Since the Industrial Revolution, various innovations have occurred in the logistics industry, and now new innovations are about to occur. It is about to be reborn as a business using next-generation technologies such as IoT and AI that do not require human labour . That is “Logistics 4.0”. In this article, we will discuss Logistics 4.0 and the future of logistics.
“Logistics” refers to centralized management of the flow from the procurement of raw materials to production, storage, packaging, and sales, from making goods to delivering them to consumers. In layman’s terms, it is a series of systems that manage logistics.
The concept of logistics is said to have appeared in the latter half of the 19th century. The industrial revolution that took place in England from the mid-18th century to the early 19th century dramatically increased the production efficiency of all industries, and in the latter half of the 19th century, more products than people could consume began to circulate in the world. I was.
Therefore, in order for companies to further expand their market share, we have come to the idea that the flow of logistics must be changed more efficiently and speedily. The concept that was born in this way is said to be “logistics”.
The 19th century saw a major revolution in the inland transportation of goods. It is the emergence of the steam engine, that is, the “railroad”. For those of us who live in modern times, the transportation of goods by railroad seems to be commonplace, but before the steam engine was invented, it was common to use horse-drawn carriages using animals such as horses and camels, or ships using canals to transport goods.
The practical use of steam engines has made it possible to transport large amounts of goods to remote areas more efficiently and safely, without being affected by the weather unlike ships.
The steam locomotive invented by Richard Trevithick succeeded in dramatically increasing the transportation capacity on land, ushering in the era of mass transportation. The mechanization of inland transportation brought about a major transformation, and this period is called “Logistics 1.0.”
With this Logistics 1.0, human civilization will progress by leaps and bounds.
The advent of the steam engine revolutionized inland transportation. However, although mechanization has made it possible to transport a large amount of cargo at one time, cargo handling such as loading, unloading, transportation, and sorting has been done manually by humans.
In the 1950s, a big change will come to such an environment. It is the “mechanization of cargo handling” with the advent of forklifts and pallets.
Forklifts were originally used as logistical support machines during World War II, such as replenishing military supplies and food supplies. After the war, along with pallets, which are cargo handling materials, they became popular at logistics sites and contributed greatly to the efficiency of cargo handling work.
After that, along with the popularization of marine containers, cargo handling became more efficient. Cargo ships at that time required a lot of time for loading work, and it was not uncommon for it to take more than a week to load 10,000 tons of cargo. With the advent of marine containers, it has become possible to load the same amount of cargo in a matter of hours. The time required for loading has been reduced to one-tenth, and at the same time, the number of personnel required has been significantly reduced.
The transformation of mechanization of cargo handling is “Logistics 2.0”.
Although mechanization since the industrial revolution has brought about major innovations in the logistics industry, automation has only progressed to on-site operations such as loading and unloading. For example, operations related to cargo entry/exit management and inventory management still depended on human labor, and were all managed using documents and ledgers.
In the 1980s, with the spread of computers, “WMS” was introduced for management and processing work, and systemization began to spread. WMS is an abbreviation of “Warehouse Management System”, which means ” warehouse management system “.
WMS has improved the accuracy of logistics management in warehouses and has been used as a system for total management of the work status of receiving, storing, picking, inspecting, and packing, and has brought about innovation in the digitization of management and processing operations. is.
The period when logistics management was systematized in this way is called “Logistics 3.0.”
What is Logistics 4.0
“Logistics 1.0” brought about the innovation of “mechanization of transportation” with the advent of steam engines due to the industrial revolution.
“Logistics 2.0” has succeeded in greatly shortening the time and personnel required for loading and unloading work through the “mechanization of cargo handling.”
With the introduction of WMS (warehouse management system), “Logistics 3.0” has achieved a revolution of “mechanization of logistics management”.
The concept of logistics, which has evolved in this way, is now undergoing another major change. This is called “Logistics 4.0”, which is “labor saving and standardization by IoT and AI”.
Changes due to labor saving
“Labor-saving” means reviewing operations to reduce unnecessary processes and personnel.
Labor saving in Logistics 4.0 literally means “saving people”. In other words, it is the mechanization of work such as “human judgment and operation” that could only be done by humans, such as the practical application of autonomous driving, home delivery by drones, and warehouse work by robots.
Logistics 4.0 is about to replace people as the core of logistics operations with next-generation technologies such as IoT and AI.
Changes due to standardization
Standardization is the orderly simplification of “things” and “things” that are becoming more diverse and complicated.
Standardization in Logistics 4.0 is standardization by sharing information with IoT and AI. For example, AI derives optimal solutions for transportation methods and delivery routes, and a platform that transcends logistics such as transportation networks, weather and disaster information is formed. will be
In this way, logistics and information can be shared beyond the boundaries of companies, and shippers and logistics resources can be broadly matched.
How will logistics change with Logistics 4.0?
Labor saving and standardization by IoT and AI are about to bring about new and major innovations in the logistics industry.
Until Logistics 3.0, the purpose was to mechanize and systemize specific work and processes, and it remained a business that required human labor. However, as Logistics 4.0 becomes a reality and the industrialization of logistics that does not require human labor progresses, the labor-intensive business model of hiring and using many workers as in the past will no longer be viable. I mean
The logistics industry will become polarized
The future logistics industry is expected to undergo extreme polarization.
More capital than ever before, forward-looking investments, and above all, information networks are needed. Looking ahead, only companies that have established excellent business models by proactively and strategically investing in next-generation logistics systems using IoT and AI, such as self-driving trucks, the robot industry, and matching systems, will survive, and those that do not will be eliminated. It will be done.
For logistics companies, Logistics 4.0 poses a huge threat to the current business model. At the same time, however, it also represents a once-in-a-lifetime opportunity to achieve dramatic growth.
For example, companies like Amazon, which sparked historic innovation, have grown into world-famous corporations because they had strategic visions during major changes and seized opportunities without fear of change. .
In the end, it is no exaggeration to say that the rise and fall of a company depends on whether this creative innovation in logistics is seen as good or bad, and how it is dealt with.
The logistics industry is about to enter an unprecedented turning point. Whether it poses a threat or an opportunity for growth depends on how companies perceive it. Taking advantage of this big wave will require bold and strategic management decisions in anticipation of the transformation brought about by Logistics 4.0.