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Key to Efficiency in Supply Chain Logistics

Key to Efficiency in Supply Chain Logistics


by Adeline Tan, Country Manager, Netherlands Foreign Investment Agency

With less than one per cent of all current physical objects with Internet connecting abilities realised, DHL and Cisco estimate that by 2020, over 50 billion objects will be connected to the Internet, presenting an astonishing S$1.9tr opportunity for logistics.

Digitalisation of logistics has become an observable mega-trend with big data, cloud analytics and the Internet of Things (IoT) enabling a higher degree of efficiency in processing and enhanced customer interaction.

Through the process of increasing reliability and traceability, logistic operators are adapting to the demands of consumers and supply chain professionals, escalating the need for total transparency and control of their cargo. By connecting warehouses and employing intelligent transportation solutions, items down to the singular unit can now be assigned a code to begin transmitting its location, status, content, and all other ambient conditions from the moment it is received up until the last-mile of delivery.

All unproductive time, stolen goods, asset deterioration, and a plethora of other operational inefficiencies can be monitored and carefully managed through real-time visibility of the entire chain. Considering over a thousand counts of cargo theft and fraud are reported annually across Europe resulting in a loss of US$9bn for affected businesses, increasing integrity and proactively activating mitigating actions via IoT solutions is the next natural step for firms. To compound the issue and bring home the chain’s need for enhanced machine-to-machine (M2M) and machine-to-people (M2P) interactions, the industry’s core competency requires the handling of vast amounts of goods passing through a multitude of interconnected partnership networks spanning the entire world. Logistics’ convoluted nature demands a 360° vantage and coordination of processes to promote uninterrupted access to global markets.

“IoT integrated devices and its peripherals are constantly being developed to meet the increasing demands of all business sectors, combined with the magnified need for efficient logistical services. As Europe’s top logistics and distribution hub, the Netherlands prides itself as a global leader in innovative and emerging technologies, challenges in logistics, supply chain refinement and last-mile delivery,” remarks Mr Elmar Bouma, Executive Director, SEA of the Netherlands Foreign Investment Agency (NFIA), based in Singapore. The NFIA provides complimentary consultations to companies planning to open, expand and diversify their business operations in the Netherlands and Europe. Smart Logistics is one of the top sectors the agency covers.

The country hosts over 19 million square meters of distribution centres. Amsterdam Airport Schiphol, located in the heart of the Randstad, is one of the largest conurbations on the continent and is a major European cargo and passenger hub. The Port of Rotterdam is Europe’s largest port by far and the world’s fourth largest. Both are supported by worldclass logistics service providers and an extensive network of road, rail, waterways and pipelines. From the nearby Port of Rotterdam, all the major economic centres of Europe can be reached within a day. The Netherlands, Mr Bouma adds, makes extensive use of IT to deliver optimal supply chain solutions, especially in timecritical areas like food and cut flowers. It is a pioneer in the development of environmentally sustainable and silent logistics.

Dawn of global IoT networks

Continual connectivity is dependent on universally compatible IoT networks at both the global and national level. In June, the Netherlands became the first country in the world to roll out its long-range (LoRa) network. Dutch telco giant KPN engaged in an eight-month deployment of its coverage to encapsulate all outdoor areas following the initial success at The Hague and Rotterdam last year. By simply adding gateways and antennas to their existing mobile transmission towers, KPN managed to supplement existing cellular networks with additional IoT capabilities including location-based features and connecting sensors at significantly lower costs and energy requirements.

Currently, they have contracted over 1.5 million devices to be connected to their network, ranging from depth sounders at the Port of Rotterdam to Utrecht Central’s rail switches.

Europe & Asia converge

With an estimated thirty-fold surge in Internet-connected devices by 2020, Asia Pacific expects to lucratively prosper from its ubiquity. Following KPN’s foray, South Korea’s SK Telecom launched its own LoRaWan network, catering to 99 per cent of its citizens. The mobile operator is discussing partnerships with Europe in hopes of advancing towards a globally blanketing IoT ecosystem, unhindered by national borders. Following closely behind could be a number of Asian countries.

