Digital distribution centers—The future is here

The pace of change has never been as fast as it is now. Globally, the population is becoming more urban and income levels are rising. By 2050, nearly 70 percent of the global population will live in cities or urban areas—that’s six billion people. Consumer behavior has also materially changed over the last decade, and omnichannel retail, personalization, and demand for same day deliveries are growing. To cater to the changing landscape, urban distribution centers that stage products closer to users within large cities are on the rise to enable faster delivery and greater customization.

Within the four walls of the distribution center, picking and packing tasks account for more than 50 percent of the total labor cost of warehousing operations. Access to labor has become increasingly challenging, particularly in urban centers, and staffing levels shoot up five to ten-times normal levels during the holiday season. Space constraints and difficulty in staffing are pushing companies to look at adopting distribution center technologies that cut labor costs, optimizes the flow of products, and improves productivity and utilization of these centers.

Since announcing Microsoft’s $5B commitment to developing an industry leading internet of things (IoT) platform last year, we’ve continued to work with our ecosystem partners to build solutions to address such problems. In “Our IoT Vision and Roadmap” session at Microsoft Build, we announced a partnership with Lenovo and NVIDIA, to bring advanced artificial intelligence (AI) to Azure IoT Edge. The demonstrated solution showed Lenovo hardware, a single SE350 Edge Server, running the Azure IoT Edge runtime with NVIDIA DeepStream to process multiple channels of 1080P/30FPS H265 video streams in real-time, transforming cameras into smart sensors that understand their physical environments and use vision algorithms to find missing products on a shelf or detect damaged goods. Such applications of Azure IoT Edge technology enable customers to quickly and cost effectively deploy retail solutions that optimize their logistics operations.

Today, we are excited to announce the next milestone on this journey, the preview of the Lenovo’s Digital Distribution Center (DDC) solution. Lenovo’s DDC is an IoT solution developed in collaboration with NVIDIA and Microsoft. Through real-time scalable package detection, tracking, and validation, DDC delivers for better optimization and increased utilization of distribution centers for retail, manufacturing, and logistics operations. The solution uses multi-video stream analytics with artificial intelligence and machine learning inferencing to self-learn, optimize, and scale. Additional releases will include geofencing alerts, palletization, depalletization, and last-mile sorting.

DDC is built with Azure IoT Central, Microsoft’s fully managed IoT app platform that makes it easy to connect, monitor, and manage your IoT devices and products. Azure IoT Central simplifies the initial setup of your IoT solution and reduces the management burden, operational costs, and overhead of a typical IoT project. This allows solution builders to apply their energy and unique domain expertise to solving customer needs and creating business value, rather than needing to tackle the operating, managing, securing, and scaling of a global IoT solution. Partners like Lenovo and NVIDIA add unique value through schemas that are relevant to industry solutions like DDC, including common industry hierarchies that organize people, places, and environments.