Big Data & The Truck Industry: How Logistics Firms Utilize and Analyze Big Data- A Case Study of DHL and the SmartTruck

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By: Jonathan Laetsch, Lennart Knoche, Torven Schalk and Cassidy Driskell

Introduction

DHL. The world’s leading logistics company is present in over 220 countries.

It’s team of logistic experts provide solutions for an almost infinite number of logistical needs and the company is known to deliver the most innovative, cost-saving and sustainable solutions available (DHL, 2016).

Logistics and Big Data

Taking into consideration an enormous growth of available data inside companies and on the public internet as well as the role of information as a fourth production factor in a hyper-connected world, logistics firms, as many other companies across all sectors, seek the use of Big Data analytics in order to a) gain unbound data access, b) adapt to a rapidly expanding digital universe and c) attain competitive differentiation (Jeske, Grüner & Weiss, 2013).

A strong hint that data mastery has always been key to the discipline of logistics is that, in its ancient Greek roots logistics means ‘practical arithmetic’ differentiation. Today, logistic providers manage a massive flow of goods and at the same time create vast data sets tracking the origin, destination, size, weight, content and location all across global delivery networks.

 

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In realization that there is huge untapped potential for improving operational efficiency, customer experience and creating new business models through the usage of Big Data analytics, logistic companies are making efforts globally to trade gut-feeling for accurate data-driven insight in an effort to achieve effective business decision-making. They believe that it is modern data that has the power to help businesses succeed. In a recent study on supply chain trends, sixty percent of the respondents stated that they are planning to invest into Big Data analytics within the next five years.

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To clarify, adapting Big Data analytics for logistics companies is barely a choice but much rather a necessity due to the exponential growth of digital information pieces, the connectivity of a globalized society and variation in data (Jeske, Grüner & Weiss, 2013). 

Exponential growth of digital information pieces 

As a result of the growth of social media, ubiquitous network access and an increasing number of smart connected devices, today’s digital universe is expanding at an exasperating rate that doubles the data volume every two years.  In 2008, the number of available digital information buts surpassed the number of stars in the

 

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Connectivity of a Globalized Society

 The massive deployment of connected devices such as cars, smartphones, RFID readers, webcams, and sensor networks adds a huge number of autonomous data sources. Devices such as these continuously generate data streams without human intervention, increasing the velocity of data aggregation and processing.

Data Variation

An increased usage of unstructured data sources such as camera images, video and surveillance footage, blog entries, forum discussions, and e-commerce catalogs all contribute to much a much higher variety of data types on a global scale.

Logistic companies must transition towards Big Data, a forward-looking style of data analysis that generates new insight and better answers. This shift in mindset also implies a new quality of experimentation, cooperation, and transparency across the company.

DHL and Big Data

Through the publication of numerous trend reports (Big Data in Logistics- Move Beyond the Hype and Logistics Trend Radar), DHL reveals its ambition to a) exploit relatively untapped data assets, b) adopt a shift of mindset and c) apply the right techniques in an effort to gain a competitive advantage through Big Data analytics.

According to their report Big Data in Logistics, the implementation of Big Data provides the company with three distinct properties of competitive advantage (Jeske, Grüner & Weiss, 2013).

 Optimisation to the Core

Big Data can provide information quicker and more accurate than traditional means, leading to refined delivery times, improved resource utilization and expanded geographical coverage.

Tangible Goods/ Tangible Consumers

As globally, millions of customer touch points daily create an opportunity for market intelligence, product feedback and demographics, Big Data concepts provide versatile analytic means in order to generate valuable insight on consumer sentiment and product quality.

Global Coverage and local Presence

Utilising Big Data, a fleet of vehicles moving across the country can automatically collect local information along the transport routes, passing the information on to the fleet manager and fellow colleagues, creating a reliable and important display for demographic, environmental and traffic statistics. 

 

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The SmartTruck

Introduction

In our eyes, DHL have utilized Big Data most impressively and taken a big step into the future of Logistics and Delivery most notably with the production of the DHL SmartTruck (DHL, 2014).  The DHL SmartTruck was launched in Germany in 2010 and can be described as an ‚intelligent’ pick-up and delivery vehicle that combines a number of innovative technologies. With the introduction of the SmartTruck, DHL has pioneered Smart technology in the delivery sector and revolutionized the way in which logistics companies approach parcel delivery forever (Jeske, Grüner & Weiss, 2013).

Why is it innovative?

