Logistics Beacons: Using Proximity As A Logistics Oversight Service (an Excerpt)

The global logistics industry generates $9.1 Trillion dollars in revenue. The global Third Party Logistics (3PL) industry generates $750 Billion in revenue as a part of that figure. Further, the U.S. trucking industry alone generates approximately $700 Billion in revenue. Air and sea cargo industries generate $62 Billion each. These are huge numbers that represent the movement of every good across the globe and the reason we are seeing the rise of Logistics Beacons as a way to increase logistics and supply chain visibility.

In the most simple of terms, any product that is produced – or the raw goods used to produce it, are moved through some sort of logistics network. There is no larger industry in the world than logistics. And there is not a more important industry to the world than logistics. Food, medicine, technology, fuel, building materials, waste – the very basic inputs and outputs of any modern society are dependent upon logistics.

Technology has always played a critical part within logistics. Over the past two decades, there have been several technologies that played an important role with respect to increased supply chain visibility. Two of those were bar codes and GPS. There were also technologies that over promised and under delivered, such as RFID.

Each of these technologies provided visibility of a single item flowing through a logistics network. GPS was and is a pro-active technology providing location of a truck, train, plane or container. Barcodes on the other hand, were reactive technologies and often operated at the product level. RFID technology can operate at both a reactive or proactive (passive versus active) manner, and can be paired at a transportation asset or product level.

But RFID fell short for a myriad of reasons, most of which could be detailed in a stand-alone research paper. For simplicity sake, let’s just state that RFID infrastructure (gates and readers) are expensive and cumbersome to deploy. This cost and difficulty became a natural antagonist to the desired ubiquity of the technology. In addition, the cost of active tags combined with the “dumb” (e.g. no power or memory) of passive tags further plagued adoption within logistics. Thus, RFID is now more synonymous with inventory management.

Today, we know roughly where a product is or has been in terms of single fixed points in time—two dimensions if you will (where and when). But, what logistics does not know today is what that asset or product was around, flowed through or handled by. You may know that a shipment arrived at a location. You may not know that it was moved through docking bay 7, handled by forklift 123, driven by employee ABC, and placed in location XYZ at 1:12 PM. Or, if you do, you have to cobble that information together from six different sources – many of which are not IoT-based in terms of data integration.

But much of this can and will change with the introduction of Bluetooth® Low Energy (BLE) technology in the form of Logistics Beacons. A beacon is an independent, low-cost device that is built upon the latest Bluetooth® standards. These devices are self-powered and require no data plan to provide proximity services. They broadcast their presence to other nearby devices, such as smart phones, tablets, computers, and sensors.


Cold Chain Shipping Loss in Pharmaceuticals – $35B per year and growing

In 2014, the pharmaceutical industry had sales of $790 Billion in non-cold-chain (77.8%) and $225 Billion in Cold-chain or controlled room temperature (22.2%) products. That totals $1.015 Trillion. If we estimate a 5% CAGR (compound annual growth rate) then by 2019, that number will be $1.36 Trillion.

The losses associated with temperature excursions in healthcare come to $35 Billion. That is broken down as follows:

  • $15.2B in Lost product cost
  • $8.6B in root cause analysis
  • $5.65B in clinical trial loss
  • $3.65B in replacement costs
  • $1B in wasted logistics costs

Within Clinical trials, the total loss of $5.65B is broken down further as follows*:

  • $1.3B in Opportunity labor costs
  • $2B in Direct labor costs
  • $2.34B in Trial product loss

Loss is present across the industry in high numbers, for example:

  • 25% of vaccines reach their destination degraded because of incorrect shipping.
  • 30% of scrapped pharmaceuticals can be attributed to logistics issues alone
  • 20% of temp-sensitive products are damaged during transport due to a broken cold chain.

A pallet of unprotected product on an airport tarmac with an ambient temperature of ~70°F (21°C) can quickly reach temperatures above ~130°F (55°C). At that temperature, you can fry an egg in 20 minutes.

So, what is a billion worth?

$16 Billion, which is the approximate costs incurred by the top ten pharma firms due to temperature excursions, is 20 times the average price to earnings ratio of big pharmaceutical firms.

$320 Billion, which is the total corporate value wasted due to temperature, is larger than the 2015 total market capitalization of Johnson & Johnson ($274 Billion).

Get the infographic here


* = Ray Geoff, Wyeth Vaccines—white paper entitled “Cold Chain to Clinical Site: The Shipping Excursions”, indeed website salary estimates
Other sources: World Health Organization (WHO); Parenteral Drug Associate(PDA); worldpharmaceuticals.net; other industry estimates.