Logistics Disruption

If you want to really disrupt an industry, aim for the things that define it. The older and the more embedded those things are, the more you can really shake the sector up. In logistics or the world of “trucks and sheds”, meaning shipping and warehousing, manual labour is a huge part of operations. Historically, there wasn’t much choice. If you wanted to deliver stones to build houses, you needed people to load up a cart at one end, someone to drive the cart, and people to unload it at arrival. Even in warehouses today, somebody must drive the forklift trucks, pick the items to packed for shipping, and organise loading. And someone must drive the van, truck, or road train to move shipments from one delivery point to the next.

 

The ”No People” Scenario

"No People" Scenario

Now, take people out of these logistics activities. No more warehouse operatives. No more drivers. No more delivery people. Is this possible while still making sure that goods get from their place of manufacture to customer premises on time, in good shape, and at acceptable cost? In a word, yes. The stage of transition to this futuristic mode of operation varies from one type of logistics activity to another. But we are already well past the proof of concept phase of a people-less environment for trucks, sheds, and deliveries.

 

Lights-Out and Lower Cost

Let’s start with warehousing. “Lights-out” warehouses have been making inroads for some time. They use zero or minimal human operatives, relying on robots and automation to put goods away, check stocks, and prepare shipments. These machines can work non-stop, without breaks, and without errors. They also function in conditions, like hot and cold temperature extremes, that are difficult for human beings. Certain industries are better candidates than others for fully automated warehouses. The food and the pharmaceuticals industries are examples. Not only can temperatures be kept low, but problems of condensation can be avoided by keeping doors shut. Machines, unlike people, have no need to move in and out of the warehouse.

 

An Enterprise Dilemma

Finance departments love the idea of saving on labour costs and having one machine work three shift without so much as a whimper. However, they are less enthusiastic about the start-up costs. This is one reason why lights-out warehouses have yet to take over the world. It’s a dilemma for enterprises in industries where cost reduction is a priority (typically, most industries). They must choose between paying wages on a weekly or monthly basis, or making large financial outlays to put robots and automated systems in. However, once automation is in place and working, it can deliver returns on investment of anything from 15 to 50%. That’s a huge amount compared to typical returns of 2 or 3% on other investments.

 

Stay Flexible, Stay Employed

Lights-out warehousing is nonetheless better suited to repetitive work and processes. While progress has been made in infusing machines with artificial intelligence, there are still limits. Product personalisation means higher variation and variability in kitting and other value-added warehouse activities. People still do many of these tasks more cost-effectively. Their role is likely to change as automation handles basic and repetitive tasks, nudging people upwards towards work that needs higher flexibility, creativity, judgment, and problem-solving skills. Robots in a lights-out warehouse may be eating the workers’ lunch, but it might be a lunch that workers didn’t find too tasty in the first place.

 

 

Driverless Trucks are Here Today

Driverless Trucks

Can companies really do without people when it comes to trucks? To judge by the Port of Rotterdam and the mining industry in Australia, the answer is yes. The Port of Rotterdam uses driverless trucks to move containers from the crane and ship area to the loading area. For safety reasons, humans are not allowed in the area used by the trucks during operational shifts. Similarly, the driverless trucks used at the iron ore mines in Pilbara, Western Australia, are in an area remote from other traffic. In fact, the self-driving trucks were brought in not only to increase efficiency, but also to address certain safety issues relating to human drivers.

 

Driver Replace or Driver Assist?

Meanwhile, large industrial vehicle companies have been testing their versions of driverless trucks. Daimler, headquartered in Stuttgart, Germany, has already demonstrated a prototype that drove autonomously on a freeway in Germany, including a junction. It is also the first manufacturer to obtain a road license in the United States for a driverless heavy-duty truck. Elsewhere, manufacturers are taking a different tack. Peterbilt Motors Co. in Texas works with retailers, including Wal-Mart, to provide them with driverless vehicles. However, Peterbilt’s focus is more on advanced driver-assist systems, also known as ADAS. While making a truck more “self-aware” on the road, Peterbilt plans to keep the human driver involved for situational awareness.

