- By Aku Happo

DISRUPTION IN LOGISTICS

Big Bang TechnologyDisruption and its game changing role

• “Big bang disruptors” are immensely innovative products or services that are better, cheaper, customized and more intricatelyinterwoven with other products and services than the existing offerings in the market

• Big bang disruptors are fuelled by “exponential technologies”, which means that a product or service will become cheaper and better faster than traditional offerings but will as a result have shorter life cycles

• These disruptions are occurring in varied sectors such as transportation, manufacturing, education, financial services, health care, etc. with increasing frequency and greater impacts

• Their rapid pace of adoption is due to the fact that customers nowadays are more digital and more aware of market information

Rogers’ Bell curve Vs Big Bang Disruption Curve

Rogers’ Bell curve Big Bang Disruption Curve

*Downes, L. and Nunes, P. (2014), “Big Bang Disruption: Strategy in the Age of Devastating Innovation”*Downes, L. and Nunes, P. (2014), “Big Bang Disruption: Strategy in the Age of Devastating Innovation” 2

DisruptorsExamples across various sectors

3

D I S RUPTOR S

Factors for DisruptionThree ingredients of success

4

• The combination of the right type of technologies with the correct business model at the right time will result in a Big Bang Disruptor

• Many companies have brought to the market innovative products or services but have as swiftly disappeared as they had penetrated it; this is because technology is constantly changing and companies must adapt and transform themselves in order to stay ahead of the curve

Technology

Business Model Timing

• Facebook became the king of online social networking due to the smart combination of innovative features, strategic decision-making, and most importantly the correct timing of launch, which enabled it to propel itself ahead of its predecessors and become the most popular social network within 4 years of its launch

• Facebook’s success was eminent from the fact that its “Like” button became so popular that people started using it even outside Facebook

Social Network Timeline

Computerized Bulletin Board (CBBS)

First dial-up system

CompuServe FriendsterSix Degrees

1978 February

1979 September

2002 2004February

1997May

2003July

2004January

2003August

Hi5 OrkutMySpace Facebook

Disruptors in LogisticsAn indicative list but not exhaustive!

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L

O

G

I

S

T

I

C

S

• In order to meet soaring consumer expectations delivery solutions need to be faster, cheaper, convenient and more focused on last mile

• Firms therefore are now offering same day delivery, delivery to parcel lockers or car boot, fresh grocery delivery, etc.

Innovative Delivery Solutions1

• Massive amount of data generated from devices such as smartphones, webcams, social networks, credit card swipes, etc. is called Big Data

• This data needs to be processed, interpreted, and analysed to produce insights that will be of business value

Big Data3

• Technological advances such as sensors, GPS, radar, etc. have helped develop vehicles that can be driven without human input

• Such autonomous vehicles will deeply affect and eventually change how we move around in the city, how our products get delivered, etc.

Autonomous/Semi-autonomous Vehicles4

• UAVs are no longer sci-fi and are already very commonly used in military operations, medical/aid work, etc.

• Although large-scale commercial deployment is still some years away, UAVs promise new opportunities for logistics players

Unmanned Aerial Vehicles (UAVs)5

• 3D printing will revolutionize the way products are designed, produced, and delivered to consumers

• It is expected to impact the logistics sector significantly especially cargo & freight businesses and last mile delivery

3D Printing6

• IoT is a network of Internet-connected sensors attached to objects such as computers, vehicles, appliances, wearables, etc.

• Logistics sector has widely adopted IoTemploying it in warehousing, freight management, package delivery, etc.

Internet of Things (IoT)2

Innovative Delivery Solutions (1/2)Driving factors

6*Jonathan Wichman*Jonathan Wichman

Lesser cost1

Greater speed (same day, same hour)

2

More flexible delivery options (parcel locker, car boot, Sunday/evening delivery, etc.)

3

Transparent and visibility (at exactly what time the package will be delivered, hidden costs, etc.)

4

Digital (real-time tracking, online payments, etc.)

5

Consumer Preferences

+ €4

Postal Players

+ €1,5

Uber

€0,7

Parcel lockers

Cost Differential

• Growth of digital consumers and global ecommerce has changed the way parcels are delivered in the last mile segment of supply chain

• Consumers’ demand for convenient, fast, and efficient delivery has pushed the logistics sector to innovate and bring new delivery models such as delivery to parcel locker/car boot, same day/same hour delivery, drive-through pickup, etc.

