Skip to 0 minutes and 8 secondsSUMEER CHAKUU: Hello, there learners. Welcome to the week five round-up on logistics. My name is Sumeer. I was your mentor for this week, and I am here with Gwynne our lead educator. Hi, Gwynne. How are you doing today?
Skip to 0 minutes and 21 secondsGWYNNE RICHARDS: Hi, Sumeer. I'm fine, thank you. And you?
Skip to 0 minutes and 23 secondsSUMEER CHAKUU: I'm fine. Thank you. So, Gwynne, what struck you about this week's discussions?
Skip to 0 minutes and 29 secondsGWYNNE RICHARDS: I think this week again it still surprises me how little people know about how product actually gets to their homes via the retailers and warehouses, and also their knowledge of the different types of transportation that's being used. Logistics is really core to getting products to customers on time, in full, and therefore it's crucial. And it's great to have a course like this where we can show people how this is done and to give them an insight into the whole field of logistics and supply chain.
Skip to 1 minute and 12 secondsSUMEER CHAKUU: So, Gwynne, our whole course was divided in different sections. So starting with the feedback for section 1, which was regarding what logistics is all about, where we defined the terms logistics. We saw the history of the logistics and how the goods were moved in the past. So it seems that logistics really plays a part in supply chain. So why logistics is so crucial when we talk about the supply chain?
Skip to 1 minute and 42 secondsGWYNNE RICHARDS: Well, as I just said, it's really getting the product to the customer on time, in full, so basically, at the time they want the product and the order that they've made in its entirety, in the right condition as well. So damage free and together with all the right paperwork as well. That's something that we call the perfect order. So on time, in full, damage free, with the correct paperwork. And if companies can achieve that, then hopefully everybody's happy within the supply chain itself. And really, if you think about it, we need logistics, you know the different modes of transportation to move the product from its raw materials state all the way through to its finished goods state.
Skip to 2 minutes and 34 secondsAnd also, because of the distances between suppliers and the end user, we also need warehouses in between to store the product to enable us to get the products to the customer quicker.
Skip to 2 minutes and 50 secondsSUMEER CHAKUU: Yeah, absolutely. And in the second section, where we talked about how we move the goods because now when you talk about the different modes of transportation. So there was a quite a good discussion going on about the advantages and disadvantages of using different modes of transportation. So what is the greatest challenge in using more than one mode of transportation?
Skip to 3 minutes and 15 secondsGWYNNE RICHARDS: Ooh, that's a good question in terms of the greatest challenge. There are a number of different challenges certainly. If you think about it, in some countries you don't have all of the different modes of transport. So some countries might not have inland waterway transportation. Some might not have the railways, so it would be a lot more difficult to combine the different modes of transportation there. So they rely very much on roads to make the delivery. Other challenges would be things like coordinating all of those movements, ensuring that the product arrives at the freight rail centre for example on time for the train to leave, and the same with inland waterways.
Skip to 4 minutes and 4 secondsUnlike roads, rail and inland waterways and short-sea shipping all work to schedules, so you have to be there on time to catch the freight train or catch the barge for example. So yeah, that's quite difficult. There's also not so much competition on the other modes of transportation as well. So rates can be higher. But then on the plus side, if we're using those other modes of transportation, then we are reducing our effect on the environment.
Skip to 4 minutes and 42 secondsSUMEER CHAKUU: Thank you Gwynne. So you talked about a really important point. That's the competition between the different modes of transportation. So does intercompany competition - for example, let's say competition between rail and road - really impact the overall transportation of goods from point A to point B? Or it's directly linked with the contract, how the contract is being made or they'll have to transport a good from point A to point B? So my question is, does competition really play a strong part?
Skip to 5 minutes and 16 secondsGWYNNE RICHARDS: Oh, it certainly can. Yeah, and there is fortunately in a lot of countries now competition between road and the other modes of transportation. Certainly, with rail freights here in the UK, it is growing. Although, I suppose going back to challenges, we still have a shortage of enough freight capacity because, with rail here in the UK, it's becoming a lot more popular now for commuters. And therefore, that reduces the opportunity for more freight trains on the rail. However, yeah, competition does play a big part. And one would hope that over longer distances rail can be more competitive in the future.
Skip to 6 minutes and 9 secondsSUMEER CHAKUU: Yeah, definitely it will apply even in future also. Now, moving from using the different modes of transportation to their carbon footprint, we know that Spain has the least carbon footprint as computed, for example, air transportation. So can you point out or pinpoint some of the major initiatives which are going on around green warehousing and especially in green transportation?
Skip to 6 minutes and 37 secondsGWYNNE RICHARDS: Yes, Sumeer. In terms of environmental pressures certainly by consumers, but also the governments now have signed up to things like the Paris Agreement to reduce their effect on the environment. So there we have pressure on companies to produce their own energy. So we have warehouses now with solar panels. We have greater use of natural light, so they're using less energy within the warehouse itself. Capture of rainwater - we can see that, and that rainwater then being used to do things like flushing toilets, cleaning vehicles for example. We have some warehouses with kinetic plates on the entry and exit to the roads into the warehouse.
