KERBL Peter (Student ID: 53793261)
Introduction
Big data has been playing a significant role as a
disruptive technology in supply chain management of the logistics industry. A
“supply chain” is a broad term for the resources, activities, information, and
people that are involved throughout the entire process of raw material to final
product, or supplier to customer. Thus, supply chains are highly linked
together and involve anything from transport to storage in warehouses to actual
point of sale. Globalization increases the interconnectedness of businesses
which leads to a growing complexity of supply chains. Hence, there is one magic
word in the logistics industry: efficiency.
Three main
emerging technologies which are improving operational efficiency of supply
chains in the logistics industry will be discussed. These three technologies
are Radio Frequency Identification (RFID), Enterprise Resource Planning (ERP),
and Automated Storage and Retrieval Systems (ASRS). My goal will also be to describe
the impact of globalization on these emerging, innovative big data
technologies.
Radio frequency identification (RFID)
Radio frequency
identification (RFID) is an automatic identification system which already has
many practical uses. For example, bar codes or magnetic strips on credit cards
use RFID technology to function. However, RFID is being taken to new and
innovative heights in the logistics industry. RFID technology is a way of transmitting
and receiving unique data so that people or objects can be automatically
detected.
…So how does
it work?
RFID
technology involves two main devices: an “RFID tag” and a “reader”. Objects are
equipped with an RFID tag containing specific data about the object. The reader
has an antenna which uses radio waves to detect the RFID tags when these tags
are within reach. The ease of reading data is precisely what makes RFID a
desirable technology. Contrary to bar codes and credit cards which have to be swiped
or placed directly against a reader to detect data, RFID readers can detect
RFID tags simply when the tags are within range of the reader. Since this is
still an emerging technology, the range varies anywhere from one meter to seven
meters for RFID technologies utilizing high-frequency radio waves. However,
this technology has improved drastically in recent years and in container
tracking and railway applications, where readers must detect tags at a greater
distance, a range of up to 100 meters is now achievable. The advantage of this
technology is quite straightforward. Imagine going grocery shopping. Instead of
the supermarket employee having to first swipe each product, the groceries
could be placed in a bag and then detected all at once. In this manner, each
product would contain an RFID tag and the reader could easily detect all of the
groceries through the bag.
Radio
Frequency Identification technology is used in supply chains to track goods.
RFID tags are placed directly on cases and pallets containing data about the
goods such as manufacture date, shipment information, destination, etc. Another
benefit of RFID is that people are not needed to scan objects as long as
readers are placed in the proximity of goods containing RFID tags.
(Roberts 2006)
The images below show various applications of
RFID:
 |
| Figure 1: Overview of the benefits & applications of RFID (Source: http://0045eff.netsolhost.com/AGWARE/English/WhitePapers/RFIDTechnology.htm) |
 |
| Figure 2: RFID tag situated in the middle of a pallet (Source: http://www.world-pallet.com/) |
The RFID market has
been slow to grow. However, nowadays the market for this big data technology is
growing quicker and bigger. There are already several big players providing
RFID technologies to many different industries. Although RFID is already quite
popular in the logistics and transportation industry, other industries such as
retailers, automobile industry, governments, farming, etc. are also using RFID.
(Harrop)
The following table shows the market size in
billions of US Dollars of RFID technologies in 2005 and 2010. Additionally, a
forecast for 2020 is provided:
 |
| Table 1: Global market size of RFID technologies (Source: Harrop) |
From the table above, it can be seen that the
market for RFID tags, readers and other equipment almost tripled from 2005 to
2010. Moreover, the market is expected to experience further rapid growth until
2020. This highlights the increasing global importance of Radio Frequency
Identification technology.
