Efficiency Gains for Established Industries
While disruption of consumer industries and the direct leading-edge applications of AI and Big Data are more headline-grabbing, there is disruption no less significant shaking up more traditional industries.
Full Truck Alliance Online platform connecting truck drivers with clients, providing various services, including transportation information, fuel discounts and financing China
Konux Smart sensor & analytic platform provider to monitor and improve railway infrastructure Germany
Delhivery Full-service logistics company leveraging machine learning India
Relex AI-driven tool to optimize supply chain, forecasting, and promotion for retailers Finland
There has been notable innovation across Europe and Asia Pacific to help companies simplify and automate a variety of business processes. Many of these exploit the spread of new technologies and devices and draw upon one or more of the various categories of intelligent automation, which are being rapidly adopted by enterprises globally.
These innovations help companies find efficiencies in areas such as inventory and supply chain management, as well as in supporting more traditional manufacturing. In addition, a new era of consultancy is emerging that is monetizing the process of collecting, analyzing, and interpreting data.
Key Growth Sectors
Supply Chain and Inventory Management
A quiet revolution is taking place in the commercial supply chain. The application of intelligent automation solutions is changing the way packages of all sizes are moved around the world. This shift is also creating significant, if incremental, efficiency gains for established logistics firms in areas such as demand forecasting, production planning, and delivery routing.
While major companies are finding ways to adapt, a variety of innovative companies have also emerged as either challengers or service providers to existing operators.
China’s Full Truck Alliance is the latter. This online platform creates efficiency in an industry that has historically been relatively chaotic by connecting small logistics providers (often single truck operators) with manufacturers. It provides a payment mechanism, fuel discounts, and transportation and location updates. It also has a financing arm that lends to drivers looking to expand their operations.
India’s Delhivery is another up-and-coming company challenging existing logistics players, but rather than providing a service, it offers comprehensive logistics solutions, drawing upon data science and machine learning to find efficiencies and lower costs.
We expect further disruption in this sector. Advances in robotics and AI, for example, have the potential to complement improvements in machine vision to make physical labor largely obsolete across the logistics market – in factories, warehouses, and the trucks themselves. Furthermore, the rollout and increasing ubiquity of 5G connectivity will radically improve the ability of companies to actively monitor and manage supply chains.
Supply Chain Data Snapshot
194,000 (2018) to 938,000 (2022)
Estimated worldwide shipments of warehousing and logistics robots – a compound annual growth rate of 48%.
Estimated revenue of warehousing and logistics robot industry in 2022
Data points reportedly used by DHL to create predictive model for transit times
Gallons of fuel UPS estimates it saves on annually thanks to delivery route optimizing software
Sources: Tractica, Mobile Robot Platforms, Shuttle Automated Storage and Retrieval Systems, Industrial Robotic Manipulators, and Gantry Robots: Global Market Analysis and Forecasts, 1Q19; DHL; UPS.
Piab Industrial automation and robotic components provider Sweden
Computer vision solutions provider for industrial automation Germany
Altius, MiQ, Logex Data consultancies UK, UK, Netherlands
TalkingData Independent Big Data service platform leveraging AI China
*The deal summary, general partner, and/or companies shown above are intended for illustrative purposes only. While this may or may not be an actual investment or relationship in a HarbourVest portfolio, there is no guarantee it will be in a future portfolio.
The most obvious use of technology in manufacturing is through the increasing ubiquity of robotics in assembly. The value of the global industrial robotics market was just over $35 billion in 2016 but is expected to exceed $80 billion by 2024.⁶
There are, however, multiple other applications for new technologies in production lines. Advances in machine vision – led by companies such as Germany’s Lakesight – can potentially drive greater production efficiency in a number of ways, including:
- Predictive maintenance: using machine vision and learning technologies to collect data that will allow potential faults to be identified and addressed before they manifest
- Defect detection and cataloguing: automatically identifying minor product defects and grading their severity, allowing for informed decisions to be made as to when or whether to halt production
- Tracking and tracing products: verifying that labeling matches centrally-held product information and ensure products can be traced from production line to the end consumer
- Safety: tracking the movement of people and machinery to predict potentially dangerous interactions
6 Global Market Insights, Industrial Robotics Market Forecast - Industry Size, Share Report 2024, February 2018
Data Mining and Analytics
Many companies are keen to use AI, but may lack a clear strategy, could have limited awareness of its full capabilities, and might lack the internal expertise to create and maintain an AI program. This has helped support the emergence of third-party consulting services for Big Data and AI applications.
A prime example is the UK’s Altius. This consultancy develops tailored transformation projects for clients founded upon capturing and effectively using data, as well as providing a cloud-based data platform to support the digital strategy chosen. Others are more siloed, focusing on specific business functions.
This is not just a European phenomenon. In Asia, China’s TalkingData is a broad Big Data service platform with AI capabilities. It provides statistics and analytics software that captures data and reports on user behavior, industry trends, and forecasts.
While human-led consulting services will continue to have their place in the marketplace, we expect data mining and analytics services to take significant market share and become an essential element of – and potentially a key differentiator within – the traditional consulting industry.