The connected supply chain: how smart logistics are powering the future of global trade

Just as the invention of the shipping container revolutionised global trade in 1955, connected supply chains are set to transform the logistics industry again by 2025. With the market forecast to reach​ $46.5 billion​ in value in the next four years, research from analysts PwC suggest the average payback period for investments in connected supply chains is ​just 1.8 years​.

Moving consumer goods from factories to front doors is a complex business. The sheer number of hands, locations and processes in the supply chain creates numerous opportunities for risk or errors. Warehouse crises, port congestion, weather conditions, unexpected traffic - or a global pandemic - can all impact on transportation.

At the same time, the ‘Amazon Prime Effect’ has entirely reshaped consumer behaviour and the world of retail and logistics. Online shopping numbers have more than doubled since 2017, and of those shoppers, 63% say that expensive shipping or long delivery timescales would see them take their custom elsewhere. Consumers are also more likely than ever before to return goods, expecting free returns as part of the purchase process - and this added cost must be factored into business strategy too.

Smart logistics can address these challenges. Powered by AI, cloud computing, 5G and IoT devices, a connected supply chain integrates real-time data from manufacturers, warehouses, shipping companies and road transportation providers across the world, aligning their schedules in the most time- and cost- efficient ways.

With a transparent, end-to-end view of all their operations, logistics providers can check the status of a consignment anywhere in the world and forecast any potential issues, creating significant improvements in efficiency and sustainability.

So what does a connected supply chain look like? Let’s look at how a new laptop, for example, could reach you:

Day 1: The assembling plant, Zhengzhou, China

The new laptop is assembled in an “Industry 4.0” factory. With better data on how their machines are performing from AI-powered production monitoring, the manufacturer can optimise productivity and uptime, as well as reducing process times and production cost. Your laptop is one of 4,000 which passed QC and were completed ahead of the production schedule today.

Day 2: Distributor’s warehouse, Shenzhen, China

An optimised supply chain planning algorithm indicates the most accurate of various potential outcomes, this time predicting a dip in demand for new laptops this week, so the distributor stops building inventory, minimising excess warehouse space and the associated costs.

The distributor knows precisely where your laptop - and everything else in its inventory - is at all times, using a ‘digital twin’: a 3D, virtual version of the warehouse, which updates in real-time. A centralised warehouse management system (WMS) automatically processes the order, via a fulfilment center in Saudi Arabia, for your laptop.

The order triggers an autonomous mobile robot (AMR), connected by 5G, and/or a drone to pick and pack your laptop, or support manual warehouse operatives to do so. As the AMR picks items from the shelves, its RFID scanner feeds real-time data on stock availability back to the central system.

Day 2: International Container Terminal, Shenzhen Port, China

Your order is packed into a ‘smart container’, which feeds data on precise location, atmospheric conditions and vibrations, into a cloud-based platform. The logistics provider, transport operator, vessel crew and customs officers, among others, can all access this data in real time and check that the shipment is processing as expected.

Day 11: Freight Terminal, Port of Jeddah, Saudi Arabia

Your laptop arrives in Saudi and is loaded onto a ‘connected truck’, which sends telematics on location, speed and fuel consumption into the cloud using 5G. There’s a crash on the highway today, and the truck is delayed by more than three hours. The road transport provider’s software recognises your shipment is no longer on schedule and automatically updates the fulfillment centre which, in turn, updates you accordingly via email.

Day 12: Fulfillment Centre, Riyadh, Saudi Arabia.

The “last mile”: your shipment arrives at a fulfillment centre, where it’s transferred to a delivery van. The delivery driver’s mobile app updates you on their precise location and expected delivery time through a central planning system. The system monitors the parcel right through to confirmation of delivery, and whether the shipment was received by a person or left in your nominated ‘safe place’.

Future-proofing global trade

In an increasingly complex world, end-to-end supply chain transparency has never been more important. The global events of 2020 have only underscored the need for more informed, more data-driven planning to minimise disruptions and costs. Smart logistics like, then, may well be the panacea - giving businesses those vital insights they need to move goods around the world efficiently, cost-effectively and sustainably.