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IT, Changing the Paradigm of the Logistics Industry!

Logistics, which is an integral part of our lives, has gone beyond simple distribution and developed into a smart industry that is a combination of IT and creative service. Today we will explore the IT logistics industry through various real-life examples.

What is the ‘New Integrated Logistics’?

The Japanese chain store Daiso is popular among consumers for offering high quality products for a reasonable price. Daiso has retained the value of its brand by continuing to structure their facilities in order to sell their high quality items for inexpensive prices. This is possible through a 3 year integrated logistics center project with LG CNS that completed a ‘hub center’ focused on smart logistics.

The Daiso hub center automates the entire process that is done manually in traditional logistics centers from storage to logistics and deliver. Through this system, they increased the daily delivery amount while reducing the logistics fee rate from 3.2% to 1.9%. This allows them to increase their means to sell quality products at inexpensive prices.

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Changes after the Introduction of Logistics IT System (Source: Dong-ah News)

As with Daiso’s logistics system, other logistics companies are developing in new directions with IT. This new development is known as ‘New Integrated Logistics’. The ‘smart industry’ of IT, BT and CT are integrated into the traditional logistics industry to improve efficiency and reduce logistics costs. This sort of logistics generates high value and is a creative technology and service. What types of new integrated logistics are there? Let’s take a look at that now.

As with Daiso’s logistics system, other logistics companies are developing in new directions with IT. This new development is known as ‘New Integrated Logistics’. The ‘smart industry’ of IT, BT and CT are integrated into the traditional logistics industry to improve efficiency and reduce logistics costs. This sort of logistics generates high value and is a creative technology and service. What types of new integrated logistics are there? Let’s take a look at that now.

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New Integrated Logistics System Chart

As you can see in the chart above, there are many types of new integrated logistics. You can see how logistics IT is impacting the integration and technological development of the industry in all directions. Above all the rest, the main goal is to diversify the current logistics market and expand the fields of logistics while simultaneously integrating the systems. At this point, the current logistics policies are focused more on reducing logistics costs than on expanding the market.

But what is the state of the global market? Let’s look at Amazon and Google logistics systems to see how smart logistics systems are being introduced and implemented.

The Amazon and Google Logistic War

Recently, there has been a distribution war going on in America. Since Google arrived on the logistics IT scene, the competition is getting even hotter. After the 9/11 attacks, Google revealed that they would be actively promoting the growth of logistics IT and logistics security.

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IT Comparison of Amazon and Google (Source: Jungang News)

The data above is a technological comparison of Amazon and Google. Amazon developed their online shopping mall, transaction system and logistics infrastructure by connecting them with external systems through their Webstore system. Google manages their solid Android platform. They are also applying Google Earth and their driverless car to logistics systems and pioneering with their expanding IT logistics system.

Something these companies have in common is that they are making innovations possible that reduce logistics fees through logistics IT. They are also applying common methods working to expand platforms that increase the efficiency of the logistics industry. But what are some of the differences between these companies? Let’s now take a look at the technology and methods Amazon and Google are implementing to change the face of logistics.

  • Amazon Delivery, the Unmanned Drone

Amazon started as an Internet bookstore and has developed to offer Amazon services in a variety of fields. It is fair to say that they are head and shoulders above the rest in the IT logistics market and innovated technology from the smart logistics world. This innovation can be attributed to Amazon’s unmanned drone as Prime Air. Currently, Prime Air is equipped with a built in GPS and implements high altitude technology while ensuring safety and accuracy.

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Amazon Drone Octacopter (Source: Amazon.com)

Amazon is not only using drones. They are deploying robots in the workplace to improve efficiency and accuracy. Recently, Amazon confirmed that their robot accuracy rate is approximately 99.99%, which is much higher than the accuracy rate of work done by human workers. Amazon’s robots were developed by one of their subsidiaries. Amazon also announced that they are developing a logistics delivery system that uses taxis. These systems will be great for applying and implementing in logistics where connectivity is important.

To learn more about drones, refer to the link below.

You could say that the unmanned car is at the heart of Google’s smart logistics. The core of this technology is not in the manufacturing of the car. The core of this technology is in the IT that performs detailed analysis on a wide range of data collected from outside the car.

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Core technology of the Google Unmanned Car (Source: Aha Economy Site)

The unmanned car is exactly what it sounds like: a car that drives with no driver. The car processes and analyses data concerning traffic lanes, amounts of traffic, traffic signals, conditions on the road and more. This technology that Google has put forward is big data. Big data makes the structure of an efficient logistics system possible by being able to analyze a huge amount of data at each stage of the process. Google is recognized as having the technology and software based on big data. Recently, the continuing unmanned driving test and high-speed tests have proved successful.

Up until now, we have looked at the current state of Amazon and Google logistics IT. These logistics technologies have significant implications in the Korean smart logistics market as well. What efforts do Korean companies need to make to become leaders in the smart logistics industry? Also, what does the future hold for the industry?

Factors for being a Leader in Smart Logistics IT

The first thing needed for the logistics industry is standardization. The goal of standardizing logistics is to make uniform the machines, containers and equipment for management of things such as shipping, storage, loading, packaging and information at each stage of the process.

Flat design vector illustration. E-commerce, shopping & delivery

 

Currently, one of the problems that cause high-costs and low-efficiency throughout the complex steps of distribution is due to the lack of standardization. This becomes an even bigger problem on a global scale. So, the most basic thing required for the efficiency of a logistics system is ‘logistics standardization.’

Another thing necessary for a new integrated logistics system is to create a safe and efficient global logistics chain. Big data accounts for a significant amount of this. Currently there is more data analysis required than there are personnel to analyze the databases and there is a lack of qualified individuals to add value to the market. Specialists known as data scientists must support more than just data collection but thorough data analysis.

Also, Korean shopping malls currently only maintain platforms for basic retail and wholesale and connecting consumers. Logistics companies conduct the role of connecting suppliers with consumers but there is still need for analysis of consumer trends. With the introduction of big data analysis, more investment is required for customer management and regular relationship configuration.

Today we have discussed logistics IT and the changing logistics market. There is a lot of effort being made even now to address the challenges of applying IT to the Logistics world. Logistics IT will continue to evolve with endless new innovations. Global competiveness based on solid technological capability is required to stay afloat in the borderless global logistics market.

Written by Ji-In Jung, University Reporter for LG CNS

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