Skip to 7 minutes and 33 secondsAnd every time a vehicle goes over the plates, they spin and we have energy being produced in that way. With regards to transportation, we're seeing a lot of work being done now with self-drive vehicles. Platooning - so we're taking the human element out of that. And what we're then seeing is better fuel consumption or lower fuel consumption. We're seeing more energy-efficient vehicles. The introduction of electric vehicles, hydrogen cell-powered vehicles. Also, on the technology side, we have companies now using more route planning software to make sure they reduce the amount of mileage that they're covering. Also, telematics, telling them when vehicles need to be serviced or where there are issues. So again, they're at optimum performance when they're on the road.
Skip to 8 minutes and 36 secondsAnd again, this move to other modes of transportation which can be cleaner and greener.
Skip to 8 minutes and 44 secondsSUMEER CHAKUU: Yeah, it's a really interesting field. And I also realise... I mean, even European Commission and everyone is trying to put more stress on greening of the transportation. We'll see how far it will go in the future. Thank you for your insight. It was quite interesting to know more about how it's being developed nowadays. Now we're going to section 3, in which we discussed what are the current and future challenges facing the companies. So outsourcing was one of the major things what we discussed in there. So what do you think are the advantages of using a third-party logistics company to deal with the goods?
Skip to 9 minutes and 24 secondsGWYNNE RICHARDS: OK. Yeah, there are quite a few advantages. Obviously, the expertise of those companies. A lot of companies tend to outsource where they see that they don't have expertise or, as we would say, core competence within that area. Also, if you think about it, a large articulated vehicle, a 44-tonne vehicle, can cost upwards to over 80,000 pounds. And add a trailer to that as well to carry the goods, and we're talking about over 100,000 pounds. So from that point of view, less capital investment from the company that wants to transport the goods. Also, if companies aren't transporting full truckloads, then they can share space on vehicles with other companies.
Skip to 10 minutes and 17 secondsAnd therefore, using those third-party logistics companies, they can then share the transport costs. And the third-party logistics companies obviously can increase their profitability by moving more goods. So certainly outsourcing helps in terms of less capital investment. So it means less capital investment, gets expertise from the third-party logistics companies, and I suppose this whole idea of sharing costs with other companies as well.
Skip to 10 minutes and 58 secondsI was going to say there are downsides as well. Yeah, a lot of companies see outsourcing as being a loss of control over their business because they're giving that business to another company and are obviously then reliant on that company to make the deliveries on time and in full.
Skip to 11 minutes and 16 secondsSUMEER CHAKUU: OK. So third-party logistics, we use them. So in the future, they will also reduce the carbon footprint. What do you think about this, Gwynne? So, will they reduce the carbon footprint as a whole in future?
Skip to 11 minutes and 31 secondsGWYNNE RICHARDS: I think overall probably, because obviously companies then instead of sending out less-than-truckload deliveries, they can combine their deliveries with other companies. We need those third-party logistics companies to coordinate and manage those deliveries. And hopefully as well, those third-party logistics companies will look at other modes of transportation. You know, the whole idea of using both road and rail to make deliveries.
Skip to 12 minutes and 7 secondsI suppose people who are on this course, specifically within the UK, will have heard of a transport company called Eddie Stobart. We see a lot of their vehicles on the road. But they also operate rail services as well. So they're able then to combine those modes of transport to be more environmentally friendly, certainly.
Skip to 12 minutes and 30 secondsSUMEER CHAKUU: It's quite amazing. Now moving to the future of transport innovations - drones, driverless trucks and Hyperloops, and so on - and a lot of things are going round this innovations. I don't know how successful they will be in future. So what do you think? Is there really a future for these innovations like drones, driverless trucks, and Hyperloops.
Skip to 12 minutes and 56 secondsGWYNNE RICHARDS: I think for some of them. Certainly, driverless trucks we're seeing a number of trials both with cars and with commercial vehicles, commercial vehicles specifically in the United States at the moment. I think that, yeah, certainly having a driverless vehicle if we can look for the issues such as insurance and things like that, then yeah. I think driverless trucks could well be seen on our roads, potentially maybe for longer distances. With regard to the drones, I'm not so sure about drones. If you think about it, if everybody in a block of flats ordered from an e-commerce company and they all expected their deliveries to be made by drones, then where would they land?
Skip to 13 minutes and 54 secondsYou know, those issues come into play. I can imagine drones being used in more remote areas, also for humanitarian aid, getting pharmaceuticals, water, for example, to areas where people have been within an earthquake, for example, or been affected by a tsunami, then actually getting aid to those people quickly. I can imagine you know drones being used specifically for that. In terms of other technology, certainly we're seeing a lot of robotics now coming into warehousing. Which is quite interesting, because we have a situation in warehousing at the moment where we have an ageing population.
