Smart supply chains: logistics embracing AI and blockchain

Logistics is in the midst of a revolution, with digitization transforming a traditional industry beyond all recognition. Internet of Things (IoT) tools have already made tracking and tracing goods in the supply chain easier, while data analytics tools are helping make processes more efficient. But other digital solutions are emerging to make their presence felt.

According to a recent Forbes Insights survey of transportation-focused executives, 65 percent believe the logistics, supply chain and transportation sector is undergoing extraordinary transformation, powered by digital technologies like IoT, artificial intelligence (AI), machine learning (ML) and increasingly, blockchain.

Blockchain blossoming

Logistics companies typically rely on large numbers of partners, ranging from chartered airlines to ship goods and maritime companies to transport goods overseas, to outsourced fourth-party logistics (4PL) providers. They also need to work closely with partners in the supply chain, like retailers or automotive manufacturers. All this creates silos of data, and the potential is there for blockchain to help by providing auditable data throughout the supply chain in real time. Blockchain can offer secure, robust databases that can only be read and updated by those in the supply chain with permission.

Blockchain is already being used in supply chains today, and its global, decentralized nature makes it highly attractive to supply chain players – it enables the transfer of funds and documentation anywhere in the world without needing to use a traditional bank or middle man, for example. In the food industry, traceability is imperative, and companies can use blockchain to keep track of food sourced from one country and track its journey, including where the food produce came from, where it was processed and stored and what its sell-by-date is.

At Orange, we have worked with customers to deploy blockchain in a third-party logistics (3PL) model, where our customer required absolute trust in their supply chain partners, whether for securing goods in transit or for tracing and proving delivery and/or handling of goods and documents.

We took a “learning” approach to this, arranging a blockchain session in our labs to “educate” the customer around the core capabilities of blockchain. This included engaging an Orange Silicon Valley analyst with expertise in the transport and logistics vertical plus a new start-up from our labs, who specializes in blockchain. The upshot of this educational approach was that the customer gained knowledge of the vertical, of the technological elements of blockchain and of the commercial potential of blockchain in logistics. The Orange commitment to blockchain is evident in our membership in the Blockchain in Transport Alliance, which develops global distributed ledger standards across the supply chain industry. We believe it is going places fast.

According to Technavio, the global blockchain technology market in transportation and logistics has hit a growth rate of around 83 percent this year, while logistics giant DHL and Accenture forecasts that blockchain technology will grow from a value of $411.5 million in 2017 to $7.68 billion by 2022.

The role of AI

AI is fast making its presence known throughout the world, and it has great potential in logistics, too. But in what sort of applications? One is chatbots, which have found their home in retail and customer service, but in logistics can be used to improve operational procurement. Companies are always looking for ways to streamline procurement-related tasks, and automation using chatbots can help.

Data sets can be leveraged by AI-enabled bots to conduct basic conversations and discussions with suppliers, to send actions to suppliers about governance and compliance materials, to place purchasing requests or to field and respond to internal questions about procurement functionalities. Bots can even carry out filing and documentation of invoices and payments in the supply chain, again streamlining traditional processes.

Machine learning (ML) will come into its own, too, in a couple of key areas of logistics. Supply chain planning can be enhanced using ML, since it helps with forecasting inventory, demand and supply and can drive a much more agile supply chain and optimize decision making. Intelligent algorithms and machine-to-machine analysis of big data sets can give greater granularity and accuracy in forecasting than humans can currently achieve.

Warehouse management can also benefit from ML, and good warehouse management can inform supply chain planning, too. Successful warehouse management can be built on a forecasting engine that leverages machine learning, making a continuous process that uses algorithms and data streams to create predictive power. ML can totally revolutionize warehouse management.

Autonomous vehicles have long been seen as a central pillar of digital within logistics, and faster, more accurate shipping has also long been supply chain’s holy grail. Enhanced shipping reduces lead times and transport expenses, it makes logistics companies more environmentally friendly, it reduces labor costs and ultimately gives competitive advantage.

Drones also flying

Drones are an AI-linked solution that has an interesting role to play in logistics. At Orange, we have recently conducted demonstrations for customers where we took them to a warehouse to show them how autonomous drones can manage the stock-taking process. Drones, or unmanned aerial vehicles (UAVs), have caught the imagination in logistics and have potential use cases far beyond the warehouse. recently predicted that the drone logistics and transportation market will be worth $11.20 billion by 2022 and is projected to grow to $29.06 billion by 2027, at a CAGR of 21.01 percent between 2022 and 2027.

A bright blockchain and AI-enabled future

What we foresee is blockchain and AI driving change and digital transformation in an industry long reliant on traditional ways of doing things. The upshot will be that logistics companies will be more cohesive and able to make decisions faster, leading to more satisfied customers and a more efficient, productive future.

To learn more about why AI is the most important driver of innovation in the 21st century, read our white paper: Artificial intelligence: what’s next?

Wu Soong Woon
Wu Soong Woon
Wu Soong Woon is Director of UCC and Business Consulting in the Orange Business Asia Pacific region.  His business charter includes the Unified Communications and Collaboration portfolio of Cisco, Microsoft and also relevant managed services for telephony, voice, video and social communications solutions.  His team also consists of business consultants who operate as digital transformation partners for key customers, championing the evolution of digital workspace and business.
He has been with Orange for almost eight years.  Prior to this, Wu Soong spent 14 years in Dimension Data, 3D Networks and Hewlett Packard in professional services, solution architecture and manufacturing.