Digitalization in the logistics industry: Be the Puppeteer, not the Puppet

Statements regarding digitalization and the accompanying changes to workplaces are often contradictory: some people imagine outlandish deserted factories and warehouses and proclaim the digital transformation as a job killer. Others recognize that humans are the key players in digitalization as they hold the strings of the revolution and can pull them in ways that protect their best interest.

Positive effects

Even in the past there were always both supporters and rivals on the topic of digitalization. I´m sure there was concern about the tasks and well-being of post offices here in Germany when it came to a digital substitution through the expanded use of email in the nineties. But the boost of ecommerce as one of several facets of digitalization changed the postal delivery service from mainly being a courier for common letters to a service provider of a great variety of missions: from the traditional postcard and standard letter through to all sorts of international transport. Even logistics and delivery services as well as individualized packaging are part of the modern postal service concept. In the heyday of ecommerce, this digital transformation didn´t harm the former monopolist of written correspondence, but instead obtained a new profitable pillar. This change again evoked a great increase of workers, for example in the time leading up to the holiday season.

Service-IT

Today, work prioritization, responsibilities and the design of jobs are changing due to the rise of digitalized processes. But the procedural character of digitalization enables us to decide how things change. Concerning workplace layouts, I can see great potential in two dimensions: First, further possibilities in IT and digital innovations can help relieve highly-skilled workers from repetitive work, allowing them to instead concentrate on strategic and cost sensitive work. Second, lower qualified workers are able to efficiently complete tasks for which they previously required significant training. These two scenarios that result from digitalization do not kill jobs, but rather increase productivity.

Let´s have a look at an example from the field of inventory management: Assume there is a wholesaler that provides Do-It-Yourself stores with all kinds of products that make a handyman’s heart leap. The portfolio therefore ranges from low-valued c-parts such as screws to high priced articles such as a jackhammer. Home improvement enthusiasts and do-it-yourselfers know that screws are part of a basic equipment set. The wholesaler therefore doesn´t register a volatile demand for these types of c-items. In this case, my experience shows that procurement professionals tend to hold excess stock for these fast movers, which often ends up in high tied capital levels as well as redundant planning effort and costs. IT-based instruments in inventory management can help facilitate the automatic and even cost-effective planning and purchasing of these c-items. Demand can be easily forecasted and purchases are calculated in a way that meets demand but decreases stock – with only one click. In this manner there is more spare time every day to concentrate on the demand and stock situation of the cost sensitive jackhammers that must be more precisely planned.

Having a look beyond the logistics horizon, digitalized processes can improve tasks in different fields of our society, for example in medicine. A digital analysis of symptoms and the automation of non-care related work can free up doctors’ time which can then be used to delve into serious illnesses and allow them to better concentrate on patients. Another example: IT specialists profit from the automation of routine tasks, for example, the maintenance of server space, a task that otherwise can take up to 80 percent of their working time.

Growing requirements

Progressive digitalization cannot be ignored by the logistics and supply chain sector. Increasing customer requirements for individualized goods and fast delivery services in combination with today’s complex and global supply chains requires flexible, digital processes. Additionally, the increasing digital acquisition and storage of supply chain data evokes a better analysis and interpretation of this data, allowing firms to profit from it. On a related note, common ERP Systems are often deficient. This is where IT applies: It makes the relevant amount of data available to the worker to support fast decisions. However, if that wouldn’t be enough, intelligent algorithms can even evaluate that data to not only create a solid information base but also provide optimized decision proposals. Ultimately, that doesn´t revoke work but instead offers the possibility to do more important tasks at the same time.

Conclusion

In my mind, we are pulling the strings of digitalization, since it is a process that we can affect and steer. Logistics operations can take advantage of these digital innovations in the IT-sector and relieve workers from routine tasks and high manual effort in various processes along the internal supply chain. Moreover, a solid and shared information base helps integrate the various silos of a business and allows employees to take a market oriented, economical approach to operations.

Are you already pulling the strings of digitalization? What has changed in your supply chain through the use of IT based support?

This article was originally written by Ludger Schuh in German and was published on the BVL blog (National Logistics Association – Germany). It was was translated by the Inventory and Supply Chain Blog Team. The original article can be read in German here.