Samsung SDS, the IT solutions and logistics service arm of South Korea’s Samsung Group, is seeking to outshine rivals in the global logistics business with its smart logistics platform that leverages artificial intelligence and blockchain technology to improve operational efficiency.

The company on Thursday shared the latest upgrades to it smart logistics platform Cello -- an end-to-end integrated logistics solution that handles logistics process from start to finish, including supply chain planning and optimization as well as transportation and warehouse management.

Samsung SDS ventured into the logistics business in 2012 with the launch of Cello, becoming a contract logistics service provider. Though it initially began with Samsung Electronics as its only client, Samsung SDS has since expanded its reach to a variety of external clients in Korea and abroad.   

Over the past few years, the Korean logistics service provider began applying AI and blockchain software to its platform Cello, including electronics retailers and food companies, to improve inventory management and international shipping procedures.

And as of now, Samsung SDS believes it is among the few companies in the world which has managed to build viable logistics systems based on AI and blockchain that have brought tangible improvements to clients’ logistics and supply chain management systems.

“For (new, emerging) technologies like blockchain, the most important task is creating many real-life use cases proving their utility and value,” Samsung SDS CEO Hong Won-pyo said during a press conference held Thursday at the Samsung SDS Pangyo Office.

“Blockchain technology itself is open-sourced. But it becomes useful only when it is combined with the right functions to serve a particular purposes in a particular industry. And I believe this is not something all companies can do,” he noted.

During the Thursday event, Samsung SDS highlighted how clients were able to improve their logistics efficiency by using the firm’s artificial intelligence algorithms to make systemized demand projections and guide inventory planning.

The firm has built a so-called “AI-based Fulfillment Center” that makes sales projections for each product sold at a retailer based on its previous sales patterns. It makes use of the firm’s big data analysis platform, Brightics AI.

The AI system, applied at 428 store locations in Germany and 53 in Austria, was able to improve weekly demand projection by around 25 to 28 percentage points compared to a human sales expert. It also cut down the time needed for analytics down to 10 minutes, compared to a whole day for a human.

Samsung SDS is also confirming the benefits of applying blockchain to maritime shipping systems.

Blockchain is an online ledger that maintains a continuously expanding list of data records from different parties. Records are saved into a “block” then cryptographically linked to a “chain.” Once the link is made, others joined in the network get an updated copy of that information in real time.

The self-operational ledger cannot be altered once updated, only added to, and is shared with everyone in the network in real time, making it transparent, secure and largely hack-proof.

When applied to shipping, it means all the involved parties record and share logistics data in the peer-to-peer blockchain network. The details of the entire shipping process from manufacturing, delivery, and arrival to retailers, can be kept transparent at all times.

Samsung SDS has already carried out success a pilot project with Korean fish cake manufacturer Samjin Amook using a blockchain-based logistics system. By scanning a barcode, customers could see where the product was made and where it passed before arriving at the supermarket, improving trust.

In the future, Samsung SDS hopes to apply its blockchain-based data recording system to the finance and public sectors, to make facilitating digital transactions and authentication procedures more secure and cost-effective.

Going beyond its role as a logistics service provider, Samsung SDS has also set up an online marketplace, dubbed Cello Square, in which clients around the world can browse and pick certain logistics services based on their needs.

This year, Samsung SDS expects to handle around 488,000 tons of air cargo and 1.07 million units of twenty-foot equivalent ship cargo, making it one of the world’s top 12 logistics companies by shipment volume.

Right now, it clients are largely limited to Samsung companies. Samsung Electronics currently takes up around 85 percent of Samsung SDS’ logistics business. Other Samsung affiliates account for 5 percent, while external clients make up 10 percent. Samsung SDS hopes to sign more outside clients to diversify its income sources in the future.

Samsung SDS’ logistics unit currently operates 64 offices in 40 countries. Last year, the business earned the company 4.2 trillion won ($3.93 billion) in revenue.  

By Sohn Ji-young (jys@heraldcorp.com)