• These new models’ cost structure varies from that of traditional players; they are more technology-enabled, utilizes excess capacity, can scale their operations rapidly & effectively, and are often offered at extremely low prices

• Growth of digital consumers and global ecommerce has changed the way parcels are delivered in the last mile segment of supply chain

• Consumers’ demand for convenient, fast, and efficient delivery has pushed the logistics sector to innovate and bring new delivery models such as delivery to parcel locker/car boot, same day/same hour delivery, drive-through pickup, etc.

• These new models’ cost structure varies from that of traditional players; they are more technology-enabled, utilizes excess capacity, can scale their operations rapidly & effectively, and are often offered at extremely low prices

Start-ups offering New Delivery Models in last mile*

Innovative Delivery Solutions (2/2)Use cases

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Improved Parcel Locker – Cleveron PackRobotA Car Boot Delivery - VolvoB

• Volvo now offers its customers the option of getting their parcels delivered to the boot of their car (currently available in only two cities – Gothenburg & Stockholm)

• This gives customers an option of turning their car into a e-commerce delivery point and reduce failed deliveries

• Also offers insurance for the packages kept in the car as a added feature

• Cleveron has introduced PackRobot, a new innovative parcel locker, that uses advanced Internet of Things (IoT) technologies

• PackRobot features can accommodate more parcels as compared to other

parcel lockers cost per parcel is relatively lesser as compared to

traditional parcel lockers has a patented 3D lift system that picks and deposits

parcels in a specific slotOrder online and select your

car as shipping address

A temporary Digital Key is generated for the delivery

person to access the car boot

You get a delivery notification on your mobile

Once the drop is made the Digital Key expires

automatically

has an adjustable internal climate control that can be used indoors as well as outdoors

takes photographs of all parcels for added security

provides an App for smartphone and smartwatch users

• Internet of Things (IoT) is wired/wireless Internet-enabled connections between physical objects• It is a part of a larger concept known as “Internet of Everything” (IoE) that includes connections between machines, people,

process, and data• The capabilities of IoT include monitoring, measuring, controlling, automating, optimizing, and learning• Big data plays a large role in understanding and analysing the data generated from all these connected devices and develop

insights that enable business growth• Logistics players are embracing IoT technology at a rapid pace due to increasing consumer demand for IoT-enabled solutions

and the rise of 5G networks, mobile computing, wireless communication, and big data analytics

Internet of Things (1/2)Understanding connected “things”

8*Cisco: The Internet of Things (2011)*Cisco: The Internet of Things (2011)

Estimated number of connected objects in the world in 2015*

15 B

Estimated number of connected objects in the world in 2020*

50 B

Currently IoT activity is focused on manufacturing, transportation and logistics, smart city, etc. However it is predicted by the IDC that within the next five year all industries will use IoT.

Internet of Things (2/2)Use cases

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A

• Proximity sensor is placed inside mail box that detects motion when letters are delivered and then sends an alert to the owner’s mobile via GSM wherever they are (even when they are not in town)

• It has an advantage over other similar devices that run via Bluetooth or Wi-Fi technologies that restrict notification to a short distance

Sensors in Mail Boxes –Postybell

B

• Increasing use of RFID* or other sensory tags on products will enable them to be monitored using a NFC smart label

• These NFC smart labels will help gauge the temperature or humidity of consumable items, quality of pharmaceutical products, etc.

• DHL along with other partners is working on a research project, SemProM, to make smart labels or digital product memory of a product

• These labels can store product information throughout its lifecycle

Smart Labels –SemProM

C

• IoT allows change of delivery address at the last moment

• Customer can get information when exactly their tagged parcels are arriving and whether a change of delivery address is required; subsequently diverting the parcel to an alternative address if unavailable

Flexible Delivery D

• Sensors in a refrigerator can track the stored products’ expiration date, detect low supplies and order them online automatically without any human intervention

• Similarly, sensors detect low supplies of a retailer and automatically order for replenishment at the distribution centre to cut down lead time and avoid going out-of-stock

