Logistics forges ahead: IoT opportunities

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Compared to others, the transport and logistics sector is at the top in digital transformation. Now it has to reap the potential of the digital work processes that are now in place and broaden its degree of networking to remain competitive in the globalized world. This has been shown by two studies on digitization.

The facts are clear: The transport and logistics sector benefits from digitization and gives it impetus. The main reason: Thanks to new digital technologies, this comparatively labor-intensive sector has been able to coordinate its considerable organizational efforts more efficiently and improve customer and partner contacts. Connected processes help optimize storage facilities and devise new transport routes and options. Moreover, shipments and vans can be monitored remotely and downtime avoided through predictive maintenance.

Digitization index: Work processes already comparatively very digitized

The "Digitalisierungsindex Mittelstand" ("SME digitization index" from November 2016) surveyed more than 1,000 SMEs in Germany to assess their current level of digitization. A sub-report of the study, produced by Deutsche Telekom in collaboration with techconsult, focuses on the results of the companies surveyed in the transport and logistics sectors.

The study's digitization index covers four digital areas of action: IT information security and data privacy, digital offerings and business models, company productivity and customer relations. Overall, the transport and logistics sector achieved above average scores in all of these areas. In the overall index the sector scored 57 out of a possible 100 – five points higher than the cross-industry average.

In terms of IT and information security, the transport and logistics sector scored 68 index points, significantly more than the average for the whole economy (63 points), leaving most sectors trailing in its wake. For example, 62 percent of companies state that they have fully or almost fully implemented secure data storage and transmission. With 54 points, the sector also scored above average for digital products and business models (the economy as a whole in the study: 46 points). The reason: To fully meet the needs and expectations of customers and partners, the logistics sector is particularly focused on developing digital products such as predictive services as an integral part of products at 32 percent of companies, and on product refinement with networked functions and use-based billing of products and services at 30 percent. In terms of company productivity, the sector scored four points higher than the economy-wide average for digitization at 53 index points. 36 percent of companies fully or almost fully integrate suppliers or business partners in their company systems and 34 percent of companies monitor shipments and transport (almost) completely in real time. With 53 index points the sector is also slightly above average (economy-wide: 51 points) in customer relations. Both the relevance and implementation of a range of customer relationship management measures are rated more highly in the transport and logistics sector than the cross-sector average.

Forerunner with the room for improvement

Although the logistics sector and its work processes are top of the class in digitization, the digitization index shows there is still considerable room for improvement. There is still a gap between the recognized relevance of digital measures and their implementation. Companies point to factors such as integrating technical measures in their existing IT systems, low employee acceptance rates and high investment costs as the main barriers to digital transformation.

PAC study on the Internet of Things in production and logistics: market far from saturated

Above average levels of digitization but still considerable room for improvement – this assessment has been further refined by the results of the PAC study "IoT in production and logistics". According to the study's authors, only five percent of the companies surveyed are exhausting their IoT potential and significant security concerns play a decisive role in their investment plans.

Market analysis and consulting firm PAC was commissioned by Deutsche Telekom and its corporate-customer subsidiary T-Systems to survey 150 IT and business decision-makers from the production and transport sectors in Germany, Austria and Switzerland. The results were published in November 2016.

The transport and logistics segment is considerably better connected than machinery and plant engineering or goods manufacturers. Its current connectivity is better and it already has more IoT project experience.

Compared to completion, logistics firms attribute by far the greatest importance to IoT issues. 72 percent see it as quite or very important for their sector. This is conclusive, freight carriers work per se mainly with movable goods and therefore have a particular interest in making logistics processes more transparent and efficient using IoT technologies (sensors, GPS, connectivity, IoT products, data analytics, etc.) and avoiding downtimes caused by technical defects. The transport sector in particular is under huge innovation pressure: for example, online vendors are developing brand new delivery concepts using IoT technologies.

73 percent of the managers surveyed said their priority was to invest in IT security before spending money on sensors or networks. Attacks on a company's core, such as the logistics platform, can put their continued survival at risk.

Communications infrastructure as the basis of IoT projects

Companies wanting to take their digitization efforts to the next level can use the self-check on the website to assess their current level of digitization and how they compare to other companies and their sector as a whole. The most important step is to combine all digitization activities into a company-wide IoT strategy. It is also essential to determine whether existing systems and machines can be retrofitted with sensor technology. IT should be integrated in IoT projects at an early stage. It is advisable to look for off-the-shelf solutions in order to reach your goal faster and more reliably. Many sub-features (such as portals, tracking solutions, etc.) have already been developed and can be adapted to your specific needs. It is often worth looking at completed projects in other sectors with comparable problems.