumer shopping habits to uplift product sales. Technology can also support store promotion compliance. Staff can be alerted when shop floor promotion stock is running low and replenish, enabling greater efficiency and improved focus on factors which encourage sales growth, like store hygiene and customer service.
The array of data collected by Smart Store technology can then be used as an intelligence base to predict consumer purchase patterns and behaviour, such as the locations for FMCG which promote sales, cross-referenced with the time of day of the purchase.
Using data innovatively
Innovative data use can also help shape approaches to supply chain systems. For example, many vendors/ suppliers assume responsibility for co-ordinating and conducting replenishment at the buyer’s site. The risks of predicting pallet requirements are held almost exclusively by the vendor based upon historical data.
Dozens of staff in a manufacturing logistics team may study over spreadsheets to roughly estimate when and where inventory was needed. In turn, this would inform wider supply chain decisions, like haulage movements. Without collaboration across the supply chain, inventory decisions are taken from a single perspective. As a result, stock requirements in the Vendor Management of Inventory may not reflect actual demand and be inaccurate.
Joint Management of Inventory (JMI) is different. The system requires suppliers, manufacturers and retailers to develop unified inventory and production plans. Through machine learning and using sophisticated software sharing real-time, accurate and integrated data, this approach ensures greater accuracy in relation to predicting inventory demands.
The end results of this innovative and collaborative use of data? A new culture of JMI which reduces inventory uncertainty and lead time. JMI supports cutting out inefficiency and eradicating empty transport miles.
Where is disruption going next?
Although these technologies sound a big advance on where the logistics industry was a decade ago, the supply chain is still in the early stages of its journey towards realising the full potential of Industry 4.0. For instance, the sector must accelerate our collaboration towards further understanding on how to enhance data management techniques for tasks such as real-time logistics planning and scheduling. The EU ‘Horizon 2020’ Logistar project is a great example of this collaboration in action with universities across Europe working with the manufacturing industry and CHEP to examine how horizontal collaboration, can unlock live fleet visibility, vehicle utilisation, geofencing to minimise turnaround times, vehicle proximity searches and asset tracking via trailers. AI focused on prediction and smart algorithms amongst other initiatives can reduce distributions costs and improve load factors to cut ‘empty running’. The study project continues over the next two years and we eagerly await the results.
The pioneers of better supply chain change must be ambitious. Technical change requires application and commitment – those who embrace that change can flourish. These pioneers are willing to collaborate and share their data, knowledge and assets, from manufacturer to logistics provider to retailer. We all have valuable roles to play pushing the boundaries of what is possible as we use our Industry 4.0 licence to disrupt.
Ashrit Cheepirishetti & Peter Murphy
Ashrit Cheepirishetti is Digital Solutions Leader, Northern Europe, CHEP UK & Ireland, and Peter Murphy is Transport Solutions Manager, Northern Europe, CHEP UK & Ireland.
CHEP helps move more goods to more people, in more places than any other organisation on earth. Its pallets, crates and containers form the invisible backbone of the global supply chain and the world’s biggest brands trust them to help them transport their goods more efficiently, sustainably and safely.