Digitalization as a driver for logistics service development Prof. - PowerPoint PPT Presentation

Digitalization as a driver for logistics service development Prof. Mats Abrahamsson, Linköping University Kenneth Verlage, PostNord Future lab

Agenda • Introduction: The different faces of logistics digitalization • A live-case: How PostNord’s e-tools have developed from being hopelessly behind to market leading in two years • Group discussion on digitalization in urban transports and the challenges for logistics companies

Major trends effecting logistics development Globalization and international competition IT/IS-development & Big data availability Potential More turbulent System knowledge More complex Customer and volatile and flow lack of raw supply chains value markets optimisation materials Environmental sustainability Urbanisation and aging population

E-commerce will change future logistics services • The project ”Dragon Boat” or ” Global Supply Chain by Amazon” – Move goods from middle east manufacturers to US- and European customers more efficiently – Heavy digitalization to bypass transportation- brokers and to buy space on trucks, planes and ships to reduced prices • ”Ease and Transparency” (same basic idea as in e- commerce) – “One click-ship for seamless international trade and shipping” for Merchants and international wholesalers – Sellers will book directly with Amazon – not with DHL, UPS or Fedex • UPS, FedEx, DHL, PostNord and others will see a new transport market emerging – Pressure on profit margins and with high service requirements

Two faces of digitalization Concepts Drivers Initiators Focus • Global competition in Automotive & Industry 4.0 – Germany manufacturing Productivity Mechanical Smart Manufact. Leadership – USA • Increase profitability in established industry Industry Strategiska Innovationsprogr – SWE • Improve existing business models • New business opportunities from digitalisation Omni Channels Entrepreneurs Customer • Growth in new and ”renewed” and Private Sustainable cities Value companies Equity Funds New Service Development • To define ”Disruptive business models”

Digitalization & Big Data in Logistics Optimization of logistics systems • Optimize transport productivity – financially and environmentally – Real time processing and route planning – faster or greener routes – Learn more about customers • All customer touch points will create an opportunity for business – intelligence, customers' response as well as customers' feedback. Big Data provide good amount of insight about different situations – Synchronize and integrate with customer business (SCM) • The logistics service providers has good insight into their customers – operations. Revealing supply chain risks and provides measures to mitigate the – supply chain risks. Monitoring global network of Information • Alternative routes in global transportations – Real time re-routing to avoid risks and delay – Open access to customer’s transport needs • Smarter consolidation of customers incoming goods –

Small differencies but huge efforts ….. Multi channel strategy = Producing logistics services in different channels Multiple distribution/marketing channels in parallell Different customer segments Direct deliveries Different ways of ordering Deliveries via retailers Shipper Different delivery locations E-commerce Different ways to communicate Omni channel strategy = A customer unique service independent the channel One coherent system providing optional ways of delivery to the same price Customer unique solutions Different options One customer Direct deliveries Optional ways to place the order Consolidation of Deliveries via retailers Shipper information Optional delivery adress and goods E-commerce Optional ways to communicate

What we know about the future • Competition will increase in most businesses and sectors • The number of competition parameters will increase – Price, Quality, Environmental Sustainability, Delivery Service, Availability, etc. • Many of these are direct related to the logistics system • Digitalization is one of the major potentials in logistics development – To be more efficient – To create customer value • Market volatility and turbulence makes it impossible to tell what kind of digitalisation is right for the future – Dynamic agile and flexible organizations will be crucial to realize the full potential of digitalization – There will be a lot of “Trial & Errors” in the development process

The major challenge is organizational not digital New Technology >> Opportunities Big Data Information Resource Cross-Functional + + Collaboration Sharing Pooling Activities Competence Realize the >> Potential Dynamic Organizations

Digitalization tests almost every aspect of the long-established pattern of supply chain processes Traditional urban freight models will be challenge by new logistics ideas driven by technological opportunities, new customer demands and entrepreneurial skills

Case: PostNord Future Lab How can a traditional logistics company apply to modern digitalization

Digitalization as a driver for logistics service development Kenneth Verlage

Digitalization in a nutshell

No longer competing with the usual suspects

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We did this: 6 insourced super smart development teams A forum where customer meets super smart coders Extreme customer focus Extreme business focus 5

And new rules! 6

We got this: ”PostNord’s e-tools have gone from hopelessly behind to market leading in two years – we are impressed” Nordic multinational retail company in August 2016 2016-10-20 e-handel 7

NCP – Nordic Customer Portal 2016-10-20 8

Collect In Store

Retail app serving the customer 2016-10-20 10

Receiver app, Flexchange, digital locks, digital ID and more! - We fuel REAL innovation

We created an engine for innovation 10/20/16 12

And we have just started! 10/20/16 13

Results from discussion Two main topics: - Digitlization and Logistics Companies - Digitalization and Urban Transports

Digitalization and Logistics Companies • Which are the biggest improvement possibilities for logistics companies in terms of digitalization? – What are the major hurdles? • Logistics companies in general are not fulfilling the expectations of today's connected consumers - what are the gaps?

Digitalization and Urban Transports • What are the three best digital ideas for Urban Transports? • Do you see any disruptive technology emerging for Urban Transports?

Which are the biggest improvement possibilities for logistics companies in terms of digitalization? • Even out the peaks in capacity • Integrate supply chain operators • One-click ship • Fill rate optimisation • How to make sense and use Big Data and turn it into value • Today sources of data is too fragmented – how to share data between transport companies • Separation of information and physical flows • Access to more and better information to increase productivity and market segmentation

Logistics companies in general are not fulfilling the expectations of today's connected consumers - what are the gaps? • Created wrong expectations • Two way communication – not only SMS • Real time info, where is my parcel exactly, why is it delayed, when will it arrive? • Too much focus on speed – too less on reliability • Predictability

What are the three best digital ideas for Urban Transports? Decoupling delivery from reception both for B2B and B2C • Bring the airport control tower model to urban freight • Electric bikes to bring home deliveries • Control systems allowing for keeping freight flows consolidated as • long time as possible Using space capacity dynamically • • App to aggregate deliveries from different retailers • Change location of delivery address • On-line, real time optimisation of freight planning • Air transports and pick-up on roof tops • Real time sharing of customer and goods location • Apartment boxes for both delivery and pick-up

Do you see any disruptive technology emerging for Urban Transports? • Systems allowing for people to do home deliveries on their way home • Circular economy • Showrooms • Mixed goods and passengers • Logistics as a service • App to outsource logistics tasks • 3D-printing to reduce amount of freight • Physical internet

It is easier to copy a “unique” product than to copy a “unique Supply Chain