Digital Logistics: From Trend to Norm
Microsoft has entered a partnership with ocean carrier OOCL to develop artificial intelligence (AI) in shipping, with the goal of helping Microsoft better understand and predict shipping patterns and variables. This partnership comes at a time when traditional players in the logistics sector have worked to streamline and automate wherever possible in hopes of becoming more efficient and competitive. As these companies step into the business of digital logistics, supply chain automation is no longer a trend, but the accepted norm.
To learn more about digital logistics, Inbound Logistics spoke with Dan Stoll, senior technical manager at Nintex, an Intelligent Process Automation company. He has spent the past 10 years of his career helping organizations turn manual processes into well-run automated ones.
IL: What is the current state of digital logistics?
Stoll: Before Microsoft entered the race, companies were already fighting to outdo one another in logistics. Walmart teed off against Amazon with its acquisition of Parcel to make same-day deliveries in New York, while Amazon's acquisition of Whole Foods is making the grocery middleman obsolete. Outside of supply chain acquisitions and announcements, robots and artificial intelligence are also picking up steam.
IL: Is there a clear leader at this point?
Stoll: What's most notable about recent announcements from Microsoft and Amazon is the fact that tech companies are not leaving any sector, including logistics, untouched. Microsoft's partnership with OOCL details that the two are in an 18-month research phase, while "Shipping with Amazon" is open for business. Once Microsoft and OOCL move out of the research phase, distributors will be faced with two powerful direct competitors. Until then, distributors need to increase their investment in data optimization and predictive analytics to keep up with the technology-driven services. It will be hard to compete with Amazon's costs or Microsoft's intelligence without any automation in place as the two lead the charge in digital supply chain innovation.
IL: What does the race to automate logistics look like?
Stoll: While there is no need to panic, competition in automation is on the rise and will only continue to escalate. Amazon put the pressure on FedEx, USPS, and UPS, but it's Microsoft that is now cranking up the heat. Legacy shipping providers need to embrace the new norm and overhaul their long-time logistics processes. The transition will not be quick or painless, but the payoff is in the time companies save that would have been spent fixing predictable or avoidable issues. Microsoft seems to be one of the first to try and address these problems head on. Depending on what comes of the Microsoft/OOCL deal, we might see two Seattle tech companies in a shipping war.
IL: What does it take to come out ahead?
Stoll: To remain relevant, a plan to automate is critical. If logistics companies aren't planning to automate in 2018, they are already behind. Until "Shipping with Amazon" was announced earlier this year, automation was not a clear priority for legacy shipping providers.
A recent study finds 43 percent of supply chain respondents partially use automation to run their businesses. But over the next few years, more than half of those surveyed want to implement even more automated processes. While the industry continues to make strides in automation and intelligent adoption, logistics leaders can look to third-party automation experts for help.
IL: How does Microsoft's announcement change this?
Stoll: Lost packages, broken cargo, and late deliveries are a given in the current state of shipping. Microsoft's announcement brings an often forgotten stakeholder in logistics: the customer. The Microsoft/OOCL partnership will better address customer needs through technology advancements and predictive analytics. The latest announcement should act as a catalyst to not only implement automation, but also to bring the customer to the forefront of conversations.