Enterprise Resource Planning (ERP)
Enterprise Resource Planning (ERP) represents
another application of big data as a disruptive technology in the logistics
industry. ERP is essentially software which integrates data from many core
activities of a business. This integration of vast data, kept in a database,
typically contains real time information on a wide range of aspects such as
inventory, shipping and payment details, manufacturing plans, costs, customer
relationship management, etc. Hence, implementing ERP software allows for
information to be easily shared across all areas of a business. Indeed,
Mehrjerdi (2010) argues that by collecting and storing information from various
business functions, the organization as a whole benefits by having a broader
insight. Thus, managers have a clear and instant overview of lots of important
information within a company which assists them in decision-making. Therefore,
ERP can make organizations more profitable by reducing the time and costs
associated with carrying out business activities. There are many providers of
ERP technology on the market, some of which include SAP, Oracle, PeopleSoft,
and Baan.
The following image depicts many of the business
functions which are integrated into an ERP system. The sum of each individual
part makes an organization as a whole more efficient:
 |
| Figure 3: ERP Systems integrate many business functions (Source: http://www.mersoft.am) |
One concrete benefit of using ERP technology is
the fact that it reduces order cycle times in supply chain management. This
means that less time is needed to deliver an order once the order has been
placed (Mehrjerdi 2010). ERP technology can also integrate and automate
e-commerce functions, increasing revenue. Additionally, ERP can be used to
automatically place new orders when inventory is low and needs to be restocked.
Customer data can also be stored and refreshed in order to better satisfy
customer needs.
Although ERP systems can significantly increase operational
efficiency of supply chains when used properly, Mehrjerdi (2010) points out
that implementing ERP software is a long and complex process. Many instances of
unsuccessful implementation have occurred which caused a decrease in business
performance of all affected companies. In some instances, companies even went
bankrupt. According to the author, surveys have shown that approximately 65
percent of business executives agree that ERP can be harmful. For this reason,
enough time and resources should be allocated when implementing an ERP system.
Managers in the logistics industry should take advantage of training and
familiarization services offered by ERP software providers. Furthermore,
managers should involve their subordinates in the training process so that
employees across all departments are aware of the benefits of using ERP systems
and are also able to use them correctly. It is important to note that most ERP
software providers will only offer technical support up to one and a half years
after the introduction of a new version. Hence, updates should be purchased
when necessary. Generally speaking, implementing ERP software in supply chain
management is a costly procedure with costs that are often hidden or
unforeseeable. Consequently, it is often argued that implementing ERP software
does not always make sense. However, Tian and Xu (2015) argue that Enterprise
Resource Planning systems are actually effective at reducing not only costs but
also risks for a firm in the long run. Ultimately, every company in the
logistics industry must decide for itself if managing big data through ERP is
useful or not.
Automated Storage and Retrieval Systems (ASRS)
Another way big data is improving operational
efficiency in the logistics industry is through a disruptive technology known
as Automated Storage and Retrieval Systems (ASRS). This technology is also
known as Automated Warehouse Storage Solutions (AWSS). This is simply a fancy
name for a warehouse where inventory is handled by fully automated computers
and robotic equipment. Before automation was developed, people, forklifts, and
other equipment were needed to manually run inventory in a warehouse. Now, with
ASRS, the technology has become more sophisticated and people are only needed
to oversee the operations of software programs and fix any errors which may
arise. Hu and Chang (2010) define ASRS as “a combination of equipment and
controls that handle, store, and retrieve materials as needed with precision,
accuracy, and speed under a defined degree of automation” (p. 297). A “stacker
crane” is installed in the warehouse which can move both horizontally and
vertically. The stacker crane stores and retrieves goods which are usually
placed on standardized pallets.
The image below shows an Automated Storage and
Retrieval System in a warehouse:
 |
|
Figure 4: ASRS in a warehouse (Source:
www.mhi.org)
|
This automated usage of big data is advantageous
to the logistics industry for many reasons. According to Hu and Chang (2010), automated
storage systems increase efficiency and safety while decreasing the costs of
labor. They enhance efficiency because through the precise location and
retrieval of objects, human mistakes are mitigated (e.g. picking the wrong
orders). They are also faster at retrieving inventory than people are. Since
less people are needed in the warehouse where heavy objects and equipment are
located, safety is automatically higher. All of these benefits mean that
operating costs are ultimately reduced. This is very beneficial in the
logistics industry, as Baker and Halim (2007) highlight that storage in
warehouses represents about twenty percent of total logistics costs in supply
chains. Nevertheless, implementing such a complex storage system is initially
expensive for companies. In addition, adopting ASRS is a lengthy process,
taking an average of twenty months to complete. However, in the long run these
disadvantages can be offset by future profits due to increased productivity. In
fact, according to Malone (2004), automated storage technology can boost shipping
and receiving productivity up to 300 percent.