• Amazon has patented the concept of “anticipatory shipping” and has launched Amazon Dash service to cater to this segment of ecommerce

Automatic Replenishment and

Anticipatory Shipping

*RFID: Radio-frequency identification *RFID: Radio-frequency identification

Big Data (1/2)Interpreting business information

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Volume

Amount of data

2.5 Quintillion bytes of data is generated every day11

Variety

Forms of data

Each month has 30 B Facebook shares and 4 B+ hours of YouTube video watching22

Velocity

Speed of data processing

New York Stock Exchange collects 1 TB trade information during each session33

Veracity

Uncertainty of data

US economy looses $3.1 T a year due to poor data quality44

Characteristics of Big Data – Four V’s*

• Every company already generates a huge amount of data that needs to be refined and processed in order to be of greater business value

• Companies have to embrace data analysis as a part of all decision-making to bring more transparency and innovation• Logistics sector will be hugely impacted by the technological advancements of Big Data, by improving products and services,

increasing operational efficiency, enhancing stock management, optimising delivery routes, managing risks, etc.

*IBM*IBM

Big Data (2/2)Use cases

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• DHL has developed an “intelligent” pickup and delivery vehicle, SmartTruck, that uses real-time GPS systems and local traffic data to calculate the ideal route to deliver packages and also allow last-minute pickups

• Big Data techniques help analyse the real-time data collected from various sources, taking into account geographical and environmental factors, and dynamically re-route vehicles on the go

• It helps reduce cost as well as CO2 emissions

AReal-time Route Optimization – DHL SmartTruck

• In this delivery model, parcels are delivered by common people (crowd) on their regular way of commute

• Users of DHL MyWays can register a parcel that is to be delivered on the App; which will then be available for other city residents who are willing to deliver it for a delivery fee

• Crowd-based delivery requires real-time matching of potential delivery people with the delivery requests and monitoring of a large number of moving delivery people, which is where Big Data technologies such as complex event processing and geocorrelation comes into play

CLast mile crowdshipping – DHL MyWays

• This manufacturer-independent cloud-based portal offers freight forwarders real-time data on the flow of goods to optimize their logistics processes

• Its features include cargo data monitoring, integration of telematics systems, targeted data transfer, Arrival Control App to monitor estimated time of arrival, etc.

BStrategic Network Planning – T-Systems TelematicOne

• It is a geo marketing tool targeted at small and medium-sized enterprises (SMEs) that provides analysis and assessment of complicated geo data

• Users can prepare scientific model-based sales forecast, analyse local competitors, generate a digital map showing the business-location factors in the particular area being studied and get a detailed report of the complete analysis

• This model has also received the Postal Technology International Award 2012 – Retail Innovation of the Year for filling a void in geomarketing

DMarket Intelligence – DHL Geovista

Autonomous/Semi-autonomous Vehicles (1/2)City planning, benefits and challenges

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• Increased road safety; automation can cut down road accidents• Reduction in traffic; autonomous vehicles can drive closer

together, at higher speeds, take less crowded roads, etc.• Driver can utilize the time spent in car for productive work• Lesser or more efficient fuel use and reduction in pollution• Can be used by everyone (old, young and differently abled)

Benefits

• Correct interpretation of data by technology is required; also failure/malfunctioning of sensors needs to be addressed

• Public scepticism against driver-less car• Shift of damage liability from driver/car owner to manufacturer• Privacy issues – there are no existing regulations on who will

manage the generated data • No existing insurance regulation for autonomous vehicles

Challenges

Google’s Autonomous car has driven more than 1,6 M Km on US road without meeting with any accident (2016)**

*National Highway Traffic Safety Administration (NHTSA), USA**Source: Google*National Highway Traffic Safety Administration (NHTSA), USA**Source: Google

Degree of Automation*

No Automation;human driver controls all functions

One function is automated

More than one function is automated

All functions are automated; driver can do other activities

Car can drive itself; no human driver is present

City Planning Requirements for Autonomous Vehicle Adoption

Planning of city infrastructure (roads, bridges, traffic signals, parking, etc.

Building digital communication infrastructure (linking vehicles with the environment via wireless networks, sensors, etc.)

