Digitalization of Logistics: From Technology Empowerment to Ecological Platform Innovation

2020 is an unusual year. The outbreak of the epidemic has significantly affected social life and many industries. But it was also in this year, in the current environment full of uncertainty, that many companies actively sought changes with the help of digital transformation, trying to turn crises into opportunities.

As we all know, logistics is the basic support of the supply chain, especially for manufacturing, retail and other enterprises that need to deliver products to designated locations on time, according to quality and quantity. Due to the expansion of demand, China's logistics industry has developed rapidly in the past few decades. Improving services and reducing costs have always been the two core elements for the continuous development of the logistics industry. Thanks to four factors, the current development of logistics technology enterprises has begun to accelerate in an all-round way. First, enterprises have begun to pay attention to their own digital management capabilities and anti-risk capabilities; second, technological empowerment accelerates the iterative process of logistics technology to technological logistics; third, the government has issued a number of policies to strongly guide enterprises’ digital transformation and upgrading; fourth, “new infrastructure” It is proposed that 5G, data centers, etc. build effective infrastructure support for the industry.

With the continuous evolution of logistics technology and the continuous refinement of logistics functions, the boundaries of all parties in the logistics industry are gradually blurred. For all parties in the logistics ecological chain, digitalization plays a more important role in industry competition. The role, or even their core competitiveness, will shift from logistics capabilities to information technology. Gartner's definition: Information digitization is the process of turning analog form into digital form; business digitization refers to the use of digital technology to change business models and provide new plans to create revenue and value. Huang Bin, executive director of the Institute of Logistics Transparency Management, believes that digitalization should be defined as: making full use of contemporary information technology to achieve user definition, demand creation, product design, raw material procurement, manufacturing, commodity circulation, customer service and life. Digitization of all links, including cycle management.

In the past ten years, the process of digitalization has mainly been in the field of consumer Internet. In the future, with the orientation of national policies and the innovation of digital technology, new technologies will gradually penetrate into traditional industries, and industrial digitalization will become a driving force. key driver of economic growth. Despite the disruption caused by the COVID-19 pandemic in 2020, the global economy is still moving towards a "digital mission", as most products and services are based on digital delivery models or require digital enhancements to remain competitive, according to market research firm IDC. With this shift, by 2022, 65% of global GDP will be driven by digitization; by 2025, driven by the global economic environment, 75% of business leaders will leverage digital platforms and ecosystem capabilities to enable their value chains Adapt to new markets, industries and ecosystems. Modern logistics is closely related to information technology, and the development of information technology is the key and core of the transformation of modern logistics industry and the realization of leapfrog development. The advent of the era of mobile Internet, the platform innovation brought by "Internet +", and the continuous maturity and optimization of cloud computing, big data, Internet of Things, blockchain, logistics automation and artificial intelligence technologies have promoted the generation of more modern logistics and the Internet. The "chemical reaction" of the logistics industry will push the logistics industry into the 4.0 era. The more intelligent and intelligent "logistics Internet" is gradually opening, and will trigger a new round of logistics industry reform.

The surging digital wave is constantly changing the rules of the game in the market. Both new and old companies are facing challenges brought by new technologies: how to use digital new technologies to reshape their competitiveness and gain new opportunities for development ? How will the development model of enterprises in the future change?

Dilemmas and Breakthroughs

It's no secret that the logistics industry is lagging behind in technology adoption, according to a PwC survey. Only 28% of T&L companies consider themselves "advanced" when it comes to digitalization, compared to 41% in the automotive industry and 45% in the electronics industry. At the same time, a University of Pennsylvania study found that only 35% of shippers believe that 3PL service providers can support their big data plans, and only 26% of shippers are satisfied with the current data analysis capabilities in the industry.

JD's recently released heavyweight report "Technology Reconstructing Social Supply Chain - Future Technology Trends White Paper" pointed out that the logistics industry generally faces four major pain points:

High logistics costs: due to The main link of logistics still relies on manpower, the cost of logistics resource management is high, and the investment in intelligent equipment maintenance is huge; The degree of intensification and networking is still low;

Different levels of digitalization: There are many enterprises in the logistics industry chain, and the digitalization degree of enterprises involved in some links is still low, making it difficult to take advantage of technologies such as big data;

The relevant system is not perfect: Since the logistics industry involves multi-departmental collaboration, and due to overlapping policies, the application of emerging technologies cannot be unified.

