{"id":8539,"date":"2021-02-15T07:05:11","date_gmt":"2021-02-15T12:05:11","guid":{"rendered":"https:\/\/flevy.com\/blog\/?p=8539"},"modified":"2021-02-10T14:10:41","modified_gmt":"2021-02-10T19:10:41","slug":"5-obstacles-impeding-the-adoption-of-automation-by-the-logistics-sector","status":"publish","type":"post","link":"https:\/\/flevy.com\/blog\/5-obstacles-impeding-the-adoption-of-automation-by-the-logistics-sector\/","title":{"rendered":"5 Obstacles Impeding the Adoption of Automation by the Logistics Sector"},"content":{"rendered":"

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Digital Transformation<\/a> has propelled technologies and innovation in Logistics.\u00a0 Artificial Intelligence<\/a> is taking charge of a number of repetitive logistics tasks.\u00a0 Organizations are benefiting from Automation<\/a> in streamlining their cumbersome processes and cutting down delivery times.<\/p>\n

Automation is profoundly affecting the way Logistics<\/a> are handled.\u00a0 It is disrupting the entire Logistics Supply Chain<\/a>, not just the warehousing, picking, and sorting functions.\u00a0 The impact of Automation on roads, rails, and ports is immense.\u00a0 Ports are increasingly embracing Automation, but they haven\u2019t yet started getting the return on their investments.<\/p>\n

In Logistics, ocean and air shipment has potential for Automation\u2014which is certainly under way\u2014but its effect on enhancing throughput is yet to be seen. \u00a0Logistics operations are being transformed at quite a pace with new models, concepts, and offerings evolving rapidly.\u00a0 With the current pace of technology evolution, experts believe Logistics operations would be done autonomously in the not too-distant future.<\/p>\n

New technologies enabling Automation of the Supply Chain are continuously being evolved, with many in the pilot testing phase.\u00a0 However, Supply Chain businesses are largely hesitant and confused on investing in Automation.\u00a0 This is mainly because it is a bit unpredictable as to which potentially feasible prototypes will emerge as widespread technologies and generate positive return on investment and which ones will become obsolete within a short timeframe.<\/p>\n

With the proliferation of E-commerce and worsening shortage of labor due to the pandemic, Automation is being viewed by many Logistics companies to be the only option to prepare for the future. \u00a0However, they are quite conservative in accomplishing this owing to the risks associated with the transaction.<\/p>\n

According to McKinsey\u2019s research, the adoption rate of Automation in the Logistics sector will remain sluggish at ~3 to 5% annually till 2025.\u00a0 Such a slow rate of uptake for Automation by the Logistic sector globally is attributed to 5 main obstacles.<\/p>\n

    \n
  1. Coopetition between Logistics and E-commerce<\/strong><\/li>\n
  2. Uncertainty of Emerging Technologies<\/strong><\/li>\n
  3. Issues with Automation Manufacturers<\/strong><\/li>\n
  4. Increasing Complexity with Fulfillment<\/strong><\/li>\n
  5. Risk of Short-term Contracts<\/strong><\/li>\n<\/ol>\n

    \"\"<\/a><\/p>\n

    Let\u2019s talk about these obstacles in detail.<\/p>\n

    Coopetition between Logistics and E-commerce<\/strong><\/h2>\n

    The growth of the online retail sector is quite lucrative for Logistics companies.\u00a0 However, the unusual dynamics between the online retailers and Logistics companies cause some critical challenges for the latter, including:<\/p>\n