Which technological applications are recommended for business to enter Logistics 4.0? (Part 1)

Published by Ngoc Tran on

Industry 4.0 figure 1

In the previous post we have discussed how logistics (procurement logistics, production logistics, etc.) has evolved and reached its fourth stage – logistics 4.0. However, not every organisation has made its way to logistics 4.0 successfully, or is ready for it. Therefore, the purpose of this post is to give you some ideas on which technology should be adopted in logistics 4.0 with concrete examples. There are eight technological applications, two of which will be explored today!

#1: Enterprise Resource Planning (ERP) systems

During the adoption of Logistics 4.0, a resource planning system is needed as it builds a robust forecasting model for the resources of a company (e.g. how many people are needed for peak and off seasons?). As a result, this helps optimize resources and processes, leading to an improvement in customer satisfaction, overall productivity, and agility of the supply chain, especially in a dynamic environment.

Examples:

  • For individual level (students, personal finance tracking, freelancers, etc.): Microsoft Office, Trello, Slack, Gmail would be best suited for resource planning, teamwork and project management.
  • For small and medium sized enterprises (SMEs): Microsoft Dynamics 365 Business Central, SAP Business One, and Sage Intacct are recommended to use; however, any purchase related to resource planning should be carefully considered, depending on your company size and needs. An Enterprise Resource Planning (ERP) like SAP would overkill a small business.
  • For large companies: ERP systems and cloud-based ERP are advised.
    • Success story: Global Interconnect INC., a globally renowned custom engineered cable assembler, had their tasks, inventory and related stuffs processed manually while their business and supplier base continued to rise. After implementing an ERP system, they experienced a tremendous downturn in the first quarter, but then achieved some great success (e.g. 50% sales growth within 4 years, 50% reduction in time spent on Accounting and Receiving, etc.) thanks to rich functionalities of the system.
    • Failure story: Lidl is one of most famous cases of ERP implementation failure. In 2011, it cooperated with SAP ERP to transit its old-fashioned in-house inventory system to ERP, but it didn’t want to change. Lidl based its inventory systems on price that it pays for goods, whereas most companies base their systems on retail price (what they sell the goods for). This required SAP ERP system to be customized, which caused lots of implementation problems. In 2018, Lidl scrapped the project after paying a bill of nearly €500 million.

#2: Warehouse Management Systems (WMSs)

Thanks to the integration of smart systems into the WMSs and globalization, considerable transformation has taken place in warehouse (WH) activities and changed WH’s roles from storage to transaction and movement. The location and estimated arrival time of products can be monitored in the intelligent WMSs through Cyber-Physical Systems (CPS). Cyber-physical systems refer to systems with integrated sensing, computational and physical capabilities into physical objects and infrastructure, connecting them with the Internet and to each other (Samad and Annaswamy, 2011), (National Science Foundation, n.d.).

Furthermore, the intelligent WMSs optimizes just-in-time (JIT) and just-in-sequence (JIS) delivery by deciding and preparing the proper docking area. Simultaneously, data related to the delivery will be sent to the whole supply chain by the RFID sensors. Before goods enter WHs, a proper material handling equipment will be requested and available storage space will be assigned immediately by the WHSs based on the specifics of the delivery.

Examples:

  • Food industry: Chung’s Gourmet Foods is the leading producer of Asian entrees in the US. With the implementation of a WMS (in this case, Fishbowl Warehouse and QuickBooks) the company succeeded to eliminate the need to double check shipments and to implement a single system of transaction management. Furthermore, the WMS can determine the true cost of each product to calculate profitability, and to automate all steps from purchasing through receiving payments. Thus, the timing of collecting data is reduced. Eventually, it earned impressive achievement, namely the ability to view purchase price variances by item and what each costs to produce, Chung’s month end closing cycle shortened from over a month to 7 workdays.
  • Retailer industry: Boot Barn, the largest retailer of western and work apparel, footwear and accessories in the US, determined to expand its E-Commerce business where it believed that it needed a system serving as a centralized point of control for its entire material handling equipment (MHE). Another goal is to achieve visibility and interaction between variable order volumes and MHE and automation technology. Therefore, Boot Barn decided to integrate an intelligent Warehouse Control System (WCS) into its WMS. As a result, this helped the firm increase throughput speed by 25%, picking productivity by 50%, and reduce staff costs. Furthermore, the WMS manages inventory itself while the WCS controls how inventory flows across different technical equipment in a warehouse or DC.

So, has your organisation or yourself experienced these technologies? How was the implementation process? What are the lessons learnt? Please reflect on these questions because it may empower you to generate ideas for bettering your current systems in a more user-friendly way. Also, please share your story in the comment below so we can learn together.

In the next post, we will talk about systems that help track your shipments, and protect you and your organisation against cyber-attack. Can you guess which technological applications already? Yes or no, you will know the answer next week, so stay tuned!

Thank you for reading and share if you find it useful!

Recommended reading:
Logistics 4.0: Digital Transformation of Supply Chain Management (Paksoy et al., 2021)
https://www.netsuite.com/portal/resource/articles/erp/erp-implementation-case-study.shtml
https://www.handelsblatt.com/english/companies/programmed-for-disaster-lidl-software-disaster-another-example-of-germanys-digital-failure/23582902.html
https://www.fishbowlinventory.com/case-studies/chungs
https://www.koerber-supplychain.com/about-us/blog/optimize-inventory-flow-from-your-material-handling-equipment-using-a-warehouse-control-system/

Samad and Annaswamy (2011) The impact of Control Technology

https://www.nsf.gov/news/special_reports/cyberphysical/#:~:text=Cyber%2Dphysical%20systems%20integrate%20sensing,cyber%2Dphysical%20systems%20a%20reality

Image source: Infolettre Automne (2019) – https://www.profilesw.com/fr/enewsletter/1586-deploying-industry-4-0-technologies-in-treasury.php

Series Logistics 4.0


1 Comment

bcrc · 12 April 2022 at 12:26 pm

Interesting read about technological applications for Logistics 4.0 such as Enterprise Resource Planning (ERP) systems, Warehouse Management Systems (WMSs) and Cyber-Physical Systems (CPS).

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