In terms of international logistics, due to the continuous impact of the new crown epidemic and geopolitical uncertainty, international logistics companies are facing increasingly severe operating pressures, while the traditional logistics industry itself has faced the challenges of digital transformation and upgrading in recent years. Challenges, many companies bluntly say that "surviving" is the most urgent problem to solve at the moment.

An article by Kearney Consulting pointed out that although basic enterprise informatization and BI technology have gradually become popular in the logistics industry, and the automation technology of operation links has also been partially applied in leading logistics enterprises, the real Few logistics companies have achieved comprehensive digital transformation. Most logistics companies only use digital technology in a scattered manner, lacking an overall digital strategy, and digitalization has not really been integrated into the business model, organization, and culture of the company.

Digital empowerment

The so-called digital empowerment, simply put, is to use big data and artificial intelligence to create an enterprise's intelligent brain, so as to realize refined operation and make the enterprise's production, operation, Operations, etc. become simpler and more efficient.

Digital supply chain can help companies greatly improve efficiency and reduce costs. Research shows that an effective digital supply chain is expected to drive a 10% increase in corporate revenue, a 20% reduction in procurement costs and a 50% reduction in supply chain costs.

He Yibo, President of Shanghai Tiandihui Supply Chain Technology, told the CEConlines that the digitalization of the logistics industry will usher in a new round of development opportunities. As a logistics service provider, it is necessary to combine the service model with the ever-changing needs of enterprises, and use new thinking and new concepts to combine practical experience to provide efficient and reliable logistics solutions for manufacturing enterprises.

In He Yibo's view, digital business and supply chain transformation are not technological upgrades. The key to digital supply chain transformation is to solve business problems. It is foreseeable that the supply chain needs of Chinese enterprises will become more diversified, personalized and specialized. The relationship between logistics enterprises and upstream and downstream enterprises in the supply chain will also become closer, which is undoubtedly a very good opportunity for logistics enterprises.

Lin Qing, author of "Logistics 3.0: "Internet +" Opens a New Era of Intelligent Logistics", believes that with the advent of the "Internet +" era, logistics has changed from a single service function to an integrated comprehensive service change. In the "Guiding Opinions on Actively Promoting "Internet +" Actions issued by the State Council in 2015, efficient logistics was clearly listed as a development goal, and achieving efficient logistics is the main goal of logistics enterprises in the "Internet +" era. Driven by the Internet, the whole world is gradually transforming from the IT era to the DT era. The traditional way of thinking and industry rules are no longer applicable. The circulation revolution with information as the entry point is profoundly changing many industries.

Big data can help businesses make faster and more informed decisions. Maersk, a global integrated container shipping and logistics company, also pointed out in the report "Digital Revolution in Logistics" that the demand for the application of emerging technologies in the supply chain has grown significantly, and logistics development is just before a critical inflection point, which will have a profound impact on how the industry operates. . The establishment of clear industry data standards is the foundation of this technological change, and it is the key to the huge potential of new technologies such as AI and blockchain. At the same time, taking advantage of new technologies will require a fundamental change in both business and logistics service providers to manage and act on the insights the new technologies provide.

Logistics providers also benefit from big data. The 2017 3PL study found that 98% of the 3PL companies surveyed believe that data-driven decision-making will be critical to the supply chain of the future, and another 86% believe it will be a core competency. Early adopters also abound, as the drive for end-to-end visibility gives freight companies with telematics, ports with efficient communications, and even shipping lines with real-time monitoring.

The rise of SaaS business intelligence tools is meeting this need, with Gartner predicting in 2017 that self-service BI will be accessible to most enterprise users in 2017. The future looks bright for platform-based logistics companies willing to take advantage of big data. As the author of "The Age of Big Data", Victor Myerschoenberg, professor of the Internet Institute at Oxford University's School of Networking, said: "Big data can change the profit model of companies and the traditional way of communication. With more and more data , big data owners will shine because they can turn this data into value." Large enterprises are more concerned about how to improve profit margins by focusing on supply chain cost control and expanding market size. And small enterprises can integrate all the elements required by the logistics market through technical means.

