Article by: Suwan Juntiwasarakij, Ph.D., MEGA Tech Senior Editor
Artificial Intelligence (AI) has become a household name since its presence almost in every aspect of personal and business lives although many consumers do not realize they use products and applications that contain AI on a daily basis. Already, AI has employed in consumer applications, clerical enterprise functions, online and offline retails, autonomous mobility, and intelligent manufacturing. Still, logistics is at the beginning of its journey and many challenges lie ahead to overcome.
Despite its intelligence capability, IA is not by itself but a unified set of interrelated technology components used in a wide variety of combinations depending on the problem it addresses. According to a collaborative report by DHL & IBM, AI technologies consists of three components: sensing, processing, and learning. Sensing refers to real-world information understood by humans’ senses such as test, image, video, sound, environmental conditions, etc. Already, the Internet of Things (IoT) is making data available for consumption by AI-based systems. Processing and learning refers to frameworks and training techniques such as supervised learning, unsupervised learning, and reinforcement learning. Many different types of machine learning framework exist with their own core functionality of deep learning capability based on neural network. Today, AI along with the interrelated technologies has become an embedded module in many key disrupting technologies in logistics operations.
TECHNOLOGICALLY UNIFIED LOGISTICS SCENARIOS
Every second, industry has faced certain key technology disruptions. When combining such technologies with the right business mechanism, providers are able to utilize them and forge quite brilliant logistics models that serve their operations. According to PwC’s Artificial Intelligence in Logistics analysis, four logistics scenarios are offers. In easy of these, technology plays a key role, but affects the market in different ways. In two of the models, new entrants are the primary drivers of change while incumbents retain a dominant position in the other two. The nature of market dynamics, especially the level of collaboration versus competition, also varies between the scenarios: Sharing the Physical Internet, Start-up and Shake-up, Complex Competition, and Scale Matters.
Sharing the Physical Internet refers to incumbents increase their efficiency and reduce their environmental impact by collaborating more, and developing new business models, such as sharing networks. Research around the “Physical Internet” leads to shared standards for shipment sizes, greater model connectivity, and IT requirements across carriers. Start-up and Shake-up is when new entrants become significant players and take market share from the incumbents through new business models based on data analytics, blockchain, or other technologies. One or two become dominants in specific segments. Last-mile delivery has been more fragmented than ever with crowd-delivery solutions gaining ground. These start-ups collaborate with incumbents and complement their service offers.
Complex Competition is a situation where big retail players expand their logistics offerings to fill their own needs and beyond, effectively moving from customers to competitors. They purchase small logistics players to help cover major markets, and draw on their deep understanding of customer behavior to optimize supply chains. Technology firms who used to be suppliers to the industry enter the logistics arena too, offering logistics services and turning into competitors. Scale Matters is a scenario as incumbents increase efficiency by streamlining their operations and taking full advantage of new technology. They funding promising new technologies with venture capital cash, and attract new staff with critical skills and expertise in competition to create a dominant market position. Major players merge to extend their geographical scale and enhance their cross-modal coverage. Access to capital to fund these investments becomes increasingly important.
TAKE-HOME MESSAGE
In order to stay competitive, it is crucial for providers to cultivate and foster unique value proposition by committing to their business identities and crafting strategic roadmap correspondent the identity. It is time for the providers to examine themselves if their strengths meet with those they want to compete. That is, companies need to focus on digital fitness, cost efficiency, asset productivity, and innovation. The companies are to build and refine these capabilities, therefore translate the strategic into the everyday.