Developing new leadership roles (who will monitor and take decisions regarding the symbiosis between the autonomous vehicles and the city)

Interpreting collected data and employing the insights

Data security

Autonomous/Semi-autonomous Vehicles (2/2)Use cases

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• When a delivery man cannot find a parking spot near the delivery location he has to walk from the parked car to the address thus increasing the time taken to make each delivery. An autonomous vehicle in this case can assist the deliveries by going to the delivery man once the package has been delivered

• Also once the vehicle is empty, a second filled car can autonomously reach the delivery man thus cutting down the time taken to go back to the parcel centre to reload

Support Vehicles for DeliveriesA

• An autonomous shopping vehicle can assist in delivering ecommerce goods on a shared-asset basis

• Volvo is testing a similar idea with its Volvo on Call App that allows it to access the trunk of a car and deposit parcels for the owner (also discussed under Innovative Delivery Solutions)

Autonomous Shared Car B

• Special attachments can be added to autonomous vehicles to enable them to pick-up and deliver letters and parcels into parcel lockers thus replacing traditional delivery man

Loading Parcel LockersC

• An incredible use of autonomous vehicles is to develop a self-driving or autonomous parcel locker that is mobile and moves around the city instead of being placed in one place

Self-driving Parcel LockerD

• In another futuristic use of autonomous vehicles, parcels themselves could be made autonomous with electronic locks and GPS-enabled such that then can unload themselves from the delivery van, drive to the delivery address, and deposit contents safely

Self-driving ParcelE

Unmanned Aerial Vehicles (UAVs) (1/2)Classification, benefits and challenges

14*VTOL: Vertical take-off and landing*VTOL: Vertical take-off and landing

Fixed WingFixed Wing

• Long range• Endurance• Larger space requirement

for horizontal take-off• Limited manoeuvrability

Tilt WingTilt Wing

• VTOL• Easy manoeuvrability• Heavy weight hauls• Long range• Complex & expensive tech

Unmanned HelicopterUnmanned Helicopter

• VTOL*• Easy manoeuvrability• Can carry heavier packages• Expensive • Requires higher maintenance

MulticopterMulticopter

• Low weight• Easy launch• Inexpensive• Light weight hauls• Cannot withstand high

winds due to light weight

ClassificationClassification

• Improved speed of delivery• Lower cost (eventually when adopted on a mass

scale; current trial runs are expensive)• Better customer service• Improved operational productivity• Enable enhancement of current logistics network• Cut down traffic and carbon emissions

Regulatory hurdles• Current legislative environment does not allow

commercial use of UAVs• Reasons behind the ban of UAVs are it may go rogue

(out of control) tracking/landing which will be a difficult task, it may fall due to technical glitches, it may hinder with other airspace users (e.g., helicopters), etc.

Privacy concerns• Cameras and sensors attached to an UAV may track a

person’s movement without authorisation

Unmanned Aerial Vehicles (UAVs) (2/2)Use cases

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Amazon• Amazon Prime Air seeks to deliver

packages within 30 minutes of ordering

• For successful UAV delivery, the packages must be 2.5 Kg (max) and delivery address to be within 16 Km

Workhorse Group (formerly AMP Electric Vehicles)• The company has coupled their

delivery trucks with UAV in order to deliver items that fall out of their main delivery route

• The UAVs will take off from the trucks with the package and return to the truck (wherever it is as it is on the go) after a successful delivery

Last Mile Delivery A

• In a futuristic vision logistics companies can deploy UAVs to monitor their assets such as warehouses, pipelines, etc.

• BP (one of the 6 companies to get a licence in USA) uses semi-autonomous UAVs to inspect its oilfield in Alaska that has harsh weather conditions making human monitoring either difficult or highly time-consuming and costly

• These UAVs weigh approximately 7 Kg, can fly for 3.5 hours, can withstand winds up to 48 Kmph, have high resolution cameras for photographs and videos, and light detection equipment to collect 3D images

Infrastructure Surveillance – BP

B

Posti• Posti launched a trail run to deliver

parcels across a distance of 4 Km between mainland Helsinki and a nearby island Suomenlinna using a UAV in 2015

• Although the test was considered to be a success, some hindrances acting against safe delivery were strong winds, need for constant line of sight while operating, etc.

