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Digitalization in Logistics

By Martin Kolbe, CIO, Kuehne + Nagel International AG

Martin Kolbe, CIO, Kuehne + Nagel International AG

All we see from our interactions with our customers, suppliers and competitors make it abundantly clear: all underlying markets are changing rapidly and comprehensively. B2C and B2B consumer behaviour and the speed of technological developments are transforming traditional go-to-market approaches and logistics operations. The digital transformation poses many challenges for logistics. Even greater are the opportunities and prospects created by the new technologies. These technologies can offer many exciting and game changing opportunities for established logistics companies like Kuehne + Nagel: from driverless vehicles, automated warehousing to drones and autonomous handling equipment, human intervention will be needed less in the physical supply chain process.

Logistics and its stakeholders are increasingly generating and handling large amounts of data. It is now important to further automate the logistics and to adapt to data transport, and not just goods transport. Information is already the basis of all supply chain management processes today. In future, it is to be expected that the use of new technologies, such as Smart Sensors, will redesign these processes and link them even more closely.

"Kuehne + Nagel's blockchain activities follow an open and cooperative approach among equal partners"

The added value of digitalization in logistics systems is to improve the logistics services for customers. Essentially, it is about reducing the complexity of logistics, making global, intermodal supply chains more transparent and efficient with the help of integrated digital technologies, automation of business processes, and new digital products and solutions.

Many years ago, the digital evolution began with standardization, automation and computerization. Kuehne + Nagel, as a frontrunner, created the basis for the digitalization process with modern user interfaces and a digital backbone. First step was taken already by the end of 1990s with KN Login, the monitoring and visibility platform of Kuehne + Nagel. By launching KN FreightNet four years ago, Kuehne + Nagel has become the first logistics company to introduce a fully digitized pricing, booking and tracking platform that provides customers online with a direct, efficient and fast connection to the company’s systems. Today, data processing, connectivity and the use of state-of-the-art software and technology are key elements in the success of digital transformation. The increasing availability of data leads to increasing visibility and is the basis for new services and products to increase productivity. Not only does data need to be collected and analyzed, but it must also be made available and actionable everywhere, anytime, on any device, and transformed into relevant information. Logistics industry knowledge, market insight, expertise to create added value and a wealth of information generated by logistics data lead to Kuehne + Nagel’s unique market intelligence.

The target is to seamlessly exchange data between different systems to drive automation and minimize manual effort. Logistics companies need to create new services that enable customers to easily do business with them, with highly automated standard deliverables, from quoting to final invoicing, to increase process automation for operational efficiency and minimal manual intervention. Kuehne + Nagel will leverage its strengths to extend from supply chain to value chain services, covering the complexity of logistics with its expertise and providing easy to handle digital products and innovative solutions that are responding to market requirements.

Kuehne + Nagel’s Logistics Data Lake, the industry’s largest data source, consists of proprietary shipment data from all modes of transportation and is enriched with external sources, such as throughput of ports, daily customs data, as well as very detailed vessel and aircraft movements in real time. The big data infrastructure, built on Data Lake, serves as a workbench for new digital products and solutions. gKNi, or "global Kuehne + Nagel indicators", is based on that workbench: it utilizes external cloud computing to perform massive calculations in a short period of time, and applies predictive analytics to make the data meaningful a pioneering step in the area of big data. gKNi provides early insights of key economic figures up to 55 days earlier than other estimates on trade related indicators. Customers are therefore given an insight into the economic development of individual countries and sectors in near real time.

Blockchain seems to be a new miracle in IT. Blockchain has the potential to make supply chains more digital and more efficient. It is an enabler of collaborative business networks, and the supply chain industry may benefit by eliminating inefficiencies and gaining speed. But this requires the cooperation of a large number of relevant market participants and the agreement on a standardized approach. Currently, the launch of first prototypes across different industries is about to reveal the real-world potentials and limitations of the blockchain technology.

Kuehne + Nagel is engaged in two proof-of-concepts. In one case we are working on exchanging shipment data between existing systems and those of our partner using blockchain technology. In a second activity, we’ve collaborated in a consortium to demonstrate that a solution based on blockchain can eliminate the need for printed shipping documents and save hundreds of millions of dollars annually. Kuehne + Nagel's blockchain activities follow an open and cooperative approach among equal partners.

Internet of Things (IoT) is another technology tackling logistics challenges. It empowers smart objects to be active participants in self-steering, event-driven logistics processes. Sensors have been used successfully for several years, such as for the product KN Pharma Chain for tracking high value shipments. The active sensor technology can monitor in-transit and in real-time any required physical shipment parameter. Kuehne + Nagel is currently testing the possibilities of the next generation of smart sensors in conjunction with cloud computing to provide shippers with real-time information about the location and condition of critical freight in transit.

While digitalization is transforming the whole logistics industry, scale, service offering and geographic reach remain crucial and are still big advantages of traditional forwarders, as well as their global network and people on site. Their know-how is very pronounced, and they can offer customers all services along the entire supply chain from a single source. Kuehne + Nagel offers reassurance and partnership, a worldwide presence, combined with local knowledge, industry expertise and insight, proven operational excellence as well as the capacity and expertise to execute any requirements and innovations digitally. Along with more than 75,000 experts around the world we are creating the most powerful logistics network possible, built on our single global operating system and state-of-the art customer facing applications. This is the next generation of logistics.