Hindsight is 20/20
Remember phone books and encyclopedias? Pre-internet, if you had a question, it could take days to get to the answer. Now, the answers are seconds away as you ask Google, Siri, or Cortana. The Internet forever changed the way we think, work, communicate, and play. It has created a new expectation of the time it takes to get an answer, “talk” with a friend, and place an order.
If you had known that the Internet was coming, would you have made different business decisions? The answer is probably yes. We are on the cusp of another seismic shift in how we live. The Physical Internet is coming and it will change our lives.
What is the Physical internet? Think of how effortless it is to send an email and have it instantly delivered to the recipient’s inbox. What if physical goods could move the same way?
The Logistics Web
Today’s consumers see three or more delivery services arrive at their door daily with packages: the US Postal Service, FedEx, and UPS. Think about how much it costs to have all three drivers come to your house to deliver a small box to your house. If we designed efficient flows, all of the packages coming to your house would be combined onto one truck and delivered at the same time. By only answering the doorbell once, you have reduced your delivery footprint – and presumably your costs – by two thirds.
What happens on your doorstep is just the tip of the problem. In the Consumer Packaged Goods Industry (CPG) most manufacturers have their own supply chains. In this model, a manufacturer ships goods from all of their production facilities to five or six regional US mixing centers. This allows a retailer to place an order that can include any of the items that manufacturer sells. Those orders are delivered, usually several times a week, in three to five days from when the order was placed. So, ten manufacturers with mixing centers in the same industrial park will send ten separate trucks to the same retailer on a given day.
None of those trucks will be really full because most manufacturers only make heavy or light products. A company that makes paper towels will use all of the space, called “cubing out” a truck, but the weight of the truck will be extremely light. A company that makes soup will reach the weight limit of the truck before the truck is cubed out. If you took off a pallet of soup, you could put half of the paper on the truck. Think of how many trucks we could take off the road if we were able to combine products from multiple manufacturers.
An Easy Fix
This is the underlying tenet of the physical internet: sharing infrastructure generates an efficient, sustainable, adaptable and resilient “logistics web,” aka supply chain. A hyper-connected network drives savings for all involved, in terms of money, time, and pollution.