 

Time to Consult Your Crystal Ball

Will drivers face unemployment because of autonomous trucks? The jury is still out on this question for at least two reasons. First, as hinted at above, truck autonomy is not being addressed in the same way by different manufacturers or by different fleet owners. For some, the “lights-out” cab (so to speak) is already a reality. For others, truck autonomy is there to help human drivers stay safer, rather than to replace them outright. Second, it’s a moot question as to whether there is currently a global abundance or a scarcity of human truck drivers. If there is an abundance, then jobs may be axed. On the other hand, if there is a scarcity, driverless trucks or at least driver-assist trucks could help drivers rather than hinder them.

 

Far Reaching Ramifications

Whatever the case, the driverless truck may have an even bigger effect on logistics than the lights-out warehouse. There are three areas that are likely to be affected. The first is network design. Current models of trucks and driver capabilities are predicated on average daily distances travelled – for instance, around 500 miles. Along with marketing considerations, this in turn drives planning for distribution centres. If the average daily distance increases to say 1,000 miles, thanks to driverless trucks, distribution centres may become simultaneously fewer and larger, as well as being situated in completely different locations. The second consideration is delivery speed. Driverless trucks offer the possibility to do more with less. Consequently, fewer trucks are needed, reducing congestion while traveling further per day. Ordering patterns and inventory management are likely to be affected. Third, changing (lower) costs of transport could mean lower end-user prices and corresponding changes in sourcing strategies.

For the ecologically concerned, driverless trucks should also contribute positively to the planet. Insensitive to the pressure that pushes human truck drivers to drive faster to maximize their performance within legal time limits, driverless trucks can stick to optimal speeds for the lowest fuel consumption.

 

 

Don’t Stock It or Ship It -Just Print It

3D Printing

Trucks and sheds could be revolutionised by automation and artificial intelligence. But what if a new distribution model then did away with physical shipping and storage? 3D printing offers the possibility to produce products locally on demand, without needing stocks or transport other than a network link or phone line via which to send the printing instructions.

 

3D Printing Crash Course

Essentially, 3D printing is a method of producing or reproducing products using (as you expected) a 3D printer. Using an “additive process”, a product is made by building up layers of material, which may be plastic, ceramic, metal, or other. Hershey, the American confectionery maker, has already demonstrated sophisticated 3D printing using chocolate(!). The 3D printing is driven by a computer aided design. If the design is changed or customized, the 3D printer simply follows the new instructions for printing. There is no additional setup or retooling time required.

 

Now We Just Need the Pizzas

This technology could radically change the logistics landscape in several ways, starting with warehousing. Instead of racks and bins holding parts and products, the only storage necessary is for the digital design and printing information at the manufacturer’s or distributor’s end, and a supply of raw printing material (plastic, metal, or whatever) at the end-customer’s end. In other words, the warehouse becomes computer system. Not only would physical shipping disappear, but the bullwhip effect in which excessive safety stocks are accumulated would no longer exist either.  The aerospace, automotive, and mobile telecoms sectors are among the leaders already using 3D printing. However, like every other solution, it has its limits. Apparently, nobody has found a way to remotely print out pizzas, for example.

 

Conclusion

Disruption is rife in logistics and people will surely find their roles changing too. In lights-out warehousing, employment and careers may simply be about the survival of the smartest or the most flexible. With driverless trucks, the solution may be for human beings and technology to work together, each helping the other to achieve better, safer, more reliable performance. In 3D printing, paradoxically, employment opportunities may flourish, not in terms of logistics, but as openings to help produce customized products for end-customers. A new career in design may not appeal to every truck driver or warehouse operative, but we should remain optimistic. After all, if ugly caterpillars turn into beautiful butterflies, there must be hope for humans too.

 

Contact Rob O'Byrne

Best Regards,
Rob O’Byrne
Email: [email protected]
Phone: +61 417 417 307