The Indian logistics sector is going through a massive transformation, and is looking at using technology to bring in a lot of efficiencies. Hirak Kayal, Vice President – Applications Cloud Development, Oracle, shares his perspective on how emerging technologies such as Blockchain, IoT and Digital Freight Brokerage, can help logistics players to get actionable insights and context for better decision-making
Some edited excerpts from the interview:
1. What are some of the key challenges with respect to India’s logistics industry?
The most compelling challenge concerning the Indian logistics sector is that it is mostly unorganized and fragmented. The organized sector contributes approximately 10 per cent of the total market share. Other challenges are under-developed material handling infrastructure, disorderly warehousing, multiple regulatory & policy-making bodies, lack of seamless movement of goods across modes and minimal integrated IT infrastructure.
In order to develop this sector focus on new technology, improved investment, skilling, removing bottlenecks, improving inter-modal transportation, automation, a single-window system for giving clearances, and simplifying processes would be required. We are getting there. During Budget 2019, it was announced that Indian customs plans to fully digitize its transactions and utilize RFID technology to improve export logistics. This, along with a few other developments such as the grant of ‘infrastructure’ status to the logistics sector and a substantial increase in the number of tech-focused startups has brought great news for Indian logistics in recent times.
According to CRISIL, the future for the Indian logistics industry is going to shine even brighter. The research firm suggests that the logistics industry of India which stood at Rs 6.4 trillion in FY17 will grow at a CAGR of 13 per cent over the next three years and will be at Rs 9.2 trillion by FY20.
2. How can technology help in alleviating some of these challenges?
Today, we expect all the information to be available right at our fingertips for immediate access. E-commerce players have changed the game completely. Depending upon your delivery location, you can receive your shipment in less than an hour of ordering it. Improved technology has also increased productivity in the supply chain, minimizing costs and errors. These advances benefit all areas of the logistics industry: trucking transportation, international transportation (ocean and air), supply chain management, and shipment tracking. Following technology advances are changing the face of logistics industry:
a. Internet of Things (IoT) and Radio Frequency Identification (RFID): IoT as a technology has been around for some time. It continues to impact the future of logistics, allowing for a more accurate in-transit visibility and delivery of goods. A tag or sensor is placed on the product and radio waves are sent out transmitting various details of the cargo, its location, orientation, storage condition etc. Several vehicle information, like location, driving condition, driver’s driving behaviour, health of the vehicle etc can be transmitted through a specific port available in the vehicle. In certain cases the GPS in driver’s mobile is used to know real time location of the vehicle. These data is then received, processed, analysed and presented by the company or by the Cloud Application service provider for IoT. AI and Machine Learning is being utilized to bring in predictive capabilities in the analysis. Today, many companies are using RFID tags in their distribution warehouses to monitor containers. Other industries are already using RFID tags, such as the apparel industry and major theme parks. For Cold Chain and Pharma industries it’s becoming increasingly important to monitor storage condition of the cargo throughout the transit.
b. Blockchain: Blockchain is finding immense use in supply chain management. With the help of blockchain, the organizations are enhancing the security, visibility and traceability of the supply chain and reducing the bottlenecks. Smart contracts are being introduced at every stage of the transactions throughout the shipment process, where the shipment goes through several change of hands and transhipments. This has brought in significant accountability among several agents, like freight forwarder, clearing agents, transporter and ports, who are handling the cargo during transit. Blockchain has also enabled digital flow of shipping documents from the shipper to the end customer. The chances of error are reduced as there is no longer a paper trail to follow and hence there is an increase in efficiency.
c. Digital Freight Brokerage: Adoption of Digital Freight Brokerage solution is growing rapidly. Digital freight brokerage seeks to lessen the need for a middle-man when companies are trying to move their goods. Digital Freight Brokerage solutions use algorithms to match carriers and loads based on origin, destination, type of load, price and timing and significantly reduce time taken to book a load. It also reduces empty miles, which account for a staggering 25-40 percent, of total road-freight miles every year in North America.
d. Automation: Automation allows firms to offer better service and save money at the same time. Some of the industry’s most labor-intensive processes are on the way to being fully or partially automated, from warehousing to last-mile delivery.
3. What is Oracle’s strategy and positioning for addressing the Indian logistics sector? What are some of the major opportunities?
At Oracle, we believe in providing future-ready logistics solutions in this increasingly competitive and complex supply chain system. We have streamlined the solutions to address each challenge the logistics market is facing today. Oracle’s logistics cloud provides end-to-end solutions in Transportation management solutions from the planning stage, execution, fleet management, along with logistics network modelling.
For Global Trade management, we have global trade and compliance in place, customs management, and trade agreements. Lastly, for warehouse management, we provide key features like modern warehousing, yard management, warehouse workforce management, warehouse management automation. Oracle IOT Fleet monitoring applications service integrated with Oracle Logistics solutions provides capabilities to monitor the cargo throughout the shipment cycle. Powerful AI / ML capabilities embedded in these applications to provide predictive analytics on ETA, vehicle condition and maintenance requirement, driver’s driving behaviour, route adherence etc. Oracle Intelligent Track and Trace Blockchain application enables shippers collaborate, monitor and trace cargo and documents flow across the trading network. Oracle has partnered with Loadsmart, a digital freight-brokerage, to ensure Fortune 500 companies like Kraft-Heinz and Coca-Cola to quickly match their loads with truckers. We see the challenges as an opportunity and address them for better customer experience.
4. Can you name some of your clients in India and the solutions they are using from Oracle?
Our customer list includes some well-known brands like Apollo Tyres, Unilever and Transworld, etc.
Transworld needed operational efficiency across its shipping and logistics businesses. Along with that, they also needed to empower their 1000 + employees to deliver heightened customer satisfaction to their customers and vendors. The organization also planned to leverage technology-enabled solutions and customer connect e-platforms to provide real-time information, swift business process, and a digital customer interface. Additionally, the company will also be incorporating new emerging technologies like blockchain, adaptive intelligence, and IoT as they move forward on their digital journey and climb higher on customers’ value chain. Oracle provided the cloud-based technology platform which leads to an improvement in the same. The technology platform has enabled standardization of all key business functions across all the group companies. These include finance, operations, procurement, supply chain, and even HR, to eliminate manual intervention and introduce far advanced operational efficiencies.
Unilever was having a concern about the inflation in the transportation market, due to onset e-commerce providers. The challenge was to get attractive contracts and pricing with the limited set of carriers present in the market. They implemented Oracle Transportation Management (OTM) to revamp their transportation strategy to improve the ‘3Cs’ of logistics viz. customer service, reducing delivery costs and cutting CO2 emissions, which was in line with their wider corporate social responsibility strategy through Unilever Sustainable Living Plan. From a technology viewpoint, they are seeing an improvement by 10X in terms of time taken to plan operations. They have also seen almost about 30-40 percent improvement in transactions between systems. With the new cloud offering (Oracle Logistics Cloud) they can release enhancements every quarter. It has enabled the business to get into an agile cycle of delivery.
Apollo Tyres was on the older on-premise version of Oracle Transport Cloud (6.3.1) which was going out of support in 2018. Migrating to the cloud ensured that they upgraded their systems for the last time. They will always be on the latest version of Oracle Transport Management and extract benefits from the new features in every release. Moreover, Apollo has some processes which were not compatible with standard OTM. We designed a cloud layer over the OTM cloud to overcome this challenge and make the application more user-friendly and efficient.
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