Automated
warehouse systems are often implemented when land is scarce and hence
warehouses are built higher in order to utilize space more efficiently. As a
result, many automated storage facilities are built over ten or twenty meters
high, with 40 meters being the general maximum height.
Impact of Globalization
Globalization in the twenty-first century has broadened
the competitive landscape because many companies have expanded their businesses
overseas. This means that more revenue can be generated by conducting business
in many markets worldwide. The fact that business opportunities have increased
is especially beneficial to entrepreneurs and small companies who are empowered
to compete in global markets. In the logistics industry, efficiency is
everything because being a strong competitor means being quick and reliable
while keeping costs to a minimum. Big data in the forms of RFID, ERP and ASRS
strengthen logistics companies, whether small or big. However, it is often
argued that globalization leads to a lack of fair trading opportunities. In
fact, the World Trade Organization, which is supposed to be a neutral
organization to promote trade worldwide, has received much criticism for being
heavily influenced by the interests of wealthy nations and companies. Through
globalization it seems that rich, well-established companies are becoming
bigger, stronger and more dominant. Thus, their financial strength enables them
to afford the opportunities provided by big data while smaller companies are
left struggling to survive. No matter what one argues regarding free trade, globalization
does in fact make big data more accessible to smaller companies. Therefore,
logistics companies should use the business opportunities made available by
globalization in order to grow and then invest in big data to become more
competitive.
Conclusion
In summary,
the three big data technologies discussed in this report are linked together in
supply chains of the logistics industry. To illustrate, goods are often
equipped with RFID tags, making them identifiable and distinguishable from
other goods. These goods are then, for example, shipped from Rotterdam to
Shanghai where they are temporarily stored in a warehouse. This warehouse in
Shanghai could then be equipped with an Automated Storage and Retrieval System.
In the warehouse, the goods would be identifiable through the RFID tags. Hence,
by reading the RFID tags, the ASRS is able to store the goods and precisely
retrieve the goods from storage again. Additionally, ERP software will most
likely be used in the warehouse to manage the flows of information. Therefore,
these three technologies, when implemented successfully, ultimately increase
operational efficiency. When deciding whether or not to implement these forms
of big data, companies should consider what their core competence is. If a
logistics company focuses mainly on transporting goods and only rents warehouse
space, then ASRS does not make sense. RFID and ERP, on the other hand, would
make sense.
References
Baker, P.,
& Halim, Z. (2007). An exploration of warehouse automation implementations:
cost, service and flexibility issues. Supply
Chain Management: An International Journal, 12(2), 129-138.
Harrop, P. The global market for RFID 2010-2020 [PowerPoint
slides]. Retrieved from market research Online Web site: http://www.centrenational-rfid.com/docs/applications-rfid/RFID%20Markets%20Toulouse%20IDTechEx%20V2%20GOOD%20ONE.pdf
Heinrich, H.,
& Willis, E. (2014). Automated storage and retrieval system: a time-tested
innovation. Library Management, 35,
444-453.
Hu, K.Y.,
& Chang, T.S. (2010). An innovative automated storage and retrieval system
for B2C e-Commerce logistics. International
Journal of Advanced Manufacturing Technology, 48, 297-305.
Malone, Robert
(2004). Acvhieving Success with AS/RS.
Retrieved from http://www.inboundlogistics.com/cms/article/achieving-success-with-asrs/
Mehrjerdi,
Y.Z. (2010). Enterprise resource planning: risk and benefit analysis. Business Strategy Series, 11(5),
308-324.
Roberts, C.M.
(2006). Radio frequency identification (RFID). Computers & Security, 25, 18-26.
