The Digital Transformation of Logistics

The digital transformation is in full swing and fundamentally changes how we live, work, and communicate with each other. From retail to finance, many industries see an inflow of new technologies, disruption through innovative platform business models, and employees struggling to cope with the significant shifts occurring. This Fourth Industrial Revolution is predicted to also transform Logistics and Supply Chain Management, with delivery systems becoming automated, smart networks created everywhere, and data being collected and analyzed universally. The Digital Transformation of Logistics: Demystifying Impacts of the Fourth Industrial Revolution provides a holistic overview of this vital subject clouded by buzz, hype, and misinformation. The book is divided into three themed-sections: Technologies such as self-driving cars or virtual reality are not only electrifying science fiction lovers anymore, but are also increasingly presented as cure-all remedies to supply chain challenges. In The Digital Transformation of Logistics: Demystifying Impacts of the Fourth Industrial Revolution, the authors peel back the layers of excitement that have grown around new technologies such as the Internet of Things (IoT), 3D printing, Robotic Process Automation (RPA), Blockchain or Cloud computing, and show use cases that give a glimpse about the fascinating future we can expect. Platforms that allow businesses to centrally acquire and manage their logistics services disrupt an industry that has been relationship-based for centuries. The authors discuss smart contracts, which are one of the most exciting applications of Blockchain, Software as a Service (SaaS) offerings for freight procurement, where numerous data sources can be integrated and decision-making processes automated, and marine terminal operating systems as an integral node for shipments. In The Digital Transformation of Logistics: Demystifying Impacts of the Fourth Industrial Revolution, insights are shared into the cold chain industry where companies respond to increasing quality demands, and how European governments are innovatively responding to challenges of cross-border eCommerce. People are a vital element of the digital transformation and must be on board to drive change. The Digital Transformation of Logistics: Demystifying Impacts of the Fourth Industrial Revolution explains how executives can create sustainable impact and how competencies can be managed in the digital age - especially for sales executives who require urgent upskilling to remain relevant. Best practices are shared for organizational culture change, drawing on studies among senior leaders from the US, Singapore, Thailand, and Australia, and for managing strategic alliances with logistics service providers to offset risks and create cross-functional, cross-company transparency. The Digital Transformation of Logistics: Demystifying Impacts of the Fourth Industrial Revolution provides realistic insights, a ready-to-use knowledge base, and a working vocabulary about current activities and emerging trends of the Logistics industry. Intended readers are supply chain professionals working for manufacturing, trading, and freight forwarding companies as well as students and all interested parties.

List of Contributors xix Author Biographies xxi Foreword xxix Acknowledgments xxxiii A Note from the Series Editor xxxv Section I Introduction 1 1 Demystifying the Impacts of the Fourth Industrial Revolution on Logistics: An Introduction 3 Mac Sullivan Introduction 3 Future of Work in the Fourth Industrial Revolution 3 The Role of Digital Transformation 4 Hub Economy Companies Leading the Way 5 Current State of the Logistics Industry 5 Effects of the Second and Third Industrial Revolutions on Logistics 5 Technology Is Easy; But People Are Hard 6 The Role of Startups in the Logistics Community 6 Logistics Companies Under Pressure 7 Technology Investments by Logistics on the Rise 7 New Entrants Threaten Status Quo 8 Disintermediation Threat Looming 8 Navigating a Digital Transformation 9 Budget Considerations for Technological Upgrades 9 Lessons Learned from Other B2B Industries 10 Automation Leading in Terms of Return on Investment 10 Winners and Losers of a Digital Transformation 11 The Necessity of Economies of Scale 11 Foundations of a Digital Transformation 12 Prioritization of Technology Exploration 12 Connectivity Standardization in Logistics 12 New Business Models Emerging 13 Participation in Platforms and Marketplaces 14 Zoom Out/Zoom In Approach 14 The Time Is Now 15 Conclusion 16 Key Takeaways 17 References 17 Section II Technologies 21 2 Technologies Driving Digital Transformation 23 Mac Sullivan References 25 3 Logistics Management in an IoT World 27 Axel Neher Introduction 27 Logistics Management in an IoT World 29 Get Connected 29 Criteria for Defining the Right Things 30 Sensors and Identification 30 Means of Connection 31 Triggers 31 Standards 31 Security 32 Get Decisions 33 Get Prepared 34 Data Quality 34 Organization 35 Skills 35 Ecosystem 36 Conclusion 36 Key Takeaways 38 References 39 4 Additive Manufacturing: Shaping the Supply Chain Revolution? 