It is said that efforts toward digital transformation (DX: hereinafter referred to as DX) will be necessary for corporate management in the future. What exactly does DX mean? Also, how will DX solve business issues? This time, after confirming the outline of DX, let’s consider how far DX can solve the problems facing the logistics industry from among various industries.
What is DX?
The “Guidelines for Promoting Digital Transformation (DX)” compiled by the Ministry of Economy, Trade, and Industry in 2018 states that “companies should respond to drastic changes in the business environment, utilize data and digital technology, and improve the lives of customers and society. Based on needs, reform products, services, and business models, as well as the operations themselves, organizations, processes, and corporate culture/climate, and establish a competitive advantage.” To put it more simply, DX is about using new digital technologies such as AI and IoT to solve social and corporate issues.
According to the “DX domestic market (investment amount)” announced by Fujitsu Chimera Research Institute in August 2018, the market forecast for 2030 is 2,368.7 billion yen. This is 4.2 times higher than in 2017, and the DX market is expected to expand rapidly in the future.
Challenges facing the logistics industry
So, before considering the efforts and effects of DX in the logistics industry, which plays a major role in our lives, let’s take a look at the current situation and issues.
Current status of the logistics industry
Currently, the market size of the logistics industry is on the rise. According to Yano Research Institute’s July 2019 report on market size trends for the total market of 17 logistics industries, the market size forecast for fiscal 2019 is 23,541 billion yen (up 4.1% year-on-year). The market size forecast for fiscal 2020 is 24.08 trillion yen (up 2.0% from the previous fiscal year), showing steady progress.
The reason for the expansion of the logistics industry market is the growth of the pharmaceutical and medical equipment field, the growth of the frozen food market in chain stores, and the infrastructure and construction demand for the Tokyo Olympics and Paralympics to be held in 2020. Logistics is progressing steadily. In addition, with the rise of online shopping, not only BtoB but also BtoC is doing well, which is a factor in the expansion of the market size of the logistics industry.
However, while the market scale is steadily expanding, the increasing burden on each individual due to a constant shortage of human resources, especially drivers, has become a major problem.
Challenges facing the logistics industry
Currently, the logistics industry faces a variety of challenges, among which the following three are the main ones.
1. Increase in small-lot deliveries
Due to the rise of online shopping, which is one of the factors expanding the market size of the logistics industry, there has been a significant increase in small-lot deliveries for B2B, B2C, and individuals.
In fact, according to the “Logistics Industry Trends” announced by Sumitomo Mitsui Banking Corporation in June 2018, the volume of cargo per shipment was 1.37 tons in 2000, but in 2015 it was 0.75 tons. is decreasing In addition, the increase in small-lot deliveries combined with the increased frequency of deliveries has increased the burden on drivers compared to before.
2. Labor shortage
The decline in the working population due to the declining birthrate and aging population is progressing regardless of industry. The same is true in the logistics industry. According to the “Corporate trend survey on labor shortages” announced by Teikoku Databank in July 2019, “transportation/warehouse” is 6 out of all industries (51 types in 10 industries). The second result is that there is a shortage of employees (62.6%).
In May 2019, the Railway Freight Association announced the Headquarters Committee Report, which stated that the number of commercial truck drivers will be approximately 208,000 in 2025 and 278,000 in 2028. expected to be in short supply. Furthermore, if the labor shortage continues, the aging of existing drivers will progress, which is a major issue for the logistics industry.
3. Increased burden on employees
Due to issues 1 and 2, the burden on drivers is increasing year by year. But it’s not just the drivers who are burdened. There is a constant shortage of workers in transportation companies who are in charge of driver operation management and those who are in charge of clerical work. As a result, it can be said that the burden on employees, including drivers, is increasing throughout the logistics industry.
To what extent can DX initiatives be used to solve problems in the logistics industry?
Let’s think about how we can solve these problems by promoting DX initiatives.
Building an efficient warehouse system
Not just one company, but two or more companies will cooperate to build a warehouse system that can perform logistics operations such as transportation and storage. As a result, even if the delivery destination is the same, it is now possible to carry out shipments from separate warehouses using separate trucks, but this can now be done collectively, realizing efficient delivery.
Digitization of product management
In addition to digitizing product inventory and shipping management, more efficient product management is possible by introducing AI and forecasting demand.
Autonomous driving of trucks and utilization of drone delivery
Although it is difficult to implement shortly as some laws need to be enacted, it is expected that automated driving of trucks and delivery by drones will be one of the measures to solve the shortage of human resources and the increased burden on employees in the future. are collecting.
Optimizing working conditions by utilizing AI
By using AI to create work shifts for drivers, it is possible to create optimal work shifts, reducing the work of operation managers. In some cases, it also reduces labor costs.
Reducing delivery risks by accumulating and analyzing customer information using AI
Due to the influence of online shopping, the frequency of deliveries to individual customers is increasing, so by accumulating and analyzing the information of such customers, AI predicts the times when they are likely to be at home. Reduce the risk of redelivery.
Improving operational efficiency by optimizing delivery routes using AI
Predict weather and road congestion with AI. By analyzing the optimal delivery route for the day, you can expect to improve the efficiency of loading capacity and reduce fuel costs.
Efforts to Improve Delivery Efficiency in the Logistics Industry: Case of CBcloud Co., Ltd.
Currently, there are problems in the logistics industry, such as “complicated delivery routes that are not sized and reduced operational efficiency due to increased redeliveries” and “low income of drivers and shortage of workers”. CBcloud, which provides a delivery service that introduces delivery requests from shipping companies to freelance drivers, has been working to solve this problem since its establishment in 2013. Offer. As of the end of October 2019, more than 15,000 drivers have registered nationwide, and the service has grown to be used by more than 26,000 users as shippers.
The feature of “PickGo” is that the driver receives orders directly from the shipper, so there is no multiple subcontracting. As a result, the driver’s unit price has risen, and there are cases where drivers who used to earn 200,000 to 300,000 yen per month can earn more than 1 million yen. For the shipper side, there is no need to constantly secure a certain number of delivery vehicles regardless of the amount of delivery, drivers can be found on the web in a short time, and after departure, the current location and arrival time of the driver can be known in real-time. This has the advantage of reducing the risk of delays.
In addition, the company provides a solution “LAMS” that automatically formulates efficient delivery routes, including skipping when not at home, so that even unfamiliar drivers can deliver while maintaining a certain level of efficiency. Further development is expected in the future.
To realize DX, first, consult with an expert
DX, which can be said to be a reform that utilizes digital technology, is also an effective means of solving current problems. However, to do so, it is necessary to analyze and understand what the issues and their causes are.
What kind of DX approach is most effective for your company? To find it, consulting with a company with specialized knowledge and experience is a shortcut to finding the optimal solution.
