Reading Time: approx. 15 min.The miracle of logistics
How intelligent systems deliver goods to homes around the world
CHAPTER 1 – More depending customer expectations
CHAPTER 2 – Predictive deliveries: The warehouse that can predict the future
CHAPTER 3 – Speed through forecasting
CHAPTER 4 – A bit like a computer game
CHAPTER 5 – The troublesome and expensive last mile
CHAPTER 6 – The Mars rover that’s taking to the streets
CHAPTER 7 – Airmail meets the robo-postman
CHAPTER 8 – Space is scarce
CHAPTER 9 – The role of logistics in smart production
CHAPTER 10 – Dispatchers become suppliers
CHAPTER 11 – Take-away
It has six wheels, wears a white hat and moves a little like a moon buggy. The vehicle, known by its designation 6E41, uses the six wheels to feel its way along the sidewalk.
A Mars rover makes its way through the streets: While in other cities this sight might attract a huge crowd of spectators, the people of the Eimsbüttel quarter in Hamburg seem unperturbed, passing the little robot without a second glance. Seeing the 6E41 and its robotic colleagues making their deliveries has become quite normal. You could be forgiven for thinking that the 6E41 is some kind of cross between a robotic vacuum cleaner and R2-D2, the rotund robot from the Star Wars films. In fact, the 6E41 is competing in the battle of the last mile – the problem of getting goods to end customers.In just the first three months of 2018, 14.6 billion euro of goods were delivered to homes across Germany – some 10.6 per cent more than in the previous year. German business magazine “Manager Magazin” has already coined a phrase for this situation, calling it “Dauer-Weihnachten”, or “Extended Christmas.”
Extended Christmas sounds fun, but it also means increasing pressure for logistics service providers. For many years now, digitalization in the logistics segment has been represented by the squeaking tires, moving rotors and six wheels of devices like the 6E41. Electric vans, drones, freight bicycles and delivery robots have all been designed to circumvent our crowded roads.These devices are controlled by ever more complex algorithms that process increasing volumes of data as well as learning from each trip.Logistics concepts have gradually become so effective that processing an order now takes just a few minutes rather than the days or hours expected in the past. Whether you’re ordering a hot pizza, wine or new gadgets – anything can now be delivered straight to your door.
CHAPTER 1More demanding customer expectationsLogistics was once a rather analog business: The driver looked at a printed dispatch list, drove to the first recipient’s location and then worked through the remaining customers in turn. Then along came Amazon.
Customers have come to expect the lightning-fast free deliveries offered by the Internet retailer, which even provides same-day delivery in major cities. Amazon has now entered the logistics market itself“Amazon has direct contact with the customer and knows what’s in the packages, giving it an advantage when it comes to deliveries,” says Lukas Wrede at MHP.It is also better for Amazon to simply employ the subcontractors who are currently working for logistics companies. The customers who love Amazon are driving this behavior. Anything can be delivered. And anything can be delivered fast if that’s what you want.
“Instant delivery” are the two magic words causing goods packers to break out in a cold sweat and making the logistics chain the focus of scrutiny by private and corporate customers alike.“Drones and delivery robots will not replace normal logistics workflows, but they will soon complement them,” explains Wrede. “Completely new services will be possible as a result.”
CHAPTER 2Predictive deliveries: The warehouse that can predict the futureLogistics is still a game that involves several unknown elements right up until the last moment. It would be a lot easier to know beforehand what a customer plans to buy and when. This idea is not as implausible as it first sounds. Predictive solutions are designed to make it possible. If you can guess what needs to be delivered tomorrow, the logistics process moves much faster. You need to know your customers well to make this happen – and be aware of the latest trends.
Berlin-based start-up Lesara promotes its offering as “Top trends in fashion and lifestyle” and functions by scouring Instagram and Facebook for trends in order to predict which clothes customers are likely to order soon and then stock up on these items. New products found via this method are available to order from Lesara just ten days later.
Cargonexx takes a different approach: This start-up in Hamburg arranges freight jobs. The price is essentially unbeatable because Cargonexx can predict the capacity of individual truck routes. A neural artificial intelligence solution makes this possible by working out the most cost-effective price for the job – the job can then be quoted at an unbeatable price.