41 Johannes Kern Introduction 41 AM Supply Chain 42 Evaluation 43 Advantages 43 Bottlenecks 44 Technologies and Materials 46 Technologies 46 Materials 47 Application Scenarios 50 Market and Trends 51 Market 51 Trends 52 Conclusion 53 Key Takeaways 55 References 55 5 The Role of Robotic Process Automation (RPA) in Logistics 61 Mac Sullivan, Walter Simpson, and Wesley Li Introduction 61 Companies Under Pressure 61 RPA as a Solution 62 Evaluating Heavyweight IT to Lightweight IT Automation 62 Achieving Operational Excellence 63 Process Improvement on the Rise 63 Outsourcing Versus Automation 64 Center of Excellence as a Leader of RPA 64 RPA: Hype or Realistic Solution 65 The Facts 65 Rote, Repetitive Tasks Ripe for Automation 65 Process Considerations of Implementing RPA 66 Motivating Example: Konica Minolta Using RPA 67 Konica Minolta’s RPA Roadmap 68 Use Cases for RPA in Logistics 70 Track and Trace 70 RPA Adoption at DHL 71 Navigating Your RPA Journey 71 Who Should Own This RPA Journey? 71 Process Mining and Process Mapping 72 Choosing the Right RPA Provider 72 Change Management Considerations 73 RPA Implementation Announcement 73 Liberated Knowledge Workers 74 Interacting with RPA 74 Training the Bot 74 Next Evolution of RPA Training 75 Conclusion 75 Key Takeaways 76 References 76 6 Blockchain Will Animate Tomorrow’s Integrated Global Logistics Systems 79 Nicholas Krapels Introduction 79 The Origins of Blockchain Technology 81 The Potential of Blockchain Technology 84 Revolution via Protocol 84 Essential Properties of Blockchain 85 Blockchain Applications in Logistics 88 Public Blockchain Applications in Logistics 88 Private Blockchain Applications in Logistics 89 Conclusion 92 From Trusted Actors to Trustless Networks 92 Key Takeaways 94 References 94 7 Digitalization Solutions in the Competitive CEP Industry – Experiences from a Global Player in China 97 Scott Wang and Johannes Kern Introduction 97 Challenges in Key Logistics Segments 97 Digitalization Solutions Today 98 E-Commerce in China and Its CEP Market 100 A New Competitive Environment 101 Digitalization Solutions of the Future 102 Internet of Things (IoT) 102 Artificial Intelligence (AI) 103 Blockchain 104 Case Study: Enhanced Address Translation Through AI 106 Conclusion 109 Key Takeaways 109 Acknowledgements 110 References 110 8 Understanding the Impacts of Autonomous Vehicles in Logistics 113 Lionel Willems Introduction 113 Evolution of AGVs 114 Intelligent Logistics 116 The Automation of Indoor Transport Systems 116 Opportunities for AGVs 117 Challenges of Adopting AGVs 118 The Automation of Outdoor Transport Systems 119 History of the Automation of Outdoor Transport Systems 119 Opportunities and Challenges in Logistics 120 Drones and Their Use in Logistics 122 Conclusion 124 Key Takeaways 124 References 125 9 Logistics in the Cloud-Powered Workplace 129 John Berry The Cloud Revolution 129 Growing Dominance of Cloud Computing 130 Infrastructure as a Service (IaaS) 130 Platform as a Service (PaaS) 131 Software as a Service (SaaS) 132 Enabling New Business Models 132 How Software Drives Logistics 133 Warehouse Management Systems (WMS) 134 Transportation Management Systems (TMS) 134 Shortcomings of Conventional Logistics Software 135 Complexity 135 Difficult Data Integration 135 The Impact of SaaS on Logistics 136 A New Technology Delivery Model 136 SaaS Warehouse Management Systems 137 SaaS Transportation Management Systems 138 APIs 138 SaaS-Enabled Value Creation 139 Automation 139 Integration 141 Analytics and Artificial Intelligence 141 Conclusion 142 Key Takeaways 143 References 143 Section III Platforms 147 10 Platforms Enabling Digital Transformation 149 Mac Sullivan References 151 11 The Digital Transformation of Freight Forwarders: Key Trends in the Future 153 Ruben Huber Introduction 153 The Specter of the Digital Transformation 153 Actors in the Shipment Cycle 153 Key