Google• Google’s Project Wing has tested

UAV delivery in Queensland, Australia

Rural/Remote Location Delivery

C

3D Printing (1/2)Introduction, benefits and challenges

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$4 B Global 3D Printing Market in 2014**

$49,1 B Estimated Global 3D Printing Market in 2025**

34:32:33Estimated Market Share Split between North America, Europe & Asia in 2025**

*Wohlers Report (2013)**Smithers Pira (2015): The Future of 3D Printing to 2020*Wohlers Report (2013)**Smithers Pira (2015): The Future of 3D Printing to 2020

• Unanswered product liability issues – when everyone is a manufacturer who will take liability of defective/malfunctioning products

• No clear rules regarding the ownership of intellectual property (IP) rights to a particular 3D product design

• Consumer 3D printers need to be cheaper, faster, and make higher quality products for faster adoptionC

HA

LLEN

GES

• Increased product availability and customization• Lower cost (eventually when adopted on a mass scale;

current prototypes are expensive)• Logistics players can take part in new market segments

like “digital warehouse”• Bring production nearer to high cost of labour nations• No resource wastage and reduced carbon emissions

BEN

EFIT

S

• Also known as Additive Manufacturing (AM) • It uses a digital model to produce a 3D object putting

consecutive layers of material together• Industries adopting this technology include medicine,

aviation & aerospace, manufacturing and automotive; personal 3D printing is lead by hobbyists

• An industrial grade machine costs around $80.000 while personal 3D printers are more affordable with its average price being $1.124 (2012)*

Impact on Postal Sector

• Postal companies can offer space in their fulfilment centres to companies manufacturing 3D products so that they can set-up printing centres

• This will allow them to print products and put them in the distribution network faster

• Alternately, growth of personal 3D printing will result in reduced deliveries of finished products while increasing shipping of 3D printing materials such as plastics, metals, liquid resins, etc.

3D Printing (2/2)Use cases

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• 3D printing reduces costs of maintaining a supply chain by bring production closer to the consumption centre

• Products manufactured via 3D printing machine will use locally produced components thus reducing long-distance shipping and increasing last-mile delivery

• Storing of spare-part sand components will become obsolete as users will be able to download the object’s design from a central database and 3D print it thus reducing the cost of maintaining a warehouse

A Bring Production Closer to Consumers

• Amazon has filed a patent application in the US to 3D print products in a mobile delivery truck to cut down on inventory maintenance costs and deliver faster to consumers

• UPS now offers 3D printing services at some of its retail stores printing prototypes, product parts, custom accessories, etc.

BIntegration with Supply Chain –Amazon and UPS

La Poste – France • La Poste has opened 3D printing services at seven post

offices where consumers can print their own designs• The company has also made customized packing for fragile

or unusually shaped products

C Postal Operators’ 3D Printing Services

SingPost – Singapore • Singapore post in partnership with 3D Matters offers 3D

printing service at its post offices where customers can print prototypes or custom designed objects

Royal Mail - UK• In 2014, Royal Mail in partnership with iMakr launched a

trial to 3D print custom objects as well as designs from a catalogue at a delivery office

• The company now offers 3D printed items via its online shop

Swiss Post• Swiss Post in collaboration with My3DWorld launched a 3D

printing Roadshow in 2014 throughout Switzerland where 3D printing supplies and hardware were showcased

Discussion and Questions

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References (1/2)

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• https://www.accenture.com/us-en/insight-outlook-big-bang-disruption-innovators-disaster.aspx• https://hbr.org/2013/03/big-bang-disruption/#• http://www.cnbc.com/2015/05/12/cnbc-disruptor-50.html• https://www.accenture.com/t20150914T032007__w__/us-en/_acnmedia/Accenture/Conversion-

Assets/DotCom/Documents/Global/PDF/Dualpub_21/Accenture-Big-Bang-Disruption-In-The-Postal-Industry.pdf• http://www.digitaltrends.com/features/the-history-of-social-networking/• http://mashable.com/2012/05/17/companies-before-facebook/#GFURvORfzPqw• https://www.accenture.com/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Dualpub_23/Accenture-Adding-

