A Collection of Nonsense Terms and Concepts
In the world of logistics, there are a lot of terms and concepts that are completely useless, yet seem to be ubiquitous. You find them at conferences, in the news, in student papers, on corporate websites… And it would be good to put an end to some of them. Since this doesn’t seem to be a realistic goal, the second best thing we can do is to collect them and describe why exactly they are useless and ought to be avoided.
Sometimes there is nothing wrong with the term, technology, or concept itself, but it’s the way they are applied to the logistics world that should make us suspicious. These are also included in the list.
This little “dictionary” of sorts is certainly not exhaustive and I will be happy to expand it as I’m being reminded of more things that don’t make sense.
AMRs (Autonomous Mobile Robots)
AMR is a term entirely made up by the newer players in the warehouse automation market to make AGVs (automated guided vehicles) sound and sell better. Although I have had the pleasure of working with dozens of people from both AGV and AMR companies, not a single person was able to coherently explain what the difference between AGVs and AMRs is supposed to be. Some claim that obstacle avoidance (see below) distinguishes AMRs from AGVs. Since both types of vehicles are often equipped with exactly the same sensor technology, the difference would be based solely on a software function. Can an AGV be turned into an AMR with a software update? AGVs and AMRs are one and the same.
One theory as to why the term AMR came up is that AGVs have been on the market for more than 40 years and have never had the commercial success that “journalists” and “market analysts” predicted. And perhaps it was simply time to give the same thing a different name to improve its appeal in the market. Another theory is that some of the early AMR companies did not know that AGVs had been around for over 40 years, so they had to invent a name for their product category.
Artificial Intelligence (AI)
Talk of artificial intelligence (AI) has been with us for many years. Supported by clueless “journalists” and the LinkedIn crowd, the topic has received more attention than was warranted. Needless to say, there was not a single useful application that would make a difference to anybody’s lives until OpenAI came on the scene with DALL-E and ChatGPT. Of course, that did not stop the clickbaiters from seeing “countless” applications of AI in warehouse logistics. However, aside from image processing in robotic piece picking, there do not seem to be any use cases for AI in warehouse logistics yet, despite startups with big marketing budgets claiming the opposite. It has become the norm to scream “AI!!1” at every non-dull regular software function. Apart from the picking robot that identifies the items to be picked, AI is most helpful in identifying people who have no idea what they are talking about.
The best-known manifestation of blockchain is cryptocurrencies, which have helped fuel the economic activities of scammers, “journalists”, Russian ransomware script kiddies, and social media “influencers.”. All of which is not relevant to logistics. However, it turns out that no competent person I have ever met is able to come up with a useful application of blockchain in logistics. That does not stop incompetent people from talking about the “many” applications of blockchain in logistics. Generations of students have referred in their term papers to the famous case study of Maersk and IBM, who have teamed up to use Blockchain for… something – and most likely something that could be done by more conventional means in an easier, cheaper, and equally reliable way. That’s probably why they announced they were ending their experiment at the end of 2022, leaving students motivated enough to write about blockchain in logistics without a case study.
When you’re scratching your head for research ideas, sometimes the most ridiculous ones can actually land you a federal grant. Take, for example, the idea of using cargo bikes for last-mile delivery instead of regular delivery vans. Sure, it may reduce CO2 emissions (or will it? I wouldn’t be too sure), but at what cost? We are already facing a labor shortage in logistics, and this problem is only going to get worse as demographics shift. But while the industry struggles to find and retain workers, researchers have the luxury of focusing on a single variable: CO2 emissions. Meanwhile, the real-world concerns of reliability, speed, working conditions, and personal safety are tossed out the window. Climate change certainly needs to be on the agenda. But in addition to climate we may want to consider something more mundane: the weather. Because sometimes, it rains. Or it snows. Or it is really hot or really cold. Feasibility and reliability of everyday services like parcel deliveries shouldn’t be dependent on the vicissitudes of the weather. Everybody knows that, except perhaps some academics with too much time at their disposal in their little bubble.