Trends That Will Shape the Future 154 Technology 154 Specialization 156 Omnichannel 157 Virtualization 158 Reshaping Logistics Service 159 Collaboration Is Key 160 Digitalization Impact for White-Collar Workers 162 The Regulatory Environment 163 Conclusion 163 Key Takeaways 164 References 165 12 International Trade Revolution with Smart Contracts 169 Matías Aránguiz, Andrea Margheri, Duoqi Xu, and Bill Tran The Blockchain Revolution 169 Smart Contracts 171 Smart Legal Contracts 171 Service Level Agreements 171 Smart Contracts in International Trade 172 Paperless Trade 172 Trade Finance 173 Bill of Lading 173 Letter of Credit 174 Trade Facilitation 174 Smart Import Declaration 175 Trusted Payment 176 we.trade Case Study 177 Information Distribution 178 Information Transmission 178 Tradelens Case Study 178 Information Symmetry 178 Smart Contract Initiatives 179 Government Initiatives 179 Chinese Central Bank 179 South Korea 179 Private Initiatives 180 Mizuho Bank Using IBM 180 Marco Polo Trade Initiative 180 Risks and Challenges of the Implementation 180 Technological Challenges 180 Scalability 180 Sustainability 181 Security 181 Interoperability Challenges 181 Compatibility 181 Data Standardization 182 Legal Issues 182 Validity 182 Privacy 182 Conclusion 182 Key Takeaways 183 References 183 13 Exploring China’s Digital Silk Road 185 Andre Wheeler Introduction 185 Digital Integration and Supply Chain Along China’s BRI 186 Challenges of Digitization for the Freight Industry Along the BRI 189 Challenges in China 190 System Connectivity Challenges 191 Digital Silk Road as an Answer to the Digitalization Deadlock 191 Summary 193 Key Takeaways 194 References 195 14 Marine Terminal Operating Systems: Connecting Ports into the Digital World 197 Ira Breskin and Ayush Pandey Introduction 197 Terminal Operating Systems 198 Ports and Local Governments Recognizing the Value of Modern TOS 198 An Increasingly Competitive TOS Software Market 199 Navis as a Terminal Operating System 200 Breaking Down the Costs of Implementing a TOS 202 What to Consider When Selecting a TOS? 202 Importance of Visibility at the Terminal 203 Digital Communication is Key 204 The Future of Terminal Operating Systems 204 Conclusion 206 Key Takeaways 207 References 207 15 Improving Cross-Border eCommerce Through Digitalization: The Case of Compliance in B2C Shipments 209 Simon de Raadt and Jiao Xu Introduction 209 Customs Clearance as a Barrier Constraining Growth 210 Lack of Integration as the Root Cause of Customs Misdeclaration 212 How the Digitalization Can Revolutionize Cross-Border ECommerce 214 Increased Customer Satisfaction 215 Supply Chain Visibility 215 Speed of Customs Clearance 216 Technology as Enabler for a Cooperative Model 217 Technical Requirements 219 Conclusion 219 Key Takeaways 220 References 220 16 Enabling Platform Business Models for International Logistics 223 Sam Heuck and Cory Margand Introduction 223 Current International Logistics Technology Landscape 225 The BCO’s Perspective 230 The Future 232 SimpliShip: Deeper Dive into an Existing Logistics Marketplace 233 The Era of Data and the Impact on the Workforce 235 Conclusion 238 Key Takeaways 238 References 238 17 The Evolution of the Cold Chain: A Story of Increasing Complexity Amidst a Sea of Traditional Thinking 243 Alex von Stempel Introduction 243 Cold Chain Transportation 243 Cold Chain Transportation Modes 244 Ocean Freight 244 Airfreight 246 Technological Differentiation Between Air and Ocean Cold Chain Transportation 246 Cold Chain Transportation Considerations 247 Condition Monitoring 247 Controlled Atmosphere (CA) 248 Modified Atmosphere Packaging (MAP) 249 Evolution of Cold Chain Transportation 249 Technology Solutions 251 Blockchain 251 IoT and AI 252 Gaps to be Addressed 252 Food Safety as the Key 253 Conclusion 253 Key Takeaways 254 References 254 Section IV People 257 18 People Navigating Digital Transformation 259 Johannes Kern References 261 19 Change Management Falling Short – the Call for Business Transformation 263 Michael Teubenbacher Introduction 263 Change Management and Business Transformation – Two Sides of the Same Coin? 264 Business Transformation in the Context of “Digital” 265 Change Management in the Context of “Digital” 267 Business Transformation and Change Management in the Context of the Fourth Industrial Revolution in Logistics 271 Conclusion 274 Key Takeaways 275 References 275 20 Organizational Culture Change: Process to Sustainably Improve Performance 277 Robert Mostert and Johannes Kern Introduction 277 