Value-to-Parcel-Delivery-V2.pdf• http://jonathanwichmann.com/my-lists/list-the-most-promising-start-ups-in-logistics/• http://www.cleveron.eu/products/packrobot/• https://incardelivery.volvocars.com/#/• http://www.dpdhl.com/content/dam/dpdhl/presse/pdf/2015/DHLTrendReport_Internet_of_things.pdf• http://www.robomq.io/images/IoTMiddlewareL.png• https://www.cisco.com/web/about/ac79/docs/innov/IoT_IBSG_0411FINAL.pdf• http://www.semprom.org/semprom_engl/• http://www.gadgetreview.com/postybell-should-you-kickstart-it• http://techcrunch.com/2014/01/18/amazon-pre-ships/• http://www.ibmbigdatahub.com/sites/default/files/styles/xlarge-scaled/public/infographic_image/4-Vs-of-big-data.jpg?itok=4syrvSLX• http://www.delivering-tomorrow.de/wp-content/uploads/2015/08/CSI_Studie_BIG_DATA_FINAL-ONLINE.pdf• http://www.dummies.com/how-to/content/the-4-vs-of-big-data.html• http://www.dpdhl.com/en/logistics_around_us/from_our_divisions/dhl_smarttrucks.html• http://connectedcar.telekom-dienste.de/en/node/53• http://www.t-systems.de/news-media/white-papers/1219360_2/blobBinary/WhitePaper_Big-Data-Logistics.pdf• https://www.myways.com/• http://www.dhl.com/en/press/releases/releases_2014/logistics/dhl_uses_big_data_for_risk_mitigation_in_logistics.html#.Vqz5ArIrLIU

References (2/2)

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• http://www.dpdhl.com/en/media_relations/press_releases/2012/deutsche_post_geovista_standortcheck_wins_international_award_postexpo.html

• http://www.dhl.com/content/dam/downloads/g0/about_us/logistics_insights/dhl_self_driving_vehicles.pdf• https://www.google.com/selfdrivingcar/• http://www.rand.org/content/dam/rand/pubs/research_reports/RR400/RR443-1/RAND_RR443-1.pdf• http://www.atkinsglobal.com/~/media/Files/A/Atkins-Corporate/uk-and-europe/uk-thought-

leadership/reports/CAV_A4_digital_250915_FINAL.pdf• https://www.move-forward.com/news/details/how-should-cities-prepare-for-connected-and-autonomous-vehicles/• http://www.dhl.com/content/dam/downloads/g0/about_us/logistics_insights/DHL_TrendReport_UAV.pdf• http://www.amazon.com/b?node=8037720011• http://wvxu.org/post/post-office-might-be-next-electric-truckdrone-customer-loveland-company#stream/0• http://www.bp.com/en/global/corporate/bp-magazine/innovations/drones-provide-bp-eyes-in-the-skies.html• http://yle.fi/uutiset/posti_to_trial_package_deliveries_via_helicopter_drones/8252978• http://www.psfk.com/2016/01/posti-drone-mail-delivery-postal-service-sharper-shape.html• http://www.abc.net.au/news/2014-08-29/google-project-wing-drone-delivery-test-warwick-queensland/5707034• https://www.uspsoig.gov/sites/default/files/document-library-files/2015/rarc-wp-14-

011_if_it_prints_it_ships_3d_printing_and_the_postal_service_0.pdf• http://www.smitherspira.com/news/2015/june/3d-print-market-expected-to-reach-$49b-by-2025• http://documents.aeb.com/brochures/en/aeb-white-paper-3d-printing.pdf• http://www.dhl.com/content/dam/downloads/g0/about_us/logistics_insights/DHL_Logistics-TrendRadar_2014.pdf• http://3dprinting.com/what-is-3d-printing/• https://www.uspsoig.gov/sites/default/files/document-library-files/2015/RARC-WP-16-001.pdf• http://documents.aeb.com/brochures/en/aeb-white-paper-3d-printing.pdf• http://www.theguardian.com/technology/2014/dec/09/royal-mail-launches-3d-printing-service• http://www.3ders.org/articles/20141004-singapore-post-launches-3d-printing-service-at-new-concept-post-office-in-suntec-city.html• http://3dprintingindustry.com/2014/11/13/swiss-post-3d-printing/

Thank You!

aku.happo@proventuri.eu+358 40 562 7065

@Aku Happo

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