Cobot, the fancy term for “collaborative robot,” refers to robots that play nice with humans in the same workspace. Starting around 2016, warehouse automation enthusiasts started singing the praises of cobots as the future of warehouses. But at trade shows, all they did was pour beer into glasses to excite your grandma. But let’s face it, grandma isn’t a logistics engineer. The problem with cobots is that “safe” often means “slow,” which is the last thing you want in a warehouse. You either want robots to work faster than humans, or without them altogether. A robot that moves at the same pace as a human (if you’re lucky) doesn’t have much use in warehouse logistics. As a result, the hype around cobots in logistics has fizzled out.
In the context of warehouses, digital twin usually means a 3D representation (sometimes just a 2D representation) of warehouses that allows warehouse managers to view exactly the same information they could get for free from their WMS. Of course, digital twins are anything but free, but they are certainly “innovative”. (Let me know if you want me to help you save €100.000. We can split the savings).
Digitization and digitalization are used interchangeably, with the former apparently being more common in the UK. “Digital transformation” is a popular variant.
Formally, digitalization describes the… well, it’s not entirely clear, to be honest. Some use it interchangeably with the even more useless term Industry 4.0 (see below), some talk about “changing business models” (more details, please), some refer to the use of “digital technologies” (as if people worked on typewriters). One large company with which I’m very familiar made several attempts at “digitalization” over more than six years, although neither the people in charge nor the external consultants could answer my question about what they were actually trying to accomplish. After spending even more money, I’ve heard that employees will soon be able to file for reimbursement of travel expenses on a poorly designed SAP form, instead of a poorly designed Excel spreadsheet that they had to print out in the old, non-digital days. True progress!
Drones #1: Delivery Drones
Delivery drones have been a fad since Amazon, DHL and Co. announced they are testing package delivery with drones. With the exception of Walmart, which proudly announced that it had made 6.000 deliveries by drone in 2022 (by my conservative estimate, that means each delivery must have cost them > €1.000), pretty much all companies have stopped this craze again. On the scale of insanity, delivery by drone ranks even ahead of delivery by cargo bike. Not only does the feasibility and reliability of drone deliveries depend heavily on weather conditions, which means you have to have full backup capacity, making the whole thing even more expensive, but they are also noisy and annoying to people and animals. Plus, drones can fail and fall on someone’s head. Plus, you are replacing highly efficient delivery by van in a milk run with a load capacity of > 100 packages with highly inefficient transport of individual packages. Of course, this will attract attention, “journalists” will get excited, and your grandmother will be impressed.
Drones #2: Warehouse Drones
Some people who liked to play with drones and were desperate for a commercial application for drones thought it would be smart to have drones flying in warehouses. After thinking about what they could do with drones in warehouses, they figured out that letting drones count inventory must be a good idea.
Well. Drones can’t look inside boxes and bins to count the contents. But they are great at blowing decades-old dust off rack beams. Backed by incompetent “journalists” who make their living lending their media reach to startups with outlandish ideas, the drone people actually made it into pilot projects with a number of 3PLs – most of whom concluded that the idea was just as useless as it looked from the very beginning.
A great example of a solution in need of a problem.
Everything has to be green, which is the color of choice to indicate sustainability as well as nausea 🤮. And so green logistics is a common theme among logistics companies, too. Some of them have put solar panels on the roofs of their warehouses, sometimes even beehives. Many have added a few paragraphs of text on their website about their solar panels and their beehives, and if they have, they have definitely shared this news on LinkedIn.
As in logistics we deal with problems that others create for us, our leverage is somewhat limited. With around 500 million returned products from e-com in Germany alone (according to Universität Bamberg), we can of course continue to discuss wind turbines and put beehives on rooftops; alternatively, we could try to avoid some of these 500 million returns per year. But that is beyond the scope and reach of logistics. And it’s a lot harder than sharing nonsense on LinkedIn.
Industry 4.0 is to factories what supply chain management (see below) is to multi-tiered supply networks: it’s an invented nonsense term that no one wants to define clearly and precisely and that is based on false premises. It has been seized upon by politicians and celebrated by clueless “journalists” and marketing departments. Like supply chain management, it’s a great way to sell management consulting, waste people’s time in keynotes and low-quality lectures, get research grants and produce (yes) publications. The term Industry 4.0 was a German invention and seems to be most prevalent in Germany and other European countries; the United States seems to be far less affected. As was to be expected, Industry 4.0 has a number of younger siblings, such as “Logistics 4.0”, “Human Resource 4.0”, and really anything 4.0 that needs a bit of a refresher. As you might expect, some scammers and academic charlatans are already pushing “Industry 5.0”.
