The future is beckoning: We must be willing to change

Jesper Riis, CIO of DSV's Global IT (left) and Brian Ejsing, Managing Director of DSV's Solutions division.

A minor revolution has taken place in the distribution market over the past five years. E-commerce is skyrocketing and, according to Brian Ejsing, CEO, DSV Solutions Holding, we can still expect volumes to increase by 'handsome double-digit percentage points' when it comes to the number of transactions. Because comparing the relatively small e-commerce orders with ordering a full truckload to be transported down through Europe is like comparing apples and pears. The value of the individual e-commerce transactions is naturally far less, but in return, the number of order lines is that much greater.

'The complexity will also be far greater and it will impose big demands on DSV, which we have to consider in time,' Brian Ejsing says. He just completed a market survey that asked existing retail customers in this business field, including the some 80 e-commerce customers, about what they required and expected of their transport and logistics company. The short answer is that DSV must be more efficient in the future when e-commerce will comprise a significantly larger share of total revenue.

Bigger flow of information

This is not to say that DSV does a poorer job than other 3PL companies, which do not have e-commerce as their key function. But if DSV wants to play in the big leagues, we have to change a few things first:

'Primarily, we need to improve our flow of information and our flexibility,' Brian Ejsing says, explaining:

'We must be able to change the process if the customer suddenly cancels an order or wants to change the pick-up site. And we must be willing to change and accommodate customer preferences on their own terms. For instance, we need to widen our opening hours, work weekends and evenings, and generally be much faster and more flexible,' he says, to which Jesper Riis, CIO, Global IT adds:

'At present, Warehouse Management Systems (WMS) have reached a point of maturity where we can actually handle both types of business at the same storage facility. Whereas we used to move e-commerce goods out into a separate storage facility, we are currently experiencing more and more customers choosing an omni-channel sales model, which entails great savings for customers. But e-commerce imposes vastly different demands on us when having to process 80,000 order lines one month and more than a million the next. And the volume of so-called alerts, i.e. information flowing to customers, has multiplied compared to conventional transport: customers receive notifications by e-mail, text messages, portal solutions, etc., about every step of the process, from ordering and packing to delivery date, track&trace details and receipt. This imposes great demands on the underlying systems,' he says.

Unpredictability

E-commerce's unique characteristic is its highly unpredictable nature. Public holidays, religious holidays, Black Friday, the Christmas trade... everything plays a part in creating the enormous fluctuations in the production, with the biggest surge around Mondays where almost half of a week's orders must be filled, because most clicks are done at weekends when people relax by shopping online.

For this reason, the week at the warehouse starts already on Sunday with picking and packing, and in future robots will be increasingly used to travel the many kilometres at the warehouse. Studies from DSV's storage facilities in Venlo (the Netherlands) show that it is not uncommon for a warehouse employee to walk 10 to 15 km in an ordinary shift, i.e. two to three hours a day where the employee is just moving around among the goods.

'From now on, we have to make sure that the goods come to the employee, so we can process the far greater number of shipments we will receive. And we'll need robotics to help us,' Brian Ejsing says, mentioning vertical transport systems, autonomous solutions such as conveyor belts or Weasel, a driverless forklift used at a Canadian warehouse, among other places. This list naturally includes the mechanical picking of goods by the so-called picking robots.

'We've actually prepared a product catalogue showing various mechanical solutions that we present to various types of customers. These solutions will subsequently become incorporated into our IT solutions,' he says.

Standardisation

To maximise flexibility and speed - such as the integration of new mechanised processes - an indispensable principle for DSV's IT solutions is to base these processes on a maximum degree of standardisation. Our goal is that these solutions must use the same components and systems, including WMS solutions, that comprise the basic structure of our warehousing operations, regardless of where in the world they are located.

'If we fail to standardise the foundation, we lose agility at the top to work transversely with customers and sites, and in so doing we also lose potential synergies and economies of scale,' Jesper Riis explains. He adds that he would rather spend energy on creating added value for customers on top of the basic solutions. This could include 3D printers at warehouses to personalise our customers' products, such as shoes, toys, etc.

Warehouses are still needed...

'We don't believe that 3D printing will revolutionise our industry in the sense that printing will move into the warehouses and be responsible for production. But it is definitely coming, particularly for personalising products but also for small-scale manufacturing of spare parts,' Brian says, to which Jesper adds:

'It's not profitable to have a spare part for an out-of-stock car model lying around for 25 years. These parts are removed from the product range after eight years and we are left with a CAD file from which a part can be printed if the need suddenly arises, for example.'

Read more about our logistics solutions