of white‐collar labor resources and skillsets, which is surprising given the pervasiveness of mobile, e‐commerce, and sharing economy trends that are driving consumer behavior.
Some signals show that the world is at the brink of a new technological revolution, now referred to as the Fourth Industrial Revolution (4IR), where the convergence of new and old technologies promises to redefine and transform the future of work and more. The intricacy and extent to which this transformation will happen will be unlike anything that has previously occurred (Schwab 2015). Implementing and realizing the results of the technologies laid out in the 4IR remain theoretical outside a few select companies. However, breakthroughs in AI and machine learning are poised to have a direct impact on our daily lives (Lee 2018). In some ways, the 4IR is a continuation of digitalization brought about by the Third Industrial Revolution as seen in Figure 1.1. However, it is unique in how it is blending the physical and cyber worlds through the prevalence of several technologies: Internet of Things (IoT) devices, cheaper cloud computing, AI, and automation (Marr 2018).
The computerization of rote tasks once done by clerks, the displacement of traditional business models through platform software application and websites, and the automation of manufacturing and physical movement of goods were all witnessed in most parts of the developed world in the early twenty‐first century. Looking toward the future, by 2022, companies have the potential to boost revenues by nearly 40 % by investing in AI and human partnership that would translate to $800 billion in new profitability (Simkin 2016). What the steam engine was able to do in decades for muscle power, computers, and digital automation was done for brain power by fundamentally reshaping the way that we think and the environment we operate in (Brynjolfsson and McAfee 2014). Much like its predecessors, the 4IR is changing the way that humans interact with the world and opening new opportunities for businesses to optimize their workflows.
Figure 1.1 The Fourth Industrial Revolution.
In his book, Hit Refresh, Microsoft's CEO Satya Nadella states that the origin of the 4IR can be identified by “A confluence of three breakthroughs—Big Data, massive computing power, and sophisticated algorithms,” and that it is “accelerating AI from sci‐fi to reality” (Nadella et al. 2017). Previously, Thomas Friedman had pointed out that the world is much flatter than it used to be as a result of the outsourcing of not only physical labor but also, with the adoption of new technology, white‐collar labor (Friedman 2007). With such a quickly evolving landscape, it is important to note that the way companies adopt these technologies will have significant impacts on their communities, company structure and strategy, and ultimately their future. While robotic process automation (RPA) and AI are not necessarily novel concepts, downstream consumer demand, consultant‐driven media blitz, and subsequent executive exploration give insight into where the B2B service sector is headed.
The Role of Digital Transformation
To take advantage and participate in the 4IR, many companies now find themselves in a position where they need to undergo what many are calling a “digital transformation.” Digital transformation can be explained as the shift in work, jobs, and products through the use of technology in a company or the operational context of that company (Parviainen et al. 2017). Transformations driven by technological advancements have a history of being stalled as governments struggle to determine the policy to control them, companies lack resources to take advantage of them, or the labor force is not equipped to use them. Strong economic activity since 2008 has helped to sustain global economic growth, and corporate coffers had been full heading into the COVID‐19 era. To evaluate the potential repercussions of 4IR, it is worthwhile to explore how some companies have already embraced these technologies and engrained them into their core business models.
Hub Economy Companies Leading the Way
Technological leadership has been spearheaded by a group of hub economy companies that do not operate by trying to compete on legacy products and services. These companies whose valuations now compare with some of the largest governments in the world use their vast networks in certain domains and then transfer those assets to redesign the competitive landscape of new domains and markets (Marco and Lakhani 2017). Hub economy companies like Amazon, Alibaba, and Alphabet are changing the way that value is created and gaining market share at a disproportionate and accelerated manner (Marco and Lakhani 2017). Grown out of the Third Industrial Revolution, these companies are exemplifying the potential of the 4IR as they innovate, grow exponentially, and leverage multiple forms of technology along the way.
Traditional B2B companies are struggling to adapt and catch up as their lower‐level white‐collar worker ranks are bogged down by complacency and low levels of retention. The sense of urgency has not set in, yet. Protests over Amazon opening up a new headquarter in New York (Feiner 2019) and an increasingly larger media profile surrounding the automation involved in their warehouses (Bose 2019) reflect the communities' cognition that hub economy companies' consolidation of market share may not be beneficial to all despite offering convenience and a lower price tag. For every million dollars in revenue that companies like Amazon take from traditional businesses like Walmart, it is estimated that four jobs are lost in the community (Kaplan 2015). Adopting cutting‐edge technology, such as automation and AI, and venturing into different market sectors have traditionally not been the core focus of many logistics companies as prioritization has tended to focus on more tangible short‐term customer‐oriented results or supplier management. The underlying global supply chain is shifting beneath us, and there is evidence to suggest a change is coming that will necessitate a reprioritization.
Current State of the Logistics Industry
Effects of the Second and Third Industrial Revolutions on Logistics
Logistics was born out of the need for military groups to travel efficiently around the world, and the term was borrowed by international trading companies as they looked to deliver their goods (Bonacich and Wilson 2011). The industry was further developed by the advent of the steam engine as its propelled cargo on trains and boats at faster paces. For this chapter, the term logistics will represent third‐party logistics (3PLs) or freight forwarding companies, who provide transportation, warehousing, and compliance support to the global trade network. Logistics is an industry built on relationships, information arbitrage, and strategic outsourcing from retailers and manufacturers of their transportation coordination needs to specialized companies that only do this in one form or another.
Logistics has transformed in terms of complexity as it moved from break‐bulk shipping into the containerized and air freight modes of transportation and now into an increasingly complex logistics network that is being constructed around consumer demand. The Third Industrial Revolution brought about a foundational shift in the levels of transparency available via Internet‐enabled computers that opened up new forms of competition for incumbent players as the amount of capital needed to be involved in the process decreased dramatically. Transparency led to more competition that result to lower margins on the supply side; however, at the same time, it also decreased the amount of manual labor needed that reduced costs (McKinsey&Company 2018).
Technology Is Easy; But People Are Hard
With $1.5 trillion being spent every year on logistics, new entrants are quickly entering the market, and incumbents are frantically trying to solidify their position (Gould 2018). As a critical control mechanism of global supply chain activities, global logistics service providers, of which freight forwarding companies are part of, are facing a new set of requirements from supplier and customers, and they are having to adjust their organizational competencies and align processes (Chen et al. 2019). Societal adoption of technology has traditionally varied even when the talent and infrastructure have been in place, and researchers