How big a deal is one-day delivery this holiday season? For Amazon it means millions more packages being delivered to their customers and a big bump in revenue. According to eMarketer, direct, first-party sales of goods purchased on Amazon have skyrocketed from 9.5% in Q1 2019 to 20.6% in Q3 2019, mainly due to the one-day delivery perk for millions of Amazon Prime customers. Other retailers such as Walmart and Target are following suit with next-day delivery services for online customers, so the race is on to see who can get your holiday packages to you the fastest.
Transportation and logistics companies are undergoing a massive digital transformation to ensure that retailers can successfully manage their supply chains and get goods to your door faster than anyone else.
Was the increase in direct sales of goods purchased on Amazon in Q3 2019, mainly due to one-day delivery.
Digital technologies that are at the forefront of this transformation include:
- Smart city and emerging technologies like the Internet of Things (IoT), GPS-embedded devices and logo-recognition cameras, combined with artificial intelligence (AI), calculate the fastest, safest and most cost-effective delivery routes, help minimize commercial traffic congestion and avoid unnecessary shipment delays.
- Automation, robots, autonomous driverless trucks and drones streamline order fulfillment and delivery.
- On-premises supply chain management (SCM) platforms are migrating to cloud/SaaS-based systems for greater scalability, efficiency and responsiveness.
- Networked blockchain distributed ledgers ensure a shipment’s validity, accuracy and timeliness.
All of this innovation will require an interconnection platform that can integrate these digital technologies with legacy systems and supply chain ecosystems for greater responsiveness, cost-efficiencies and data-driven, real-time decision-making.
Interconnecting global supply chain ecosystems
As trade and shipping are essential drivers of the global economy, the transportation logistics processes and supply chain ecosystems underpinning them have become indispensable. Delivery information about the goods going to customers must be coordinated for the global flow of products and services to work. This all depends on integrated transportation logistics and supply chain ecosystems, from the receipt of raw material to final product delivery. And with the availability, visibility and speed of delivery that retailers such as Amazon have conditioned consumers to expect, transportation and logistics companies are forced to streamline processes to deliver products faster than ever before.
As trade and shipping are essential drivers of the global economy, the transportation logistics processes and supply chain ecosystems underpinning them have become indispensable.
The on-demand nature of this sector requires these companies to be the most interconnected enterprises in the world, with real-time connectivity to their external ecosystems (e.g., manufacturers, retailers, online shops, customers, and even competitors). In fact, the third annual Global Interconnection Index (GXI), a market study published by Equinix, predicts that private interconnection between enterprises and supply chain partners will grow annually by 77% between 2018 and 2022.
These businesses also need interconnection to thousands of distributed IT data centers, offices and employees, goods warehouses and fleets of vehicles (especially if they operate globally). They also require real-time access to large SCM, big data, analytics, business intelligence and IoT systems. And all of this needs to be managed in a hybrid IT environment of on-premises and colocation data centers and, increasingly clouds. According to the GXI, the annual growth rate of interconnection between enterprises and Cloud & IT Providers will be 112% by 2022.
Barriers to a streamlined, continuous supply chain
Given the scale and complexity of these companies’ IT assets, getting a product from a manufacturer to a customer is not always a streamlined, integrated process. While some parts of the digital value chain work together seamlessly, others do not. Supply chains are typically fragmented, with many participants using different technology and interfaces for their own operations. There are also challenges in terms of data collection, processing, analyzing and exchange. And as the transportation logistics business has very low margins and a lot of competition, the digitalization and automation of the supply chain typically needs to have an ROI of less than a year.
Interconnected transportation and logistics services can better leverage a high-performance, scalable, pay-as-you-go model that enables new digital platforms and information exchanges.
Centralized IT infrastructures and traditional network backbones prevent the effective collaboration among supply chain partners and systems, and limit end-to-end visibility for customers. Integrating more agile digital technologies, such as mobile, cloud, IoT and AI, into rigid, siloed IT infrastructures can be expensive and resource-intensive. Backhauling data transmission over long distances from remote users, vehicles and devices to centralized storage and analytics systems inhibits real-time analysis and insights. All of these factors present major obstacles for transportation logistic companies that are looking to get digital ready and future-proof their IT architectures for decades to come.
Interconnecting the digital supply chain for faster delivery
To compete in the digital economy, transportation and logistics organizations must re-architect their IT infrastructures for the digital edge, placing strategic control points where users, clouds, networks and ecosystems meet. By leveraging distributed interconnection hubs at the edge, transportation and logistics companies can seamlessly integrate supply chain ecosystems and new digital technologies for faster, more cost-effective delivery of goods.
Regional interconnection nodes on a globally interconnected platform, such as Platform Equinix®, enable organizations to directly and securely interconnect with partners, analyze data, and engage with customers and other connected entities in real time by leveraging Interconnection Oriented Architecture™ (IOA™) best practices. They can accelerate partner collaboration, enable end-to-end visibility into supply chain transactions on-demand and scale capacity as needed during peak periods. And by placing data capture and analytics at the network edge—near roaming equipment, customers and data—, they can tap into real-time insights to drive efficiencies and reduce costs. For example insights on the least congested routes and places to park can help these companies lower gas consumption and deliver packages faster.
A globally distributed interconnection platform can offered customized transportation and logistics services that are data-driven and standardized worldwide for real-time supply chain ecosystem collaboration at the digital edge. This more optimized, interconnected transportation and logistics IT infrastructure can better leverage a high-performance, scalable, pay-as-you-go model that enables new digital platforms and information exchanges.
Platform Equinix is ideally suited to empower retail/e-commerce, transportation and logistics businesses to embrace:
- Agile digital technology platforms that adapt to increased mobility, automation, data-driven insights and omnichannel experiences.
- Flexible IT and software-defined network architectures that deliver greater information exchange, web experiences and mobile/wireless applications.
- New transportation logistics applications and services that can be accessed anytime and anyplace, while addressing performance, scale, security and compliance at the edge.
For example, Sysco, a global leader in foodservices with customers in 90 countries, built a high-speed network backbone on Platform Equinix to more cost-effectively interconnect its multiple U.S. data centers and leverage a dense network peering ecosystem to manage its massive foodservice order processing and delivery operations. It also used Equinix Cloud Exchange Fabric™ as a hybrid/multicloud gateway for its server/application migration and data analytics in the cloud.
Ultimately, with greater interconnection, transportation logistics’ processes will be streamlined, partner ecosystems and new digital technologies seamlessly integrated, and fast product delivery and customer satisfaction during the holidays (or any other time) guaranteed.
Learn more by reading the Transportation Digital Edge Playbook.