CHAPTER 3Speed through forecastingLogistics processes are always at the mercy of traffic in cities. And then there’s the question of whether the full addresses have been provided. And whether the recipient is even there to accept the delivery.
Mathias Baur plans to overcome these challenges with his start-up Smartlane, a company that gathers transport data. Working with his three co-founders, the computer scientist has developed a transport mining solution.“We collect as much information as possible in order to create a database,” explains Baur.The software takes the previous day's data from the delivery van and looks for patterns that have caused delays. The software then learns from the information for next time.
“You can learn something new every day when it comes to logistics. And that also means that you can get better every day,” says Baur.Baur’s background is in science. He researched algorithms for optimizing traffic issues for self-driving cars while at the Technical University of Munich. The systems available to date have not made sufficient use of the wealth of data out there. Smartlane uses transport management data plus real-time traffic data. This combination allows the algorithm to learn information from past deliveries, such as the amount of time that the driver spends at a specific address. “Drivers spend two minutes at a terraced house. By contrast, they need at least 15 minutes when delivering to an address on a university campus.”
CHAPTER 4A bit like a computer gameThe Smartlane software GUI is colorful with an intuitive operating concept that functions almost like a computer game. The AI algorithms deliver fully automated route optimization in a single click, with the aim of helping the delivery company save up to 40 per cent on costs by using fewer routes.
“Thanks to our browser-based planning tool, we can help even small and medium-sized companies to quickly get started with digitalization,” says Baur.
“Jobs are recorded with just a few clicks and the routes are automatically planned.”From a mathematical perspective, the optimization algorithm is very good, but the developers are still working on the human factor. In other words, the customer’s requirements. For example, some customers want their deliveries from same driver each time. “You will soon be able to specify these requirements manually,” explains Baur.
CHAPTER 5The troublesome and expensive last mileThe last mile to the customer will remain the greatest and most expensive challenge as logistics moves forward. Around 40 per cent of transportation costs are incurred at this point in the chain.
Employing people to deliver packages is, and will always be, expensive. In fact, service providers in the booming delivery market are currently finding it difficult to employ people in these roles. This is a gap that new specialists such as Starship, Liefery and Skycart are hoping to fill, using their flexible, app-based offerings to overtake traditional logistics companies. “The faster the customer wants the goods, the higher the cost of delivery, regardless of the technology used,” says MHP logistics expert, Julian Popp.The opportunity to be better and faster in niche areas makes logistics attractive to start-ups.
Admittedly, building a delivery fleet, paying drivers and developing software is an expensive business. These are the elements that make same-day deliveries to customers so complicated. And difficult for those who are new to the game. Starship is actually hoping to completely eliminate the need for drivers.
CHAPTER 6The Mars rover that’s taking to the streetsHendrik Albers, who is responsible for Starship Technologies operations in Germany, is an advocate of the 6E41 delivery robot. “Our goal is to offer a decentralized and cost-effective solution for instant delivery,’ says Albers.
The small logistics robot is a realistic hope for mastering the last mile. “Any business owner can send for one of our robots – we’ve developed an app for that. The robot delivers the goods to the customer in 30 minutes for just one euro.” The Starship rovers are not cars – they share the sidewalk with pedestrians. For this reason they have a maximum speed of around 6 km/h. The two founders of Starship, Ahti Heinla and Janus Friis, actually wanted to build a Mars rover until they realized that there is a need for robust robots in our cities here. The Starship delivery robot is now in its fifth generation and is almost ready for mass production.
It became clear when testing the previous versions in Germany that every one of these robots required human supervision. But this is now set to change. Once an area has been mapped, the delivery robots can move autonomously through a section of a city to the customer’s front door. Customers receive an SMS on their cell phones to indicate that the robot has arrived with fresh pizza, wine, etc.“Imagine you are socializing with friends and you run out of wine. You would never call a taxi or get a bicycle courier to bring more. But maybe you would send for one of our robots,” says Albers.