Singapore’s ambition of becoming a smart nation includes the integration of smart technologies into every aspect of life, including logistics where Asian cities occupy the majority of the market space, or China, which is projected to become the world’s biggest aviation market but is simultaneously plagued by rising fuel prices and road congestion due to the massive inflow of traffic.

Reusable smart pallets

The pallet industry has remained stagnant for the past 50 years, revealing a crucial opportunity for IoT to improve such conventionally disconnected items. Smart tags and digital itemisation have elevated logistics identification with further granularity, resulting in increased horizons of authentication, fraud detection, and traceability.

German chemicals company BASF, in collaboration with Dutch startup, Ahrma Holdings, has created a new line of pallets. These robust hybrid pallets, made from plastic and medium-density fiberboard with BASF’s patented Elastocoat® C spray coating, eliminates the need for further primer coating, and is guaranteed to increase the resistance and durability of the pallets. The MDF pallets are not just more stable but are 25 per cent lighter than traditional pallets, while boasting an innovative, comprehensive track and trace system. The life span of the pallets is 10 years and individual components of the pallets can be dismantled and replaced.

More thematic, however, are the pallets’ IoT capabilities. Transponders and Ahrma’s corresponding software, the Supply Chain Big Data system, are integrated into the structure of the pallets, allowing the company to record all surrounding information including temperature, location and any impact the pallets encounter. This customised solution offers cost savings and benefits beyond what is provided by current systems as any disruptions in the cold chain can be detected and mitigated immediately.

The companies’ successful forage into reusable, smart pallets will, no doubt, lead to an evolution of all future manufactured pallets, and a massive reduction in overall costs for supply chains.

Track & trace solutions

Not only are transportation devices eligible for connection to the IoT grid, but the technology aiding in cargo transfers has the potential as well. There are currently very limited means for monitoring nonmotorised objects not connected to the power grid, especially when dealing in vast quantities. KLM Royal Dutch Airlines, Amsterdam Airport Schiphol, Rabobank and the Delft University of Technology are jointly funding a smart network technology designed by Undagrid, another Dutch startup for track and trace solutions.

Undagrid’s wireless technology with its GSETrack application allows an object with no access to energy to create a common network where ground equipment, such as dollies, carts, and staircases can communicate their positions with each other. An operator checks the location remotely via the cloud or a dashboard, which makes maintenance and equipment management more efficient and cost effective. Each device only needs one battery to keep the network operational for years at a time.

Amsterdam’s Schiphol Airport is already using the technology for its luggage trolleys and aircraft stairs. While it is currently being used to drive down costs in logistics, going forward, Undagrid says there will also be applications for travellers. Around 1.5 trillion items on Earth could benefit from gaining an IP address but less than one per cent is currently engaged. Isolated IoT implementation results in limited benefits if not mimicked or compatible throughout the entire ecosystem, and this can only lead to the inefficiency of the whole chain.

Constructing a wide-reaching IoT network is the first step to pervasive adoption that can only be sustained with investments in conducive accompanying technologies. “The advent of IoT in the supply chain combines the two things the Dutch excel at most: logistics and technological innovations. The Netherlands has blazed a path towards total global connectivity by setting a case study and standardised practices for Asian nations to learn from. Not only are they revolutionising and adopting IoT, the Dutch also have a penchant for pushing the boundaries of IoT technology,” Mr Bouma says.

About the Author

Adeline Tan is Country Manager for the Netherlands Foreign Investment Agency (NFIA), assisting companies in South East Asia and Australia that are planning to expand, relocate or diversify their business in Europe via The Netherlands. Since 2007, she has been bringing value to companies here by jumpstarting their Dutch, European networks, bridging the business culture and supporting business development. Adeline holds a Masters in Applied Economics and brings with her to the table, Dutch perspectives with a local flavour.