Charles Caleb Colton once said that “Imitation is the sincerest form of flattery.” While not all direct imitation is the best strategy in life (like plagiarism and copyright infringement), the point is, it’s often wise for a person or company to look beyond their bubble for new ideas and answers.
As you may or may not know, we’ve been making a sincere effort on our blog in recent months to take a page out of other industries’ books. Our construction role models series has so far gleaned lessons from fashion, film and even fast food, and the results have been surprising: There’s no end to what we can learn from industries that seemingly have nothing at all to do with building.
Today, we turn our attention to the logistics sector looking at how global companies are moving goods throughout the world. While construction and logistics focus on completely different processes and customers, they have one whopping characteristic in common: Namely, they’re both established industries that are slow to change.
In recent years, however, the global logistics industry has made a concerted effort to catch up with the times, and in so doing, has become a truly important role model for construction to look up to.
Ready to find out what builders can learn from the logistics industry? Here are five lessons we should take to heart today.
1. Improved Security and Efficiency Through Blockchain
With more security risks than ever, logistics providers are doubling down on security efforts, particularly with blockchain technology. While everyone has heard of this, not everyone understands the power of this cutting-edge approach.
“When we say the words ‘block’ and ‘chain’ in this context, we are actually talking about digital information (the ‘block’) stored in a public database (the ‘chain’),” explains Investopedia. Each transaction that gets added to the database includes not only the information of what the transaction is and who made it but also a specific code pertaining to the specific block. It gets added to the chain of transactions using cryptography, then reproduced across thousands of different computers. If this all sounds a little obscure and futuristic, you’ve identified why so many companies have yet to integrate this technology, which is proving increasingly secure and effective.
Logistics, however, is jumping in with both feet, leveraging the tech’s ability to cut down on paperwork and shorten transaction time in transportation. In one example, “All transactions and contractual obligations, from the sellers to buyers and port authorities, to agents, banks and customs, could be carried out using keys that make the process less complicated and more secure—and 10 days shorter.”
Implementing security measures like blockchain also improves productivity: A study pertaining to the same example as above found that “a simple refrigerated shipment went through more than 30 different organizations and required over 200 separate communications. Any lost form or delayed approval could hold up the container in port indefinitely, or get it lost altogether.” With blockchain, all of these steps can be recorded securely and immutably in real-time, cutting down on waste and delay.
Construction can also benefit from the implementation of blockchain-like technologies for security and efficiency. Take smart contracts, for instance, which can reflect the quickly changing nature of construction projects:
“Smart contracts can account for real-time project impacts, such as in the event of change orders or adjustments to the schedule. They can also be partially or fully self-executing and self-enforcing, streamlining payment and claim procedures and providing for easy verification and administration of contracts.”
Blockchain technology can also interface with building information modeling (BIM) to better coordinate projects, enabling “better coordination among the various trades and designers who have access to the model.”
2. Full-Scale Digitization
As with all industries, digitization is reshaping the logistics industry. Digital technologies have the power to disrupt logistics in the best possible way, upending its traditional reliance on paper-heavy processes and its heavy use of raw resources.
Today says the Cleantech Group, “A confluence of forces–Amazon and Alibaba, electrification and sustainability, autonomy and robotics, among others–are changing the logistics industry to become more resource-efficient, faster, and responsive to customer needs.”
Digitization has a number of amazing outcomes for the global logistics industry, including:
- Antiquated technologies requiring heavy human involvement, such as phone and fax, are increasingly less important than fast digital systems.
- Companies can access more granular real-time data, such as which containers are available and when streamlining the process.
- It’s easier to track the progress of containers and shipments in real-time, at every stage along the way, without worrying about tampering with the order.
One company doing this particularly well? San Francisco based startup company Flexport, which according to some is reshaping the entire shipping process. “Flexport uses software and data to provide greater control and visibility to clients through freight forwarding service, which facilitates the international shipment of freight through coordination with manufacturers, warehouses, shipping carriers, and other global trade players.”