Skip to 14 minutes and 51 secondsSo people working in warehouses are getting older, and it's a lot more difficult to attract younger people into not only working in warehouses but also driving vehicles as well. So there could be a bit of a balance there between people retiring and the greater use of robotics and driverless vehicles. So yeah, there are a lot of innovations. And that's the interesting part of supply chain at the moment. And that many companies now - I suppose Amazon are at the forefront of it - they're talking about, they've just taken out a patent on having an airship, with having goods being stored in the airship and then using drones to deliver from the airship.
Skip to 15 minutes and 45 secondsIt does seem quite fanciful at the moment, and it may be a marketing ploy. However, it's great to see these companies trying to come up with new ideas to revolutionise freight transportation and the supply chain.
Skip to 16 minutes and 3 secondsSUMEER CHAKUU: And I think DHL is also spending quite a lot on using drone and everything in the remote areas.
Skip to 16 minutes and 11 secondsGWYNNE RICHARDS: Yeah, DHL, also UPS as well.
Skip to 16 minutes and 17 secondsI watched a video the other day of a UPS vehicle driving along and then stopping, the driver coming out, going into the back of the vehicle and releasing a drone to make a delivery to a remote delivery address rather than the truck having to drive maybe 10 or 15 miles out of its way to then return back. They used the drone, and then the drone caught up with the vehicle on its deliveries later in the journey. So, yeah, there are possibilities there. As I say, I'm still not convinced of the things like landing areas, but also the safety as well of drones. There have been accidents in the past where drones have malfunctioned.
Skip to 17 minutes and 5 secondsSo I think it might be a little bit longer before we see lots of drones in the sky I think.
Skip to 17 minutes and 13 secondsSUMEER CHAKUU: Yeah, we'll hope so. And now coming to the last section, which was regarding the warehouses. We know that warehouses have been now developed significantly, sorry, we know that warehouses have now been developed over the past few decades, and they are becoming more and more sophisticated. So you mentioned already the usage of robotics in warehouses. So is the robotics only one of the aspects which will be introduced in the warehouses in future, or there will be some more changes in the warehouses when the future comes, when the technology gets more and more involved in the supply chain? So what do you think will be the future of the warehouses? And another thing, is this another side...
Skip to 18 minutes and 9 secondsdo we really need warehouses in the future? Because, looking at the industry 4.0 and all these new internet of things and these new technologies coming in, new methodologies coming in, so do we really need warehouses in future?
Skip to 18 minutes and 27 secondsGWYNNE RICHARDS: Right. Yeah, in terms of the technology within warehouses, we're going to see I think a great deal more automation. And it's down to the consumer. We want our products quicker. And the actual lead time from a warehouse receiving an order from a consumer to having it then delivered to that consumer, that lead time is shortening significantly. We have retailers now saying order by midnight and receive the product next day, i.e. you know that next day being within probably a 12-hour window. So the courier needs time to make the delivery. So the time within the warehouse is shortening significantly. So the greater use of automation is going to help on that.
Skip to 19 minutes and 24 secondsCertainly, as we've talked about earlier, robotics, we are seeing the use of robotic arms. We've seen the Kiva and the CarryPick system on the videos, where robots are bringing shelves to people in the warehouse for them to pick from those shelves. There are quite a few technologies now being introduced into warehouses to keep up with consumer demand. Will we require warehouses in the future? Definitely. We need to be able to store product to provide this next-day - or even to a degree now same-day - delivery services to customers. We're still producing a lot of product overseas, very much in the Eastern part of the world and then exporting to the West.
Skip to 20 minutes and 26 secondsSo in order to be able to supply quickly, then we have to have a local store of product. As for areas such as 3D printing, I can't imagine that everybody's going to print everything that they require in their own homes.
Skip to 20 minutes and 48 seconds3D printing still takes time. And I can see 3D printing kind of revolutionising what we would term maintenance stores. So companies who are holding parts just in case something breaks down. Or if you imagine maybe a 20- or 30-year-old car that is still being driven around and then the part for that car becomes defective, then there's always the possibility of being able to 3D print that item rather than hold thousands upon thousands of parts for cars, trucks that are on the road longer than expected, for example.
Skip to 21 minutes and 34 secondsSUMEER CHAKUU: Fantastic, Gwynne. Thank you very much for this valuable discussion. So this concludes this week's round-up on logistics. Thank you very much.
Skip to 21 minutes and 44 secondsGWYNNE RICHARDS: That's OK. And I hope everybody's enjoyed the week, and I'm looking forward to week six. Thanks very much, Sumeer.
Skip to 21 minutes and 54 secondsSUMEER CHAKUU: Thank you.
Week 5 summary
Please return here at the start of Week 6 for the round-up video for Week 5.
Week 5 focused on the physical aspects of the supply chain. Before immersing yourself in this final week of the course, take some time to consolidate your learning from last week by watching the summary video.
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