Industry 4.0 to be game changer for UPS Vietnam

Industry 4.0 is now a clear trend in many economic sectors. What are its impacts on the logistics industry? How did UPS prepare for this and what opportunities do you expect in 2018?

Daryl Tay talks about how Industry 4.0 will transform the logistics industry

Logistics companies will need to be more technologically advanced than ever—this new industrial era will push the logistics industry to become much “smarter” and more adaptable. With Industry 4.0, logistics companies will need to take a closer look at how operations and infrastructure can be improved through technology and innovation.

UPS was established in 1907. In over 110 years of operations, we have experienced industrial revolution through the second and third iterations–electrical power and computing, and seen firsthand the impact it had on not just our industry, but also those of our customers. While UPS was founded on engineering excellence, today we are more like a technology company with lots of people, trucks, and planes.

Our intelligent logistics network relies on technology and we have a long history of innovation paired with a strong commitment to technology and investing in it. UPS invests $1 billion annually into technologies to make our business smarter and more efficient. For example, industrial automation equipment linked by a vast technological network enables UPS’ Worldport distribution center in Louisville, Kentucky, to sort around two million packages on an average day and as many as four million packages in a single day during peak periods. Investments into strengthening UPS’ global Smart Logistics Network will help us address the future needs of our customers as production windows get shorter and pressure to get a product to market quickly increases.

Another example of how UPS builds technology to improve our capabilities would be the On-Road Integrated Optimisation and Navigation (ORION) system, which improves efficiency by optimising the drivers’ routes. Other examples would be providing our customers with increased mobile solutions and deploying artificial intelligence and machine learning.

One of the opportunities we have identified is collaborating with our customers to enable greater integration to smoothen the cross-border shipping process. For example, UPS’ technology solutions currently allow customers to integrate their Enterprise Resource Planning (ERP) systems with UPS’ technology solutions via Application Programming Interfaces (APIs). Leveraging automation enables companies to streamline operational processes like shipment processing and tracking, billing or customs regulations, freeing up time and resources to dedicate towards building their core business.

How do modern logistics change the behaviour of consumers in Asia, including Vietnam? What are the key areas of modern logistics that Vietnamese retail companies need to focus on to unlock their full potential?

The influence really goes in the other direction: rather than logistics companies changing the behaviour of consumers, it is actually consumers driving the change we are seeing in the logistics industry. Looking specifically at retail, the biggest driver of change right now is without a doubt ecommerce. It has opened up a world of trade opportunities for businesses and consumers. It has levelled the playing field, but also made it more competitive for companies looking to succeed.

Customer-centricity has long been a core pillar of UPS’ business, and to understand the challenges our retail customers are facing, we sought to understand what the end-consumer seeks during their path to purchase. In addition to the transition towards an omni-channel shopping experience—where consumers are engaged across multiple online and offline touch points across their entire shopping journey—the UPS Pulse of the Online Shopper study identified provided valuable insights into customer trends.

For instance, 73 per cent of online shoppers in Asia expect orders placed between 6 PM and midnight to qualify for next-day delivery, while seven in 10 online shoppers are willing to pay less to collect their packages at alternate delivery locations with extended hours. This led to the creation of retail solutions like UPS Access Points™ and UPS My Choice®, which empower customers with greater flexibility over their shipping options and delivery tracking. By ensuring a consistent customer experience across retail channels and the entire customer journey, retailers will be better equipped to address the challenges of Industry 4.0.

UPS is well positioned to capitalise on the growth of Industry 4.0

What preparations should Vietnamese SMEs make to apply smart logistics solutions effectively? How can UPS help SMEs stand out in this competitive market?

SMEs should first look to understand the needs of their customers, before identifying the right solutions and partners to deliver results.

The ideas behind Industry 4.0 are not static—there is no one-size-fits-all checklist here—and so each solution or collaboration between a business and their partners will look different. At UPS, we work closely with customers to understand the changing business environment, and then build a solution that addresses their needs, connecting our capabilities with the various facets of their business. Apart from our transportation services and freight business, we provide a range of complementary products which can be plugged into our customers’ businesses, including automated account opening, shipping tools, visibility and tracking tools, a range of flexible delivery options, and billing tools.

Case in point—one of our customers, DK Sportswear, saves as much as 1,280 labour hours annually with the implementation of UPS’ integrated solution. UPS optimises their supply chain and streamlines the outbound shipping process to improve their productivity and customer satisfaction. For example, round-the-clock tracking with the full suite of UPS Quantum View® enabled them to provide high levels of customer service by being more responsive to shipment status queries. More importantly, DK Sportswear has benefitted from having direct access to UPS’ suite of innovative technology tools, including UPS Worldship® and Paperless Invoice, which improved overall operational efficiency by streamlining outbound order processing and custom clearance procedures, hence minimising delays.

Many global logistics firms have been trending toward green logistics to protect the environment and to grow sustainably. How about UPS?

Sustainability has been a key pillar of UPS’ path forward for a long time now—in fact, I am proud to say our business contributes to sustainability by making logistics as resource-efficient as a possible. We meet customer needs by utilising a broad range of transportation modes like airplanes, trains, ships, trucks, cars, carts, bicycles and more to reduce an impact on the environment.

This February, UPS ordered 14 Boeing 747-8 cargo jets and four new Boeing 767 aircrafts to provide additional capacity and to cater to increasing consumer demand. The 747-8F’s new wing design and engines, and the resulting improved cruise performance, make the airplane environmentally friendly. The 747-8F reduces carbon emissions by 16 per cent compared to the 747-400 and it is 16 per cent more fuel-efficient. This is in addition to the more than 9,000 alternative fuel and advanced technology vehicles we operate worldwide.

Because of our adoption of advanced technologies to increase our efficiency, we are able to give ourselves ambitious, measurable sustainability goals. One of them is to reduce the carbon intensity of our operations by 20 per cent by 2020, using 2007 as a baseline. It is important to note that we are setting ambitious goals at a time when our carbon footprint is expected to increase due to the rapid growth in e-commerce volume, which requires us to expand our physical network around the world.