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Why we should welcome automation in the logistics industry

Logistics and automation have gone hand in hand since the beginning of the first industrial revolution; from the steam engine, the forklift and now robotic pickers and packers. Drone delivery, automated self-driving trucks and fully automated AI controlled warehousing are all already in the prototype stage and will most likely become common place in the next 10 years.

There are more products being produced for more people than ever before. There is increased demand from the retail sector and the explosion of e-commerce which in the United States alone has shown an average annual growth of 15 percent over the last decade is placing an immense strain on the logistics industry making it one of the fastest growing sectors and resulting in a severe shortage of skilled labour and management worldwide. This problem is even greater in developing economies where there is accelerated industrial expansion and limited opportunities for skills development.

The Problem

The shear growth in volume of products that need to be moved and managed has resulted in the demand for skilled supply chain talent to be at an all-time high. The challenge is that the number of people earning relevant degrees and certifications are not enough to meet this demand. There are a number of reasons for this:

  • Demographics – there is a trend particularly in developed countries where skilled baby boomers are retiring but the “Millennial” generation which are currently entering the workforce are not yet skilled enough to fill many of the middle management positions that are going vacant.
  • Changing Skill set – The increased importance of technology means that even relatively low-level skilled employees such as forklift drivers need to have more technical and analytical skills. Similarly, as logistics managers are taking on more strategic roles on their companies there is a greater need for them to develop more “soft skills” including project management, leadership, communications, and relationship management capabilities.
  • Cost Cutting Measures – The recent economic downturn has resulted in many companies cutting back or eliminating their skills development programmes.
  • Lack of training programs – In developing countries, there are not enough colleges, universities and other institutions offering courses in logistics and supply chain management.

Furthermore, a more demanding consumer who expects shorter delivery times and more complex requirements such as customisation and omnichannel distribution networks is forcing logistics companies to look for faster more efficient methods of managing their operations.

The advantages of automation

The biggest and most obvious advantage of automation is increased productivity. Machines don’t need to sleep or eat and can work 24/7. While they do occasionally break, if properly maintained they will give you a much higher production rate than their human counterpart.

Machines can also work much faster than we can, and they can do things we can’t, drones can fly, and they can be designed to fit into spaces humans will not

A robot will repeat the same task over and over with the same level of accuracy, they do not get bored or need motivation and do not suffer from “human error”. They can also compute faster than the average human, do not forget and have capacity to store and access a lot more information than the average human. A computer for example with be able to track the position of every item in a warehouse and instantly retrieve it from storage.

Finally, automation can be cost effective, apart from the increased productivity and eliminating all the inherently human costs such as salaries etc. They can result in other savings such as reduced warehouse sizes, less shrinkage and they are easily scalable to accommodate an increase or drop in demand.

Are there drawbacks?

A few. automation usually requires a large upfront investment. This can be very costly and even disastrous if demand suddenly reduces or technology changes and your automation machines become obsolete.

AI is still a long way from being able to create an intuitive machine. We will still need humans to make judgment calls when not all the variables can be captured as data.

Machines cannot adapt to new situations. Most machines are designed to do one or at the most a few limited tasks while the same human could perform numerous tasks depending on where they are most needed.

Be prepared

While it is predicted that in the transport, storage and manufacturing industries by 2037, 50% of jobs will be automated, there will simultaneously be an increase in demand for people who can build, programme and maintain robotic workers.

The challenge will be upskilling the current workforce to work side by side with robotic machines. Companies are aware of this but as this technology is all relatively new there is uncertainty as to exactly what training to provide.

Governments need to promote and support the development of accessible skills training for both those in the existing workforce whose jobs are currently under threat and those looking to enter the field of logistics.

Finally learning institutions need to insure they are providing relevant education so that those completing their studies are equipped to deal with an industry that is increasingly automated.

The IMM has numerous opportunities for those looking to upskill themselves. We have short courses in Logistics, Transport and Export Administration. You can now also specialise in Supply Chain Management when doing our BCom in Marketing and Management. To find out more visit https://imm.ac.za/

LOGISTICS – What is it and why is it so important?

LOGISTICS – What is it and why is it so important

The world we know wouldn’t function as smoothly without the logistics industry. Everything you buy in the store had to get from the supplier to the retailer at some point. Building material had to be transported to site before a structure was built and food is transported from the supplier to the retailer.

The term “logistics” was originally used by the military to describe how it obtained, stored and moved its equipment and supplies. The term as we know it remains the same but with the rise of consumerism and subsequent growth of more complex supply chains, it has evolved. It refers to the process of coordinating and moving resources such as equipment, food, inventory, materials and even people from one location to another.

Inbound vs. Outbound logistics

The two main categories of logistics are inbound logistics, which refers to all the processes of the gathering, handling, storing and transportation of inbound materials, and outbound logistics, which involves the collection, maintenance and delivery of products to the customer.

The other categories of logistics are:

  • Third Party Logistics: a company’s use of third-party businesses to outsource elements of its distribution.
  • Fourth Party Logistics: a company’s ability to outsource the entire management of its supply chain to another company.
  • Green Logistics: the process of minimizing environmental damage done by logistics operations
  • Digital Logistics: digital logistics management systems that enable the optimisation, visibility and collaboration between stakeholders in the end-to-end supply chain.

Logistics management vs supply chain management

Even though the terms “logistics” and “supply chain management” go hand in hand, they refer to two separate aspects of the process. As mentioned above, logistics is concerned with the process of coordinating and moving resources, but supply chain management uses a more holistic approach. CTMC defines supply chain management as “all collaboration between companies that connect suppliers, partners, manufacturers, wholesalers, retailers, and customers to optimize efficiencies that improve competitive advantage”.

Read: 6 Important tips for effective logistics management here: https://cerasis.com/effective-logistics-management/

Types of logistics management

There are four main types of logistics management: supply, distribution, production and reverse logistics. Each type focuses on a different aspect of the supply process.

Supply

Supply management involves the planning and coordination of materials or products that are needed at a certain place and time to support the receiving company’s production or activity.

Distribution

Distribution manages how a supplied and stored material is distributed to its required recipient. It involves the loading, unloading and transportation of material, the tracking of stock and accountability of use, which is the recording of how the material is used and by whom.

Production

BizFluent says that production logistics manages the stages of combining distributed supplies into a product. This can involve the coordination required in a manufacturing or assembling process.

Reverse logistics

Lastly, reverse logistics involves the return of material and supplies from a production process. It plans for the removal of excess material and its re-absorption into a stock supply. For example, if there are bricks left over on a building site, it will be removed and returned to the supplier and reclaimed as stock.

Why logistics is so important

Logistics is an integral part of any company, especially those that produce and distribute products and materials. Having said that, the logistics industry is important for the following reasons:

It helps to create value. Providing value extends further than the quality of a product, it also refers to its availability. Effective logistics management ensures the continued availability of products and materials to consumers, thereby creating and increasing the value a business offers.

It helps to reduce costs and improves business efficiency. By partnering with other businesses that offer transportation and storage, companies can reduce their operational costs while maintaining and increasing business efficiency.

It ensures the timely delivery of products to the correct location. Good logistics management ensures the quick and safe shipping, storage and delivery of products to customers.

In short, logistics is about providing the right goods to the right recipient in the right quantity at the right place at the right time. In an article by NHFS, a shortage of skilled workers is cited as one of the challenges in the South African freight industry along with climate change and regional connectivity.

The IMM Graduate School’s supply chain and export management believe the future could be in the hands of the young logistics professionals. Find out more about our logistics short course here: https://www.immsc.co.za/online-course/logistics-short-course/