Only in recent years are construction companies beginning to adopt robust cloud-based digital technologies to provide more transparency and improve the efficiency of construction. There’s still a lot of movement needed to truly transform the industry, but it’s good to have models such as logistics to show us how to gain more efficiency when transitioning from slow analog technologies to lightning-fast digital counterparts.
3. Rise of Data-Driven Decision Making
Data is everywhere. It floods in from endless sources, from transactions to contracts to vendor communications to social media to the finance department (and on and on and on). If the mere thought of the sheer amount of data gives you a mini-stroke, we don’t blame you. However, too many people use the overwhelm of data as an excuse to ignore it, when data-driven decisions are indisputably the key to greater profit margins and healthier companies.
Logistics has embraced this fact wholeheartedly. According to one study, “98% of third-party logistics companies (3PLs) and 93% of shippers believed data-driven decision-making was essential to supply chain activities.”
As real-time visibility improves due to the smart use of data, logistics companies can leverage it for ever-greater results:
- Using historical and real-time patterns to make predictions
- Decreasing costs by decreasing waste and inefficiency
- Passing those cut costs on to customers, streamlining delivery and otherwise improving customer satisfaction
Several logistics companies are even using big data analytics to improve last-mile delivery. That last mile of the delivery run is known for being crazy inefficient. In fact, it can cost up to 28% of the overall delivery price tag. For obvious reasons, addressing that would make major headway in streamlining the logistics budget overall.
Construction needs to take a page from this book and start addressing areas of outrageous waste or spend through the use of data analytics. True, we’re not there yet. When it comes to data-driven strategies and decisions, many companies have massive quantities of data but no idea how to leverage it. We’ll get there, though. In the meantime, here are some data-driven that can help the industry meet those goals.
4. Automation and IoT
Automation and the Internet of Things (IoT) are no longer just buzzwords; they are here to stay and have been rising in the global logistics industry. Increasingly, logistics providers are investing in automation in warehouses to overcome thin profit margins:
“Amazon’s KIVA robots grab items from shelves in a highly efficient manner, and its yet to be released automated drones will deliver items to addresses within 30 minutes of an Amazon center.”
Advanced sensors and tracking innovations are being used to great success in shipping. Sensors on vehicles and packages that integrate into IoT can transmit real-time information of great value, enabling companies to make better decisions regarding warehousing, routing and staffing. Having relevant access to information on sensors connected to IoT can save time and money, as workers and teams don’t have to sit around waiting for supplies simply because they don’t have an accurate idea of when a given shipment will arrive. Overall, the result is less downtime, less confusion and more incisive decision-making.
Construction is still in the very beginning of its journey with automation. Brick-laying robots come to mind, for instance, but we’re still a long way from being an industry that’s fully saturated with automation or IoT. We must continue to embrace innovations as they come our way, helping to improve work safety and quality for human workers, as well as the bottom line for each company. Doing so will help us future-proof the industry as a whole.
5. Move Towards More Collaboration Efforts
Collaboration in the supply chain is improving, which is making waves in the logistics industry. When formerly siloed departments work together, the overall quality and reliability of decisions rise.
“For instance,” says A & A Customs Brokers, “the procurement department can utilize the business data on suppliers to enhance supply chain decisions, such as supplier evaluation and recommendations of the best business partners. Also, effective cooperation can help assess risks in the supply chain based on global industrial and political trends as a way to prevent or mitigate danger of stock shortages.”
As an industry that also involves many stakeholders, construction could make big moves to improve collaboration on projects. By bringing different groups and trades together, using cutting-edge software that reduces siloing and increases communication, we can make huge strides toward a more modern future. Again, though, having the right technology is key, so you shouldn’t wait to audit your current system and ensure you’re using the best one for today’s needs and tomorrow’s goals.
Learning from the Logistics Industry Now and In Future
Undoubtedly, logistics still has many lessons left to teach us. Considering it is an old and sometimes bloated industry with a tendency to get stuck in the past, it is demonstrating amazing agility when it comes to making this modern pivot. We take heart from this and believe that, with the same attention to detail and modernity, construction can do exactly the same thing.