OCC Business Practices 279 Strategic Matching 279 Purpose, Vision, and Mission 281 Values and Beliefs 281 Recruitment and Placement 283 Training and Development 283 Rewards and Recognition 284 Performance Management and Feedback 285 Artifacts 286 OCC at Toll 287 Background 287 New Purpose, Values, and the Case for Change 288 Changing the Way to Manage Performance 291 Tone from the Top (Leadership) 292 Next Steps 292 Conclusion 293 Key Takeaways 294 References 295 21 Competence Management as an Enabler for the Digital Transformation of the Supply Chain 299 Jiayu Sun Introduction 299 Competence Management in Supply Chain Functions 300 Fundamentals of Competence Management 300 Bosch Case Study: A Competence Model Example 300 Current Competencies Required 301 Future Competences Needed 301 Digital Transformation Competence Management: A Learning Transformation 303 Fundamentals of Learning 303 Transitioning from Passive Learning to Active Learning 304 Transitioning from Classroom Training to Digital Learning 305 Future Learning Trends 305 Micro-learning 305 Mobile Learning 306 AR/VR 306 Blended Learning 307 Conclusion 307 Key Takeaways 308 References 308 22 Impacts of Digitalization on Traceability: A Case Study of the Carbon Fiber Supply Chain 311 Cameron Johnson Introduction 311 Carbon Fiber, The Material of the Future 312 Global Supply Chains: A Fragmented Picture 312 Several Constraints Characterize the Global Supply Chain 313 Case Studies on Lack of Material Traceability and Digitalization 314 Case Study 1: An Aerospace Company Losing a Qualified Supplier 314 Quality Management 315 Quality Control 315 Standards 315 Case Study 2: Traceability, Which Affects Efficiency and Compliance 315 Case Study 3: A Global Carbon Fiber Converter’s Internal Waste System Could Use an Upgrade 318 Tracking Waste 319 Compliance 320 Digitalization Benefits in the Global Carbon Industry 320 Implementation Challenges 320 Manual Entry 320 Cost 321 Training and staffing 321 Motivation 321 Digitization Opportunities 321 Conclusion 322 Key Takeaways 322 References 323 23 The Evolution of Freight Forwarding Sales 329 Mac Sullivan, Dennis Wong, and Zheyuan Tang Introduction 329 The Rise of the Digital Freight Forwarder as a New Entrant 329 Market Shifts 330 Amazon Effect 330 Instant Visibility and Pricing 331 Redefining Customer Service 332 The Evolution of Freight Forwarding Sales 332 The Traditional Sales Representative 332 Traditional Sales Reps Evolving 333 Rise of Technology and Its Effects on Sales 333 Connectivity 334 Freight Forwarding Sales Executives at Risk of Losing Their Jobs? 335 Analytical and Creativity as Valued Skills 335 Future Job Market 336 Sales Enablement in a Digital Age 336 Information 337 Training 338 Talent 338 New Cultures and Skills 339 Conclusion 340 Key Takeaways 341 References 341 24 Managing and Selecting Logistics Service Suppliers 345 Colin Cobb and Dyci Sfregola Introduction 345 Identifying Business Needs, Capacity, and Capabilities 346 Motivational Example 347 Background 347 Current State Enterprise Network 348 Services that Will Be Needed to Achieve the Goal 348 Industry Vertical Experience 348 Technology Solutions 348 Forecasted and Desired Demand 348 Previous Wins and Challenges 348 Deconstructing the Issues 349 Defining a Solution 349 Choosing a Solution 350 Sourcing and Managing Suppliers in the Continuum 350 Strategies for Developing Strategic Alliance 351 The Vested Outsourcing Model 351 Pricing Considerations for Outsourcing 353 The Roadmap for Success: Onboarding, Measurements, and Service Level Agreements 354 Key Performance Metrics 355 On-Time Delivery (Inbound) 355 Order Accuracy 355 Cost per Shipment 355 Customer Order Cycle Time 356 Carrier Scan Rate 356 Inbound (Purchased) Order Cycle Time 356 Inventory Accuracy 356 Fill Rate 356 Data or Document Transfer Error Rate 357 Logistics Billing Accuracy 357 Supplier Development and Managing the Supplier Relationship 357 Conclusion 358 Key Takeaways 358 References 359 Section V Conclusion 361 25 The Digital Transformation of Logistics: A Review About Technologies and Their Implementation Status 363 Johannes Kern Introduction 363 State of Digitalization in Logistics and Supply Chain Management 365 Logistics Infrastructure 365 Seaports 365 Airports 366 Warehousing 368 Logistics Execution 371 Road Transport 371 Sea Transport 376 Air Transport 378 Courier, Express, and Parcel Delivery (CEP) 381 Logistics Services and Advisory 387 Conclusion 391 Key Takeaways 393 Acknowledgments 394 References 394 Glossary 405 Index 435