Microfulfillment Center (MFCs)
Microfulfillment Centers (MFCs) involve the integration of small automated warehouses for online order fulfillment within the existing infrastructure of retail stores. This idea emerged as a solution to the costly nature of last-mile delivery and the potential for increased productivity through automation in warehouse operations. While the underlying reasoning is sound, the execution of placing these automated systems in spaces that are not specifically designed to accommodate them may not be the most viable approach. In fact, it turns out to be both economical and technical nonsense. This is true in particular for the food retail segment where MFCs were pushed the most by vendors. The nonsensical nature of MFCs was obvious from the beginning to anyone who understands warehouse automation and the food retail industry. With five minutes of spreadsheet modeling, one could demonstrate that return on investment would never happen. Since competent people represent a small minority, and particularly in management positions, the industry decided to spend millions of Euros in designing and marketing MFC solutions to food retailers. Some, like Takeoff, Dematic, and Savoye decided to base their MFC solutions on the AS/RS technology that is least fit for it: single-level (captive) shuttle systems. While we can’t blame Takeoff (effectively a software start-up, no logistics experts), we have to wonder about Dematic and Savoye, both of whom should have enough people who understand why small-scale shuttle systems will necessarily fail to work with the order structure of online groceries. Given the amount of noise the industry, “journalists” and “market analysts” made about MFCs between 2019 and 2021, it was somewhat amusing to find MFCs effectively forgotten at Logimat 2022. It almost felt like a person photoshopped out of a photograph.
Mobile Picking Robots
Mobile picking robots allow you to replace one expensive asset (the human), who travels long distances when picking orders and therefore achieves low picking rates, with – you guessed it – another expensive asset (the robot), who travels the same distances but moves and picks much slower, and therefore achieves a much lower picking rate.
If this doesn’t convince you yet: the mobile robot brings in some additional technical complexity, limited range of SKUs it can handle, failures, expensive maintenance contracts, the need for manual backup capacity, as well as the need for order consolidation (depending on the order structure). You will love it.
Robotic order picking is complicated. AGVs are complicated. Combining the two is pretty hopeless. And is highly likely to produce no economic nor operational benefits whatsoever (see above).
Obstacle avoidance refers to the ability of an automated guided vehicle (AGV) to detect and navigate around obstacles in its environment. Some would argue that obstacle avoidance is one of the characteristics that define an AMR (see above). The ability of a vehicle to drive around an unknown object in its path is as impressive as it is useless. If random objects are placed on driveways in your warehouse or your factory, you have very different problems to solve than obstacle avoidance.
Supply Chain Management (SCM)
Supply Chain Management is a popular term. It describes a variety of activities that have nothing to do with “managing supply chains” the reasons being that (a) supply chains don’t exist (they really are supply networks, which comes with a host of practical implications) and (b) virtually no one does more than deal with their tier-1 suppliers. Goals associated with supply chain management fall somewhere between irrelevant and illusory. Check out this detailed explanation of why supply chain management doesn’t exist.
The Q in Q Commerce stands for “Quick” and indicates cycle time for order processing and delivery in the range of 15 to 45 minutes. While there were some players before Covid, this young branch of e-commerce has received a huge boost from the pandemic. Companies like GoPuff, Gorillas and Getir had valuations in the billions – which is as silly as it sounds. The business model of having some helpless, abused immigrant or Gen-Z person deliver low-value, low-margin food items by bicycle in record time is plain stupid and there is no nicer way to put it. The idea that this business model could ever turn a profit is equally silly. It has always been clear to anyone with a relevant technical education that quick order fulfillment and efficient order fulfillment are polar opposites. Since you need efficient order fulfillment to make money on low-margin items, the promise of quick and inevitably inefficient order fulfillment spells financial collapse. Sure enough, company valuations went up in smoke in 2022 as investor money dried up, and Q Commerce players are going bust one by one. As they should, because their business model is so silly.