IoT to deliver $1.9 trillion boost for logistics industry, says DHL and Cisco


The IoT will deliver a US$1.9tn boost to supply chain and logistics operations, according to a report by DHL and Cisco. And it estimates that $8tn will be generated through new connections over next decade.

DHL and Cisco jointly released the trend report at the DHL Global Technology Conference in Dubai this month. DHL and Cisco Consulting Services are also collaborating on a joint IoT innovation project that will improve decision-making in warehouse operations with near real-time data analytics based on Wifi connected devices.

“At Deutsche Post DHL Group we have a deeply held belief in the positive powers of global trade,” said Ken Allen, CEO DHL Express. “Yet, as our Global Connectedness Index 2014 revealed, the overall level of global connectedness remains surprisingly limited. There is huge potential for countries to further increase their connectedness and prosper through trade, integration and technology. We believe the internet of things will be a primary enabler of this global transformation.”

The report, which estimates that there will be 50 billion devices connected to the internet by 2020 compared with 15 billion today, looks at the potential impact this technological revolution will have on business. The value at stake, combination of increased revenues and lower costs that is created or will migrate among companies and industries when new connections are made, reveals the huge potential when the internet and networks expand their connections to warehousing, freight transportation and other elements of the supply chain.

For any organisation with a supply chain or logistics operations, IoT will have game-changing consequences, from creating more last-kilometre delivery options for customers, to more efficient warehousing operations and freight transportation.

According to Cisco’s economic analysis, IoT will generate $8tn worldwide in value at stake over the next decade. This will come from five primary drivers: innovation and revenue ($2.1tn); asset utilisation ($2.1tn); supply chain and logistics ($1.9tn); employee productivity improvements ($1.2tn); and enhanced customer and citizen experience ($700bn).

“Digital disruption is all around us and it’s having massive implications for business,” said Chris Dedicoat, president of EMEAR for Cisco. “Digitisation and the expansion of the internet of things is a catalyst for growth, which is driving new economic models and enabling organisations to remain competitive and embrace the pace of change happening globally. This report clearly demonstrates that digitisation and the IoT will deliver long term efficiencies and growth opportunities across a wide range of industries.”

According to the report, over the next decade, the logistics industry could unlock higher levels of operational efficiency as the IoT connects in real time millions of shipments being moved, tracked and stowed each day. In warehousing, connected pallets and items will be a driver for smarter inventory management. In freight transportation, tracking and tracing of goods becomes faster, more accurate, predictive and secure while analytics of a connected fleet can help predict asset failure and schedule maintenance checks automatically. Finally, connecting delivery personnel with surrounding vehicles and people can become a way of monetising and optimising the return trip to improve efficiency and service in last-kilometre delivery.

“The internet of things is the connection of almost anything – from parcels to people – via sensor technology to the web and both Cisco and DHL believe this will revolutionise business processes across the entire value chain including supply chain and logistics,” said Markus Kückelhaus, vice president at DHL. “To get the maximum global economic benefit, we’ll need to understand how all components in the value chain converge and this will require a comprehensive collaboration, participation and the willingness to invest to create a thriving IoT ecosystem for sustainable business processes. The new trend report is another step towards making sure DHL delivers the benefits of IoT to our customers.”

Cisco Consulting Services and DHL are now collaborating on a joint IoT project that will improve decision-making in the warehouse operations through near real-time data analytics based on Wifi location data of selected devices. This based on Cisco’s CMX connected mobile experiences, which uses the high-density wireless network to collect aggregate location data on Wifi connected devices.

• Transparency Market Research has forecast that global smart and mobile supply chain products will be a US$16.5bn market by 2020 with the market registering 13.2% CAGR through the forecast period.

By end-use applications, the retail (18.5%) and manufacturing (18.4%) segments were the single largest contributors to this market in 2013. By 2020, however, the logistics sector will drive a significant share of demand.