When we discuss Industry 4.0, we often mention the origins of its name, i.e. the concept of the fourth industrial revolution defined by machine-to-machine communication and autonomous processes. With Logistics 4.0, on the other hand, there is typically no such history lesson involved, perhaps because we think of the new logistics paradigm as fundamentally an outgrowth of Industry 4.0. Whether or not that’s the case, it’s becoming increasingly clear that this new era in logistics is very much its own entity—and it’s already changing the way that shippers and freight forwarders (to say nothing of their customers) do business.

This all begs the question, what are the distinct elements that define Logistics 4.0 systems? How do these elements incorporate the logic of Industry 4.0, and how do they build on the logistics paradigms of the past?

The rise of Industry 4.0 is already impacting the way that supply chain managers do business. As it continues to promote digitization and interoperability across all touchpoints on the global value chain, it will no doubt bring about significant changes across a variety of different supply stream operations. No doubt one of the most significantly impacted processes will be transport logistics, which might lead one to wonder, “what will transport logistics look like in the Industry 4.0 era?”

What comes to mind when you think about transport logistics? Streamlined product movement? Enhanced inventory management and monitoring? Better procurement processes? Or perhaps increased customer satisfaction or customer relations platform? While all these are certainly true, what less frequently comes to mind (perhaps incorrectly so) is enhanced business value. Though increasing business value usually comes into play earlier in the production lifecycle, increasing the efficacy of moving products from the production floor to the customer’s door has ripple effects across the entire value stream.  

Because transportation relies on so many varying factors each with their own level of uncertainty or constantly shifting constraints (fuel economy, routing, obstacles in transport routes, and others), the capability to mitigate and respond to these moving targets is a crucial driver in helping manufacturing companies maintain delivery timelines, enhance the accuracy of their delivery dates and windows, and drive enhanced customer service. In addition, because transport networks can be varied and include a number of partners across a wide range of regions or locales, they can lead to even more complexity and nuance in facilitating a transport logistics strategy that drives business value.

For many of today’s manufacturing companies, operational transport planning is akin to a game of musical chairs. The strategy is often hard to decipher, network players don’t often work synergistically with each other, and the levels of risk or uncertainty continue to grow with each passing round in the game. As a result, it becomes almost impossible to secure a firm footing amongst the other players and thus the executed actions throughout the game become more chaotic, less strategic, and more risky.

Similarly, operational transport planning and its lack of transparency and visibility into the overall supply situation means increases in unnecessary costs and resources, missing or lost parts and deliveries, and more complex logistics that detract from the clarity necessary to leverage lean supply chain management principles. In short, operational transport planning can be a significant stumbling block for manufacturing companies as they work to reduce risk and increase transport and logistics efficiency.

It simply cannot be stated enough or more clearly: Success for manufacturing companies stems largely from the ability to control, mitigate, and reduce risk. While success can mean a number of things to any number of companies, the capacity to reduce the amount of uncertainty in operating a global supply stream is perhaps one of the most critical pain points across today’s manufacturing landscape. No matter how hard planners and managers work to contain risk, the sheer nature of a variant-rich supply network means risk in a variety of forms can plague companies across the entire value chain, everything from planning and procurement to production and transport logistics.

All this being said, there are a number of strategies, solutions, and principles manufacturing companies can deploy and integrate to reduce the level of risk in a cross-organizational manner that also helps to increase productivity and enhance efficiencies. One of the more integral tools in a manufacturing company’s toolchest is transport logistics. Or, put simply: the coordination of efforts, resources, and personnel to successfully moving products from the production floor to the customer’s front door. It sounds quite basic, yet in an era of varied partner networks and variant-rich production programs, it can actually be a significant challenge for manufacturing companies across an array of industries. But for companies that deploy a successful transport logistics strategy, there are a great many benefits to be experienced beyond simply delivering products during pre-defined delivery windows.

“If you’re not growing, you’re dying.”

While a little hyperbolic, this is an old saying often at the heart of discussion for so many of today’s manufacturing companies when it comes to expansion, increasing their market footprint, and raising their visibility in a very competitive field of play. The expectations and realities for manufacturing companies to create long-term, sustainable growth while at the same time showing signs of robust, short-term success is a delicate balancing act planners and managers are faced with executing at each touch point of the value chain. Because so much of today’s production cycle is connected through the integration and digitization of the supply stream, various process must work in tandem in order to achieve growth opportunities and propel companies into a prosperous future.

For so many companies in today’s digital manufacturing landscape, so much of transport logistics is still shrouded in mystery. Because a majority of manufacturing companies place a greater emphasis on earlier stages of the production cycle (planning, procurement, inventory management, and job allocation), little attention is often paid to successfully administering a transport management system or structure that effectively helps companies reduce transport costs and optimize transit processes.

This lack of visibility, as with almost every other aspect of global supply chain management, allows for misinformation or inaccurate understandings of just how and why an integrated transport logistics strategy is a critical value proposition for today’s manufacturing companies. Moving finished products from the production floor to the customer’s front door on-schedule and in good order is part and parcel of what effective production programs are all about, and transport logistics are a key driver in helping manufacturing companies achieve this ever-important goal.

When talking about creating and adding business value, much of the discussion surrounds planning and production programs — essentially, earlier stages of the production cycle where decisions and actions are executed based on such critical elements as procurement, resource allocation, facility and job management, and inventory optimization. But business value and important business moments can take place further down the line in the production cycle, especially in such a complex, variable-rich function as transport logistics.

Because transportation relies on so many varying factors each with their own level of uncertainty or constantly shifting constraints (fuel economy, routing, obstacles in transport routes, and others), the capability to mitigate and respond to these moving targets is a crucial driver in helping manufacturing companies maintain delivery timelines, enhance the accuracy of their delivery dates and windows, and drive enhanced customer service. In addition, because transport networks can be varied and include a number of partners across a wide range of regions or locales, which can lend to even more complexity and nuance in facilitating a transport logistics strategy that drives business value.

It’s a question each and every manufacturing company grapples with: How can we reduce our transport costs and attempt to normalize our transportation strategy given the number variables associated with shipping our products? In an industry like manufacturing where so much of how efficiency a company functions is dependent on getting the right product to the right customer at the right time in the right condition, transport logistics cannot be overlooked as a critical part of the value chain.

If our goal on the flexis AG blog to educate our readers about the pressing issues in global manufacturing and supply chain management, then today’s entry is right on par with that mission. Transport logistics, though a critical element to a manufacturing supply chain management strategy, is perhaps one of the least discussed aspects of SCM. While an underutilized element of administering a successful value chain, transport logistics (or the manner in which companies move finished products from the production room floor to the customer’s door) is the last crucial link in fulfilling customer expectations and ensuring production programs are executed to their fullest extent.

It’s somewhat difficult to understand why transport logistics often gets lost in the fray of global supply chain management. Perhaps it’s because more emphasis is placed on operations at earlier stages in the value chain such as planning and procurement. Or perhaps it’s because the facilitating of effective production programs is often at the forefront of the minds of planners and managers. Either way, transport logistics, though often neglected, can either be a significant boon or detriment to how effective a manufacturing company conducts itself.