Some people love to use the expression “before it was cool”. In hindsight, it can be applied to almost anything that gains acclaim. According to this Reddit thread, for example, Facebook was already cool when it was still known simply as “The Facebook” way back in 2004. My point: the “before it was cool” expression is really about when something’s value or significance is recognized very early on, and this can certainly be applied to many of the technological advancements we see today. Connecting devices, or instrumenting machinery with some form of connectivity, to capture data and provide control, was a used in many industries, before the term ‘Internet of Things’ or ‘IoT’ became cool and all pervasive.
We’ve looked various verticals in the past like the Smart Electric Grid and Healthcare. Today we look at the transportation and package delivery industry’s early embrace of connected technology, because they were probably one of the earliest to implement it about a decade ago. Truth be told, quite a bit of what we now call IoT was initially referred to as “connected systems” especially in industrial systems and environments. In addition, the use of sensors as part of these connected systems has also been taking place for years.
The key difference now is we are connecting more of these ‘things’, connecting them at a deeper level and interconnecting systems that then give rise to system of systems. Today you can connect machines, different modules inside of a single machine, and scale this out across a plethora of machines within that system and beyond.
Another important difference is because of the advancements in cloud technologies, it has become easier to innovate and offer newer, more robust cloud-based software solutions. One category that has benefited is cloud based data analytics, further giving rise to edge-based analytics. All of it is helping the transportation market by combining IoT with big data, big data analytics, edge analytics, and more, for a much improved and comprehensive solution. Whereas earlier, these solutions and components operated independently and in siloes, now by interconnecting them, we can reap the benefits of collating multiple sources and points of data.
The fact that some of the world’s largest transportation companies like FedEx and UPS implemented the technology before anyone else should not come as a surprise to anyone. These behemoths needed a way to connect systems to expedite package delivery, super streamline their logistics processes and ultimately reduce the cost of service. Today, Amazon is trying to enter this market and is using innovative approaches to reduce their operational as well as capital costs. Since Amazon delivers so many packages, at least in the US, having their own delivery service makes sense. Once the kinks have been worked out and they have validated their model, is likely that the company will repackage the solution and offer it to others.
It should be noted that other industries, such as building environmental control and HVAC, were also using the IoT of sorts “before it was cool”. As this Control Trends article puts it, a decade ago most consumers didn’t know or care how their lighting, elevators or parking garages were controlled as long as it all worked. And the early connected solutions that were put in place did, in fact, work relatively well.
The way to profit – optimization and efficiency
One way a delivery and logistics company can differentiate itself is through optimization and efficiency, ultimately leading to lower operational costs. And across the industrial marketplace, volumes are high, but profit margins are extremely low because the services have almost become a commodity and the lowest bidder wins. Which is why compared to other verticals, transportation, logistics and warehousing have been advanced, automated, optimized, and as stated at the outset, connected for years.
The transportation industry has been able to increasingly rely on huge levels of sophistication to compete, and even reduce costs to cent pennies. Various companies in this market have been able to do this in siloes while improving parts of processes, or different aspects, of the supply chain. Now, with the advancements in IoT, and as more people are putting time and money into research for building new devices, systems and models, the cost of deploying IoT will decrease while the usefulness of the devices will increase. Not only will this lead to a new standardized adoption of optimization and efficiency in warehouses transportation and a reduction in costs across the board, customer experience will be greatly improved as well.
Finding cost savings in the ‘last mile’
The most expensive step of package delivery is known as the last mile. It’s very cheap to get a package from location A – such as a factory – to location B – a distribution center. But from location B to C – the end consumer, say an office or residence, the destination can become rather costly. Consequently, the package delivery industry tends to focus on this ‘last mile’. Traditionally it has been difficult to optimize this process.
Amazon has been interested in autonomous robots for a while now – many of its warehousing operations are automated via small pickup and delivery bots. Amazon acquired Kiva Robotics in 2012. Amazon has also been looking at drones for several years as a way to deliver items while lowering its last-mile costs.
As a result of Amazon acquiring Whole Foods, you can now find Amazon Lockers in many of the stores to pick up a delivered item. According to its website, Amazon has installed more than 2,800 lockers at 70+ major metropolitan areas in the U.S. Innovative approaches such as this may enable Amazon to increase drop-ship deliveries, whereby they bypass, or reduce warehousing time, and transport goods directly from the manufacturer to the end customer – a sort of hybrid just-in-time model. This can be enabled by better analytics at the edge and better processing of data streams from manufacturer, warehouse, transport vehicle and even customer demand data.
Numerous companies including my own, GlobalSign, are looking at various ways to further improve the delivery experience by using blockchain along with a combination of smart lockers and smart sensors while incorporating Public Key Infrastructure (PKI) for identity authentication. This solution has the potential to automate delivery, reduce re-delivery and perhaps one day eliminate package theft.
The path that IoT has taken in disrupting every vertical is different, because of differing levels of technology maturity in each one. It is exciting to see how other industries have been increasingly implementing it. But we need to remember that IoT is a tool and not a solution. Bringing in other elements such as security, cloud analytics and edge computing is how it all comes together. It is a wonderful example of aligning various technologies to solve a problem as well as find new ways to ultimately improve the bottom line.
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