Accelerating Supply Chain Digitalization Creates Competitive Advantage

Supply chain digitalization has the potential to improve business efficiency, resilience and agility. But the path forward isn’t always clear and well lit.

According to McKinsey, funding for logistics startups jumped from $12.6 billion in 2020 to $24.6 billion in 2021. That should bring a wave of new solutions to market but will also make an already crowded vendor landscape even harder to navigate. Finding the right solutions and successfully deploying them requires a depth of technology and supply chain expertise that most businesses – or technology vendors – don’t have.

New technologies also come with a degree of risk. Still reeling from COVID-related disruptions, companies are rightly cautious about introducing technology that could be disruptive. Yet, delaying digitalization could leave operations vulnerable to crippling labor shortages, higher costs and poor performance.

Clearing the Path
Venture capital firms (VCs) aren’t the only ones investing in supply chain digitalization. Third-party logistics providers (3PLs) have brought their scale and operational expertise to this challenge – with a focus on accelerating the use, and maximizing the value, of a range of emerging technologies.

Leaders like DHL Supply Chain are serving as a bridge between technology vendors and businesses by ensuring vendors understand the processes their solutions will support. They also accelerate digitalization for their customers by streamlining technology selection, deployment, integration and management.

DHL Supply Chain accomplishes this through a structured innovation funnel that casts a wide net at the top and narrows at the bottom to focus on the highest value digital solutions. The company regularly engages with a broad range of emerging and established vendors to provide insight into processes and operating environments that product development teams can then use to engineer solutions to application requirements.

According to DHL Supply Chain’s North American CIO and Global Digital Transformation Officer, Sally Miller, “what we often find is that vendors entering the supply chain market have really good technology but lack the operational expertise required to apply that technology to solve real-world challenges. We’re willing to share our expertise to help advance digitalization within the industry.”

That effort also keeps DHL in tune with the ever-changing vendor landscape, enabling the company to identify the most promising technologies and expedite their move down the funnel. With more than 500 operations across North America, DHL can match emerging technologies to use cases to enable solutions to be piloted in a controlled environment that tests their ability to deliver value. The company supports its proof-of-concept testing with a team of engineering, solutions design, operations and safety specialists experienced in deploying and evaluating new solutions.

“You want to move quickly to deploy technologies that can help your business, but there are risks that have to be managed,” said Brian Gaunt, vice president, accelerated digitalization at DHL Supply Chain North America. “Our focus with every proof of concept is to understand the value the technology can deliver and define the processes required to safely and efficiently scale that technology across our network.”

Successful proofs of concept fuel the last stage of the funnel – commercialization across the company’s network. DHL has cataloged digitalization use cases by site to ensure solutions are rolled out where they can deliver value. As solutions become commercialized, processes and best practices from the proof of concept are shared and expanded through playbooks and other tools that enable a high degree of standardization and predictability in deployment timelines and results.

DHL’s ability to scale the number of live digitalization projects across its North American operating sites, beginning in 2018 with approximately 10 projects in North America and scaling up to more than 1,400 by early 2022 with additional deployments underway, points towards the success of the company’s commercialization programs.

Among these projects has been the adoption of goods-to-person picking systems. With its eCommerce, omnichannel and aftermarket parts businesses all growing, DHL Supply Chain has become an industry leader in deploying goods-to-person technologies such as AutoStore. An ultra-dense and easily scalable automated storage and retrieval system (AS/RS), AutoStore has enabled the company to increase productivity up to five times compared to persons-to-goods processes while shortening order cycle times, ensuring accuracy, and expanding storage capacity.

Acceleration in Action

DHL’s innovation funnel has helped accelerate the use of robotics, analytics, augmented reality and other technologies within its network of operating sites. The most recent example of how the company is accelerating digitalization is through its strategic collaboration with Boston Dynamics.

That partnership started before the two companies even identified a use case for Boston Dynamics’ innovative robotics technology. A prime candidate emerged quickly in the form of container and trailer unloading, one of the most physically demanding tasks in today’s warehouse. As prototypes were developed by the Boston Dynamics team, they were piloted in DHL warehouses, with learnings from each proof of concept shaping the evolution of the solution in areas such as accuracy, mobility and ease of use. In January 2023, that partnership bore fruit when DHL became the first company to introduce Boston Dynamics’ Stretch™ robot into its operations.

Speed without Risk

With labor markets remaining tight and customer expectations continuing to rise, digitalization has become essential in using the supply chain to create competitive advantage. But few organizations have the resources and expertise to select, implement, manage and orchestrate digital solutions in the supply chain. Working with a 3PL that has invested in understanding the landscape and refining processes for technology selection, implementation and management is an effective approach to accelerating supply chain digitalization. To learn more, visit dhl.com/allin.