Role of Iot in Express Delivery Services Logistics

Role of IoT in Express Delivery Services Logistics

[pic 1]

ABHIJOY MUSTAUFI                                                        PGDBM 2016 – 18

B16063                                                                        Xavier School of Management

                                                                                  XLRI Jamshedpur

Logistics and Supply Chain Management                                               Prof. T A S Vijayaraghavan

[pic 2]

Abstract

The purpose of this study is to study the various facets of logistics for Express Delivery Services and the profound ways in which the Internet of Things can make the existing system more agile, safer and faster. Initially we have a look at the current market scenario of the industry in the Indian context and identify the underlying process making up the value chain for the express logistics industry. This study also aims at establishing that use of IoT will do benefits to an organization in terms of enhancing its enterprise value, in the face of the slower growth and tough competition. The text also tries to make an attempt at identifying various service gaps existing in the current express delivery system and ways to reduce this performance gap through the use of a combination of various technologies supported by IoT. The various technological advancements made in this field have also been studied and potential applications for mid to large sized firms have been listed down. While it is difficult right now to predict the future of the industry owing to the rapid changes in technology and market structure, one thing can be said for sure that IoT is definitely going to be one of the major factors in shaping the future of the express delivery logistics industry, as it is presently doing for industries like manufacturing and healthcare.

Introduction

Express Delivery Market in India

Express industry is a premium segment of the logistics industry, providing logistics services for movement of time sensitive shipments. By creating an integrated chain including multi-modal transport modes, both air and surface, express industry has fine-tuned the logistics process for time bound deliveries of shipments across domestic and international regions. Compared to the conventional carrier services, the express industry is focused on fast and reliable delivery of movement of goods with an end-to-end integrated service under the control of one operator. The express industry is a key business enabler and plays an important role in trade facilitation and in the overall economy. By providing faster deliveries, it helps its customers in meeting their evolving requirements with regards to time sensitive logistics. The larger players in the express industry have also started offering guaranteed time definite services. These are premium services guaranteeing delivery by a certain stipulated time, rather than just guaranteeing the delivery day, with money-back guarantee on failure in adhering to timelines.

As per the industry estimates, there are about 2000–2500 express service providers in the country, out of which 1000 are active players. The others are largely small-time players with very limited operations. Although the Indian Postal Service, DHL Express India Pvt. Ltd. and Blue Dart Express hold domestic market shares and have secure global networks, India is still cluttered with many small unorganized participants who have gained trust of the customers over the years. Although with the courier service industry catering to a total of approximately 40,000 pin codes of the country, due to the unstructured market and harrowing competition from local courier express services, there is a dire need for this industry to achieve better networks, innovate rigorously and strive towards better support from logistics.

With over 150,000 post offices set up in the country, the Indian Postal Service is rendered the most reliable of all players. But the express services' industry faces severe pressure which undermines profit in bringing a cap to their prices. While BlueDart and DHL entered in to an association in 2014 to enhance their presence in the market, there is need for breakthrough technology and best practices withstanding the forces of competition. With little left to improve on, the industry has to gather its stability from solidifying its market through unification and alliances among top players, proficiency in their logistics network and devising a strategy to opt for just in time systems and usage of the growing information technology sector to their advantage. Moreover, in spite the fact that the express delivery services, have, over the years sought faster delivery with cost performance, characteristically, it remains very elastic in favor of the customers due to the competition. Many foreign participants have tried to squeeze in to the markets but have struggled to keep up with low price potential and severe pressure on cutting costs.

Value Chain of Express Delivery

[pic 3]

Most of the large players have a preference for an owned branch model, while few of the large players prefer a franchisee network model. The transport services like air transport are mostly outsourced though some of the larger players have their own aircraft fleet. The larger players have wide networks, sophisticated processes and strong information technology networks which have enabled to capture higher market share and put them in a better competitive players vis-a-vis the others.

IoT in Logistics

IoT promises far-reaching payoffs for logistics operators and their business customers and end consumers. These benefits extend across the entire logistics value chain, including warehousing operations, freight transportation, and last-mile delivery. And they impact areas such as operational efficiency, safety and security, customer experience, and new business models. With IoT, we can begin to tackle difficult operational and business questions in exciting new ways.

The advent of IoT Technologies and underlying impact on logistical services can be mapped down as

Source : Sundmaker et al., 2010

The pre 2010 era mainly consisted of RFID sensors and GPS monitoring techniques used in primary tracking and secondary information collection based on a network sensors but were mostly inefficient in providing real time tracking for time sensitive materials. While the idea of using IoT in courier services was a novel concept, the underlying costs were too high to accommodate the system in the existing architecture. The advent of technology saw enhancements in Sensor Network Location Transparency and Next Generation IoT based social software which resulted in the cost of communication coming down and interaction among the different stakeholders rising, resulting in better user interface and functionality improvement for service providers. A major thrust to this industry came in the post 2015 era with the mass production of smart sensors which enabled temperature tracking and motion sensitivity thus enhancing safety and timely delivery of time sensitive goods ranging from dairy products to confidential data. The advent of nanotechnology and operations research techniques facilitated by IoT and Cloud infrastructure promises an interesting future for the express delivery firms.