Logistics 4.0: Buzzword or True Revolution in the Logistics Industry?
According to the standard practice of blogging, we should wait to answer the question posed in the title until the last paragraph, but today we will do it differently and reveal the answer right now. Yes, Logistics 4.0 is a revolution in our industry. However, it’s worth reading this post to the end, as we will explain why, what the idea of Logistics 4.0 entails, and why it is a breakthrough in the world of cargo management and delivery.
What is Logistics 4.0?
The concept of Logistics 4.0 wouldn’t have emerged without the prior idea of Industry 4.0. Industry 4.0 is also known as the fourth industrial revolution. The first revolution was marked by the invention of steam engines and their use in more efficient production of goods, initially textiles. The next stage (Industry 2.0) was defined by electrification, and with it the introduction of production lines, which enabled mass production and reduced product prices. The popularization of computers in the second half of the 20th century marked the beginning of Industry 3.0, with faster information flow as its key element. This was also the start of globalization.
The digital era, in which we currently live, has brought about the fourth industrial revolution, focusing on the extensive use of automation and data exchange in the production of goods. Logistics 4.0 thus translates this approach to supply chain management activities. The effective implementation of Industry 4.0 principles wouldn’t be possible without simultaneously adopting Logistics 4.0, as no production activity would be feasible without efficient, uninterrupted logistics that keep pace with production. Therefore, as the industry entered its fourth era of development, the logistics and transportation sector also had to undergo such a revolution.
So how do we define Logistics 4.0? In industry literature and online publications, we find many more or less detailed definitions of this term. If we attempt to synthesize them, we could say that Logistics 4.0 is an approach to supply chain management that involves extensive use of modern technologies to further optimize logistics processes. Thanks to these technologies, logistics is faster, easier, and more integrated with production processes. What technologies are we talking about?
Elements of Logistics 4.0
- Internet of Things (IoT): A network of interconnected devices (“things”) that can collect information (using built-in sensors), communicate with each other over the internet, and transmit collected data to other devices and human users. The IoT ecosystem includes both household appliances (e.g., refrigerators analyzing the state of food produce and automatically ordering missing items from online stores) and complex industrial machines. Oracle specialists estimate that the number of IoT devices worldwide will reach 22 billion by 2025.
- Big Data Analysis: The analysis of large and complex data sets from new sources. Big Data analysis is used to optimize processes and is conducted using specialized software capable of processing such extensive databases.
- Automation and Robotics: The use of robots to accelerate and increase the efficiency of various industrial processes, which machines can perform more efficiently, precisely, and at a lower cost than humans.
The above three technologies form the core of Logistics 4.0, but there’s more. Today, the logistics industry is increasingly utilizing artificial intelligence, blockchain technology, 3D printing, drones, and other autonomous vehicles. Let’s briefly look at how these technologies can be practically used in the daily operations of logistics companies operating in the era of Logistics 4.0.
Logistics 4.0 in Practice
IoT allows for monitoring inventory levels and initiating their replenishment without human intervention. It also enables real-time tracking of shipment status and controlling the conditions in which certain products need to be transported or stored.
Thanks to Big Data, it is possible to analyze and forecast market trends, allowing for more efficient inventory management and preparation for periods of increased or decreased demand. This translates into cost savings through better inventory management. The same result is achieved by optimizing delivery routes, which not only reduces vehicle fuel consumption but also extends their lifespan in the company’s fleet. We must not forget the environmental aspect, as route optimization through Big Data analysis also means reducing the company’s carbon footprint—trucks deliver loads faster, are on the road for shorter periods, and therefore emit fewer gasses into the atmosphere.
Automation using robots that handle all warehouse tasks, shipment packaging, and sorting not only improves the efficiency of these processes and speeds them up while reducing costs but also significantly reduces the risk of human errors.
Where does artificial intelligence come into play? The rapid development of AI in recent years shows that it will have a key role in further improving logistics processes. You can learn more about the role of AI in logistics from our previous article, available here. Here, we can mention, for example, even greater optimization of delivery routes in real time.
Blockchain technology, enabling secure and transparent transactions, also finds application in the Logistics 4.0 concept. It can be used to track the supply chain, ensure product authenticity, and improve transparency and trust between business partners.
Delivery drones and autonomous vehicles will revolutionize the last mile deliveries to end customers, especially in the most congested urban areas. Tests of these solutions are already underway as Amazon is conducting them in the USA. Drone deliveries will be particularly important for logistics in the e-commerce sector, where time is of the essence.
3D printing in Logistics 4.0? Absolutely, although it is still in the testing phase. The ability to produce certain products or spare parts, which are in constant high demand, directly in the logistics center rather than in a distant factory, will significantly speed up the logistics process. It will eliminate the need to first deliver the goods from a distant production facility.
As you can see, Logistics 4.0 brings many diverse benefits to companies. Of course, there is also the other side of the coin. Implementing the described tech solutions requires logistics companies to incur costs (in line with the old principle that you have to spend money to make money, and in this case, to save cash at the same time). Additional costs will also be associated with employee training and security—such extensive networking exposes the company to the risk of a cyberattack, against which it must be as well-protected as possible.
Is Logistics 5.0 Approaching?
If we consider the timeline, Industry 4.0 began in 2013 (although the term debuted two years earlier during the Hannover Fair) when the final report from the working group on preparing recommendations for smart industry was published in Germany. The start of Logistics 4.0 is most commonly dated to 2020. Several years have passed, so we can ask the question: is the time for Logistics 5.0 approaching? This question is, of course, rhetorical, but for accuracy, let’s answer: yes, the fifth logistics revolution is approaching rapidly, and to some extent, it is already here. What will it entail? We will answer that question in one of our upcoming articles.
As we can see, Logistics 4.0 is indeed a true revolution for our industry. Thanks to modern technologies, efficiency increases, costs decrease, and errors occur less frequently. IoT, Big Data, automation, AI, and blockchain make supply chain management more integrated and optimized. These innovations lead to faster and more transparent logistics operations, making logistics more automated and better adapted to market needs, improving overall process efficiency.