Despite advances in manufacturing that will move the bulk of product production away from mega-factories in developing countries back to Europe and America, logistics will always play a big role in a world of global trade.
The industry employs millions of people worldwide, and even robots will struggle to make a big impact in the short-term. That is because logistics is inherently a complicated industry, with hundreds and thousands of variables, complex system, interconnectivity problems and standards varying from country to country, even port to port.
If you have ever tracked a parcel through a delivery service, you know that at present we only have information when a package transit from one system to another, from one data point to another. We know very little about what happens to shipments in transit.
That is important. Drugs, food, livestock, and many other things should be constantly monitored to ensure quality and product safety. Most of these items should be tracked from the source all the way to the receiver, 24/7.
(This is where blockchain may come in: How Blockchain Will Save the World
The Advent of 5G and IoT
5G networks with their big throughput rates, safety features, and low latency will not only enable industry 4.0 and better automation, they are also the key to a successful deployment of the Internet of Things. We will finally have information systems and bandwidth that allow us to track anything we like from source to end-user.
This will not be an immediate transition, due to the complexity of systems. It will take the better part of the next decade to make the transition meaningful. Some companies will go ahead and build their own proprietary systems, but interconnectivity and cybersecurity will delay adoption in the short term.
Real-time insights will allow for greater efficiency in tracking not just the physical route of a package, but also its condition, e.g. temperature, humidity, etc. Integration with traffic information systems will allow flexible re-routing; data analysis and machine-learning algorithms will allow new and existing logistics providers to offer far more flexibility, and thus cost and energy savings.
What Supply Chain Managers Are Looking For
Delays and problems during shipment account for the majority of complaints in international business. What CIOs and supply chain managers really want for their business is customer satisfaction.
- Enhancing customer satisfaction
- Increasing efficiency and faster shipments
- Cost savings (including human resources)
- Compliance with international rules
- New delivery and distribution methods
All of these are components of Customer Success, the key to successful value propositions for customers.
Once the proper systems are in place, companies will be able to offer just-in-time deliveries with speed and flexibility, unlike anything we have now. Combined with robots and drones, these new logistics systems will be completely unrecognizable.
New IoT devices will have far better connectivity. Visual positioning systems (VPS) will replace or augment GPS, allowing for tracking in enclosed spaces like warehouses, basements, or remote areas.
The key technologies to make IoT devices efficient are energy conservation or independence from traditional energy sources like batteries, and interconnectivity with sophisticated control systems in factories and logistics control centers.
Read also: The Future of the Internet of Things
AI is the final ingredient
The transportation systems described will be incredibly complex, perhaps too complex for humans to control. Integration with sophisticated artificial intelligence and machine learning system is the final ingredient to make them successful.
There is a clear connection between AI and IoT: it’s called data. IoT devices will produce so much data, it can only be leveraged by machines.
The use of 5G and IoT will speed up transportation of goods air, waterways, rail, and road. Vehicles, conveyor belts, drones, and storage systems have to be linked with open, interconnective protocols on a global scale. Only AI will be able to manage larger systems.
Regulation Must Catch Up
One of the biggest obstacles to 5G and IoT adoption in supply chain management is regulation. Even if some countries are keeping ahead of the curve, in the majority of trading nations custom clearance and regulatory approval of shipments (like food or drugs for example) are still years behind.
Companies may end up with fantastically advanced internal systems that have to interface with government agencies through antiquated paper records. Every time such an interface opens, you have a problem with data entry and human interference: the latter being the biggest source of error and wrong data. Machine learning and AI can only be accurate and useful if the data they work with is accurate.
The Security Issue
Interconnectivity is alright, but it also opens these complex systems to hackers and criminals with nefarious intent. The more interconnected, the greater the danger of major damage to global IoT systems, in particular in logistics. One hacker could paralyze the supply chain of a single company or an entire country.
5G promises the implementation of security problems that will tackle these issues. But as a cybersecurity expert and friend keeps telling: everything that can be hacked will be hacked. In particular, DDoS or denial of service attacks may become far more powerful than ever, as they block access not to PCs but actual integrated systems. And in an integrated supply chain, if one part fails, the entire process may collapse.
Because they are connected, hackers have a million opportunities to enter the system. There will always be weak points. If, for example, in a factory, someone hooks up ancillary systems like air conditioning to the main node, there is a way to hack into the system. WiFi routers, robots, access control, and anything else connected that is not under the direct control of the supply chain security team, are especially dangerous.
Neither cloud services by large companies like Amazon, Google, Microsoft or SAP, nor proprietary systems by individual suppliers are immune from such attacks. Startups like Cloud Logistics will offer new challenges: as they experiment with new approaches, things could go terribly wrong.
The biggest threat does not come from the security threats we are aware of, but from new developments. Every time we change systems on a large scale, we cannot be sure that we have covered all the bases.
Is Blockchain the Solution?
Some experts predict that the security features of the distributed ledger or blockchain technology are the key to making these supply chains safe. Others bet on quantum computing. One thing is sure: a lot of it will happen in the cloud, controlled by a handful of large technology companies that implement and manage cloud and edge computing solutions. And as I said, those are vulnerable too.
What 5G and IoT promise to do, however, is far more important and beneficial than the danger of cyber attacks. Not only could the IoT make supply chains make more efficient; it will also solve problems like pollution, recycling, fighting corruption, food and drug safety, and help developing countries catch up with the rest of the world far more quickly. And that is why nothing will stop the IoT, no matter how serious the security issues.