All Day Intelligence Co-founder and CTO Wu Jinghui told CEConline: The potential of artificial intelligence and machine learning in logistics is huge: supply chain may be a real gold mine of structured and unstructured data , By building a data visualization management middle-stage full-path analysis and utilization, identifying patterns and in-depth understanding of each link of the availability chain, logistics companies can significantly transform their operations.

Platform Thinking: Reshaping the Value Chain of Logistics Enterprises

Ecological platform companies have a strong Matthew effect and can generate platform-level data. How to use big data to feed back the platform? Turning data into productivity is an important means to improve the core competitiveness of platform companies.

With the active entry of emerging enterprises, the "Internet + logistics" model has emerged rapidly. It is expected that the market size of "Internet + logistics" will maintain rapid double-digit growth until it reaches a scale of 100 billion in 2025. With the continuous advancement of the "Internet +" wave, the cost of communication and collaboration between industries and enterprises has been significantly reduced, and innovative formats such as cloud warehousing, crowdsourcing logistics, smart logistics, and modern logistics parks have shown strong vitality. Under the support of the Internet information platform, logistics companies located in different regions can achieve efficient cooperation, thereby bringing consumers a more extreme logistics experience.

The technological means and way of thinking brought by the Internet are profoundly affecting the social and economic development and the reshaping of the industrial pattern. In the field of logistics, it is deeply integrated with the industry, giving birth to a business model represented by the sharing economy and platform economy, optimizing the original transaction model and business process, and realizing cost reduction and efficiency increase. Based on the perspective of customers, online and offline linkage has become the mainstream service model in the logistics industry, and customer-centricity is the core of service in the Internet era. Focusing on this concept, both emerging logistics companies and traditional logistics companies are actively reconstructing the entire logistics service process with digital technology. Through online and convenient business systems and intelligent data analysis, they can improve comprehensive solution capabilities, upgrade customer experience, contract performance quality and efficiency.

Zhang Jingtao, chairman and CEO of Yiliu Technology, shared the model concept of Yiliu's "supply chain control tower" in an interview with CEConlines. It can deeply integrate supply chain business and data to achieve global security and transparency of the supply chain, business collaboration and resource allocation optimization. It has been observed from past cases: based on the initial application of the control tower system, the delivery rate of logistics performance can be increased by 7%, and the delivery cycle can be shortened by more than 30%.

Landing is the key. "To take the road of logistics technology development, the technology must be advanced, but it should pay more attention to low cost and reproducibility, and see if these can be satisfied. If not, this logistics technology can only be said to be more of a concept, or to the future. It is an expectation; if it can be implemented into practical applications, it will reduce costs and increase efficiency, and such logistics technology will be more long-term, which should not be ignored by everyone.” Zhou Shihao, founder & CEO of Yunquna told CEConline . Effective logistics and supply chain management can enable Chinese small and medium-sized manufacturing enterprises to reduce transportation costs with their customers and use warehousing resources efficiently.

Summary

There are only two kinds of enterprises in the world: one is the enterprise that has developed rapidly in accordance with the trend of the times, and the other is the enterprise that has been ruthlessly subverted in the torrent of the times. The biggest challenge in the digital age is the ability for businesses to dance with uncertainty. This requires enterprises to grasp the essential law of value creation transformation from "dividing" to "integration", and to open up the transformation of organizational boundaries from "competitive logic" to "symbiosis logic". Appropriate "symbiotic space" also requires enterprises to have irreplaceable capabilities in it. The fundamental core is that only enterprises with real "collaboration" capabilities can obtain sufficient "system efficiency" and avoid the fate of being subverted in the wave of new technologies.

For supply chain logistics technology companies, building differentiated core competitiveness in advance is the key to success, and dataization is the general trend. The domestic logistics industry has achieved rapid development and great transformation in the past 10 years. Models continue to emerge, leading companies have emerged in multiple market segments, and a large amount of capital, technology and talents have also been gathered. The outbreak of the epidemic has accelerated the development trend of digitization, platformization, refinement and differentiation in various segments of the logistics industry, providing new development opportunities for major logistics companies.