Cloud & APIs

Trend Overview

Impact:

Low

Realization:

< 5 Years

Focus Areas:

Automation & Efficiency Customer Experience Physical & Digital Security Visibility & Resilience

Trend Clusters:

Digital Backbone

Sectors:

The trend of Cloud & APIs refers to the expanding operational integration of cloud computing, using web-based software services to store and exchange data online instead of using on-premise hard drive solutions. Further it includes application programming interfaces (APIs) which are software protocols that allow software services and applications to communicate with each other and exchange data and functionalities in real time.

Because APIs allow companies to open up access to their resources while maintaining security and control, they have become a valuable aspect of modern business. Some popular examples of application programming interfaces include Open Authorization (using Facebook, Twitter or Google to quickly authenticate the user), third-party payment processing (eg. PayPal), and location services (eg., routing option to nearest retail location via Google Maps).

Popular API examples include third-party payment processing such as Paypal, providing location services such as directing people to the nearest retail store via Google Maps, or using an open authorization framework (OAuth) to authenticate users via their Facebook, Twitter, or Google account through third-party providers.

In 2021 alone, companies delivering their main value proposition via an API (or by using an API) raised 5 billion USD in funding. As an example, the financial services company Stripe began as an API with just seven lines of code and went on to partner with many of the biggest enterprises in the world; it has diversified to offer loans and corporate cards, and was recently valued at 36 billion USD.

In the logistics industry, as well, the need for connecting to partners along the value chain and exchanging real-time data is increasing as well. Applications range from generating shipping labels to tracking shipments and returns.

With the increasing need and value of exchanging data between functions, operations, companies, and end users, it is expected that cloud computing and APIs will grow in the next 1 to 3 years. Especially in the area of e-commerce, there are good prospects for APIs in the implementation of an integrated omnichannel strategy and the assimilation of detailed track-and-trace information from logistics service providers into e-retailer websites.

This trend is likely to have only a low impact on logistics; while it will support day-to-day operations and improve the customer experience, it is more likely to be classified as an enabling technology.

Processes up and down supply chains can benefit from APIs, reducing administrative costs and improving customer service.

Source: Eradani

Relevance to the Future of Logistics

Robotic Fleet Management

Robotics is booming during times of labor shortage, especially in the logistics industry. In North America alone in 2021, companies across industries ordered and incorporated more than 40,000 robots into operations.

Implementing more robotic systems increases the complexity of onboarding each additional solution, as well as monitoring interactive processes. Effective scaling and efficient implementation of new robots can only be achieved if all involved systems are interoperable. In this use case, APIs can successfully connect different robots from various vendors to a single warehouse management system (WMS).

Companies like Blue Yonder, one of DHL’s partners, identified this challenge and developed a solution for the increasing complexity of warehouse automation. Blue Yonder’s software-as-a-service cloud solution Robotics Hub, built on Microsoft Azure, integrates any type of robot into an existing WMS while reducing integration time for new robots and enabling monitoring of entire robotic fleets via one dashboard. This means the Robotics Hub acts as a communicator between the WMS and the cloud systems of all the robots so that orders are processed as efficiently as possible – all connected via APIs.

It is clear that the ongoing automation of supply chain operations, which goes hand in hand with the integration of robotic solutions, demands logistics companies focus on cloud and API solutions.

Next use case

E-Commerce Integration

The scaling of cloud and API solutions is enabling new opportunities for many companies to extend their reach by integrating with different platforms, as well as offering new capabilities to customers. Already in 2020, 36% of retailers considered APIs a strategic resource for creating business value. This indicates the relevance of APIs, particularly in the e-commerce sector, to enable presenting updates digitally to the end customer, from the ordering process on the company's own platform to last-mile delivery.

An example of leveraging APIs is the so-called super-app which can connect countless mini-apps via one main app platform, so the end user does not have to leave the app platform to use a variety of different services. The most prominent example of a super-app comes from the Chinese company WeChat, which has used API technology to integrate over 3 million mini programs in its super-app, covering everything from retail online shopping to online dating.

APIs are a great enabler of new commercial opportunities for logistics by integrating real-time information on delivery options, shipment tracking, freight rates, and availability of transportation solutions and other services into apps, websites, and customer platforms. Through the DHL API Developer Portal, interested third parties can access a range of APIs to integrate DHL solutions such as tracking, shipping, and location services on their own e-commerce platforms in order to provide frictionless transparency to their end customers.

In the logistics industry, the various opportunities presented by cloud and API services lead to an enhanced customer experience, deeper customer relationships, business growth, and ultimately competitive advantage.

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Integrative Cloud Logistics Platforms

The integration of cloud logistics platforms into existing IT data infrastructure and systems such as enterprise resource planning (ERP) systems via APIs enables companies to incorporate all relevant logistics data into operational planning and execution. This allows companies to streamline logistics processes through fleet management, optimized inventory management, and accurate shipment tracking and monitoring. In addition, cloud logistics platforms create a high level of data transparency across a company's value chain, enabling a smoother end-customer experience by integrating updated and relevant information (eg, order options, billing and tracking details) across all customer touchpoints. Companies like Cleo, with its Cleo Integration Cloud, are developing cloud logistics platform solutions to digitize complete end-to-end business processes by integrating third-party services into platforms using APIs.

Through the integration of cloud logistics systems, decision makers receive real-time data that improves performance management and enables new insights into business data through analytics. For example, by connecting to the main ERP system, a cloud logistics system can directly map price fluctuations in global freight forwarding in order to reschedule transport routes at short notice, if necessary, and to inform customers and internal stakeholders about possible delays.

Previous use case

Challenges

Since cloud and API technologies rely on web-based programs, a secure IT infrastructure is essential to minimize the risk of data breaches and ensure trouble-free cloud-based supply chain operations.

Successfully integrating API-based functionalities and building and maintaining a cloud platform requires resources and skills not necessarily available in logistics.

As cloud and API solutions are the cornerstone of integration into a larger, connected digital data exchange ecosystem, the initial costs of building and incorporating such solutions can be high.

Challenge 1 Challenge 2 Challenge 3

This trend should be CLOSELY monitored, with implementations available for many use cases today.

Outlook

Cloud and API solutions will continue to be an integral part of day-to-day operations for many companies, so that an increase in number of these solutions can be expected. Even if the overall impact on the core logistics business is rather small, we expect cloud and API technologies to mature in the next one to three years, so that API integration will be standard for any additional IT solution in the future.