 Each individual Truck is in constant contact with the DHL headquarters through the global positioning system (GPS) and uses the information technology Telematics to update both the  fleet manager and the driver on various issues, benefitting both parties (Telematics, 2015).

Fleet Manager

Fleet Manager benefits heavily from the telematics in DHL’s SmartTruck as the statistics provided allow for more control over the fleet and as a result an improved overall performance. The statistics provided by the telematics system include Route Optimization, Truck Maintenance and Driving Behavior.

Route & Delivery Optimization

At the core of the SmartTruck lies the dynamic route planning system developed on behalf of DHL by Quintiq, a supply chain software specialist (DHL, 2014). It is the digital nerve center of the system and processes all the information on the road and traffic, sending relevant updates, for instance a change of route, to the vehicle’s on-board computer instantaneously. This allows the delivery to become more efficient, (the implementation of the SmartTruck reduced the number of miles traveled by 15%) and environmentally friendly (as fuel consumption and CO2 emissions decrease).

Concerning Delivery, the Radio Frequency Identification System in the truck monitors the parcels (packages) inside the truck. The system alerts the driver and the fleet manager if a package is misplaced or forgotten.

Health of the Truck

In a large fleet, it might be difficult to keep track of mileage and find out when a truck is due for preventive maintenance and regular check-ups. To solve this issue, telematics found in the SmartTruck feeds the fleet manager with statistics of the Truck’s health (mileage driven, tire pressure, engine) who can react quickly and accordingly if needed, before the minor problems become a major issue (Telematics, 2015). What’s more, this helps ensure the driver’s safety, prevents a drop in resale value and on the road break-downs.

Driver Behavior

Telematics also overview the behavior of the driver. Therefore, a DHL SmartTruck can monitor unauthorized stops, insecure loading of goods, prolonged lunch breaks, excessive speed, offhand parking and other misbehaviors. Upon receiving the information, the fleet manager has an improved overview of the drivers and can consult and give feedback accordingly. An improved driver behavior and bettered efficiency are often the result.

The Driver

Driver also benefits heavily from DHL’s SmartTruck as various innovative technologies in the Truck allow for more safety and an improved driving experience (Ranaiefar, 2012).

Safety

The SmartTruck also features various mechanisms that ensure a safer driving experience. These safety measures include an inability for the truck to start if the driver is not buckled in, the deactivation of any sound output in the cabin if the truck is in reverse and a warning whenever the driver exceeds the named speed limit. Furthermore, cameras in the vehicle can monitor driver fatigue by tracking key indicators such as pupil size and blink frequency, alerting drivers when they need to take a break. These mechanisms have lead to less accidents on the road and a safer driving experience for the Truck drivers of DHL.

Driving Experience

The SmartTruck enables a more stress-free and aerodynamic driving experience. The intelligent route planning system of the truck, based on satellite-supported geo and telematics data locates the vehicle and analyzes the traffic situation, navigating express vehicles away from traffic jams. Moreover, as soon as the SmartTruck registers vehicle speeds of over 80 mph or 130 Kmh, the gap between the driver compartment and the transportation compartment closes, allowing less air flow interruptions, making the driving experience more aerodynamic and efficient.

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Limitations

Although groundbreaking in multiple ways, shifting from traditional and small data analysis techniques to Big Data also bears difficulties. First and foremost, utilizing smart technology in its trucks, makes DHL more vulnerable to the attack of cyber criminals that can misuse and steal valuable data, leading to deconstructive consequences and possible damage to the company’s strategic level. Secondly, the aerodynamic kits and telematics solutions found in the SmartTrucks require monthly software updates and extensive maintenance work, a process that sacrifices financial means and time. Lastly, the SmartTruck experienced bureaucratic counteraction when it was banned from entering various metropolis, hindering parcel delivery for certain geographical regions and limiting the SmartTruck’s innovative ability.

Conclusion

In a new trend, logistics firms, as many other companies across all sectors, seek the use of Big Data analytics in order to a) gain unbound data access, b) adapt to a rapidly expanding digital universe and c) attain competitive differentiation. Although more vulnerable to cyber criminals, costly and restricted to city outskirts, the introduction of the SmartTruck by DHL has pioneered Smart technology in the delivery sector and revolutionized the way in which logistics companies approach parcel delivery forever.

 

SWOT Analysis

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Business Canvas

 

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Bibliography

Image Credits:

  • Jeske, M., Grüner, M., & Weiß, F. (2013). Big Data in Logistics [PDF]. Troisdorf, Germany: DHL Customer Solutions & Innovation

 

 

 

 

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