The Future of Logistics in the Light of the Pandemic

09. 06. 2020

A pandemic is one of those unpredictable cataclysmic events that are described by Nassim Nicholas Taleb in his bestseller The Black Swan. Their common characteristic is that no one can predict them, and they, therefore, surprise us again and again.

The occurrence of something improbable, or a “Black Swan”, instantly changes the established patterns of our behaviour. It is interesting, however, that these changes often go in a direction that had already been indicated earlier. Every shock accelerates changes that create new spaces and opportunities.
The world is becoming fragile and unpredictable. Prudent company management teams work on several scenarios simultaneously. In other words, they keep fit in order to be able to manage change.

Supply Chains Under Scrutiny
Multinationals have started using risk assessment matrices again. One of the first results to emerge from this is a thorough revision of supply chains. Buyers want to have several geographically separated suppliers for the same component parts. Production is being relocated back to the developed world or at least somewhere in close proximity. The issue of the ageing population – and the resulting labour force shortage – can only be overcome by automation and robotisation in the new production facilities. This will, of course, involve a considerable contribution from new technologies, such as collaborative robotics, artificial vision, artificial intelligence and self-driving vehicles. Every working cell in modern production logistics is interconnected through IT. Internal logistics makes use of manufacturing that is supported by IT in the pull (on-demand) mode and uses robotic vehicles (automated guided vehicles – AGV).

Especially in the automotive industry, buyers continue to want just-in-time deliveries. Nonetheless, the increased risks of delivery disruptions are reflected in an increase in reserve local stock.

Many production companies have realised that managing logistics by themselves is a strategic advantage, which is why they invest in the construction of new, often automated warehouses next to their factories. However, these warehouses are only efficient if they are managed by a state-of-the-art warehouse management system (WMS).

Even the Most Conservative Buyers Are Turning to e-Shopping
With the pandemic, e-commerce has got new wind in its sails. Even the most conservative buyers have started using new modes of shopping. On the one hand, online shopping is becoming more concentrated, which increases regional warehousing capacities that can only satisfy the performance requirements of the market with state-of-the-art automation. On the other hand, buyers are not prepared to wait for the goods they order, so rapid supply can only be ensured through a high level of automation of local logistics centres. The desired delivery times, especially in the case of food and medicines, are ever shorter, which requires completely different innovative logistics solutions, such as micro fulfilment centres. Such centres are automated and often located directly beneath shopping centres. They serve the purpose of supplementing the stock of nearby shops, as well as supporting e-commerce in local supply.

Transport Distribution Is also Becoming Smart
With the increasing traffic, distribution to the end buyer represents a unique challenge, especially the last part of the way, i.e., the last mile. Digitalisation enables intelligent delivery logistics, as it optimises the route, vehicle size, temperature regimes, road conditions, time windows, etc., and traces the goods all the way to the buyer.

Those Who Are Ready Are Reaping the Rewards
Some market players do not want to deal with the logistics challenges by themselves and prefer to entrust their logistics to specialised companies, so-called 3PL logistics companies. In this segment, those companies that invested in warehouse infrastructure and smart IT (WMS) in the past are now reaping the rewards in the market.

“Eppur si muove”
The pandemic has only been a temporary disturbance in the world’s movement. The world is already accelerating its rotation, even though it is still ‘staggering’ and changing directions. Successful companies are adapting to the rapid pace of change by introducing digitalisation, robotisation and automation in their operation. In these areas, Epilog and Knapp offer state-of-the-art technological solutions.

In the end, a Black Swan is still just a swan. Those companies that have awareness in their DNA that the only constant is a change cannot be taken by surprise by anything.

 Damjan Širca, CEO, Epilog

The Future of Logistics in the Light of the Pandemic