Distributed micro-fulfilment may be the next logistics disruptor

Posted: 6 March 2018 5:03 pm

Technology is letting distributors cheat when solving the travelling salesman problem.

The logistics industry has a lot to gain from blockchain technology. The World Trade Organization estimates that simplifying and streamlining global shipping, such as through blockchain systems, could potentially increase total trade volume by 15% and global GDP by 5%. This is why the world's largest shipping companies, like Maersk and FedEx, are running, not walking, towards a blockchain-based industry.

This combination of new technology and solid real-world applications is also why logistics-oriented cryptocurrencies like VeChain and WaltonChain are attracting a lot of attention. But another potential disruptor might be coming to the industry in the form of decentralised micro-fulfilment. This is largely overshadowed by the broader applications of blockchain systems, but it is well suited to working alongside it.

In simple terms, micro-fulfilment is basically Uber for warehouses. In slightly more complex terms, it's Uber for warehouses plus AI.

The idea is to let individuals monetise their surplus space to help facilitate logistics, giving companies a much more finely tuned storage and transport machine with much greater potential to keep goods where they're needed most.

The artificial intelligence (AI) system helps pull the network together to match storage spaces to types of goods and to keep the wheels turning smoothly while constantly solving the continually evolving and changing travelling salesman problem.

The benefits are especially clear in today's Amazon age.

Fewer than half the products sold on Amazon Marketplace are Amazon products. The majority of items are manufactured in relatively small numbers by small and medium-sized businesses. Amazon just gives them a marketplace where they can sell the items, and Amazon handles the other elements such as delivery.

But in Australia, the delivery element is a real pain for just about everyone. Amazon has opened only one fulfilment centre in Australia to date, in Dandenong, Melbourne, and from there, it needs to ship to all other major cities and other destinations around the country.

Micro-fulfilment lets businesses take a much more granular approach, and if it all works as planned, it can be done almost seamlessly by matching products, storage spaces and demand in given areas.

After all, there's not much demand for winter jackets in Queensland or surfboards in Alice Springs, but it's all coming from the same fulfilment warehouses. For a company that wants to consistently offer quick and affordable delivery of almost any product imaginable, this is a relentless headache.

Perishables, medication, fragile goods and anything else that has specific storage needs is another compounding factor. With limited "special" storage space, such as refrigerated goods storage, sellers need to carefully prioritise their available stock and manage a system of ongoing deliveries.

In a nutshell, more options equals less costs, and cutting even a little bit of fat from supply chains can make an enormous difference.

Micro-fulfilment is still a relatively niche area, but there are a few logistics companies moving towards it. ReverseLogix is one of them, with a prestigious clients list including Samsonite and Electrolux.

"We're essentially a technology company," said ReverseLogix CEO Gaurav Saran, "able to enable microfulfillment and micro-storage through technology."

Unsurprisingly, blockchain technology might also become a key element of micro-fulfilment, with Saran describing it as a primary focus and a way of better enabling scalability in the system.

Scalability is naturally an important element. With more people monetising their storage space and more organisations using these micro-fulfilment systems, the entire network becomes more effective. This also gives the machine learning AI a lot more data to use, letting it become more effective more quickly. Blockchain technology might help remove some of the frictions that come with adding more entities to the mix.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, SALT, BTC and NANO.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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