How Automation Benefits the Logistics Sector through Efficiencies and Synergies

How Automation Benefits the Logistics Sector through Efficiencies and Synergies

Automation benefits the logistics sector in many ways. Right from order booking and package handling in warehouses, including transit and shipment that is enabled by automated modes, and tracking and delivering the materials, automation can increase the efficiencies and synergies of the entire supply chain.

Efficiencies accrue as logistics providers can implement economies of scale made possible by automation. For instance, by making robots move packages around the warehouses, more such packages can be handled since the robots being automated machines, do not tire or need prolonged breaks.

In addition, by automating the shipment and transit, logistics providers can use drones for delivery as well as self driving trucks and vehicles that can be on the road for longer periods of time.

Indeed, the leading online retailer, Amazon, is already using automation to derive the efficiencies from the economies of scale. similarly, by automating the supply chain and integrating the diverse, discrete, and disparate components of the value chain, synergies are possible as previously disconnected components of the supply chain can now be connected leading to better coordination and collaboration in the supply chain.

Thus, the twin benefits of efficiencies from economies of scale and synergies from integration would result in substantial benefits to the logistics providers.

How Automation Leads to Lower Carbon Footprint and Higher Value Addition

In addition, it is often said of the logistics sector that it has high Carbon Footprint due to its fuel intensive modes of operation. Automation can help the logistics providers in this respect as well through Green modes of operation.

For instance, electric powered robots and self driving vehicles can be deployed leading to Zero fuel consumption. In addition, by automating the order booking and delivery components of the logistics value chain, firms can ensure that drones are used wherein there is no need for oil consumption.

Moreover, automation can help reduce the burden on logistics workers by freeing them up to perform higher value adding activities such as process monitoring and tracking as well as route and operations optimization.

Indeed, in times when the labor policies of most logistics providers are being scrutinized for their people policies, automation in the logistics sector can ensure that such concerns are addressed.

Of course, this aspect is a double edged sword as automation in logistics can also result in job losses (something that would be discussed in the next section) and hence, one has to be circumspect about the impact of automation on the logistics sector.

The Present State of Automation in the Logistics Sector

Indeed, there is more hype than reality as far as automation in the logistics sector is concerned. For instance, despite the widely predicted job losses and the doom and gloom a scenario, the logistics sector is still labor intensive.

This is because the field of robotics has not reached a stage where robots can completely take over from humans. Moreover, self driving vehicles that can replace drivers and long distance truckers are yet to take off in a commercial sense.

In addition, there are certain aspects of the logistics value chain that do not gain much from automation. For instance, we are yet to see the emergence of robot order booking and drone delivery except in isolated cities worldwide and that too, mostly in the United State and Europe.

Having said that, Big Data powered Analytics is certainly helping the logistics sector as can be seen from the increasing number of workers who are being employed for this task whereas most of the lower value adding tasks has been automated.

To summarize, while automation in the logistics sector is increasing the efficiencies and synergies, there is still some time before the benefits kick in fully.

Some Future Predictions

Such benefits can be in the future as can be seen from the predictions of futurists. For instance, experts point to how logistics providers can automate the entire supply chain including ship loading and transshipment.

To explain the terms, loading the ships with the materials to be transported and moving them between ships at transshipment points is being automated to a large extent in global and world class ports such as Singapore.

Apart from this, using the emerging Blockchain technology to automate the logistics handling can benefit the logistics firms to decrease defective item handling and move towards a hundred percent success rate as far as avoiding loss and damage of the packages during transit are concerned.

Moreover, countries such as China can immensely benefit from automated supply chains since it is the world’s largest trading country and hence, efficiencies and synergies can be a game changer.

Indeed, even India can benefit from automating its supply chains though the infrastructure is not yet in place to deliver such gains. A key point to note is that in many countries worldwide, the software of the automation is ready and it is only the hardware of the physical infrastructure that is lacking.

Conclusion

This has lessons for emerging economies as they integrate into the global trading system as they need to first put in place the necessary physical infrastructure before automating their logistics value chains.

Moreover, they need to adopt a Glocal approach wherein they bring global best practices and yet adapt them to local conditions so that the execution is according to the on the ground situation.

Indeed, the last mile connectivity is what drags the logistics sector from automating fully and hence, they must pay attention to this aspect. To conclude, the future is indeed bright for the logistics sector to automate and the gains from such automation are indeed immense.


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