Logistics industry at a cross roads

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Digital transformation is having a major impact on traditional processes and practices in the logistics sector as companies seek out new ways to streamline operations and reduce costs.

Logistics has always been a complicated business, but the arrival of the internet and ecommerce threw its future roadmap into turmoil. Many thought digital technology would be the beginning of the end for logistics: but nothing could be further from the truth.

The logistics industry is bigger than ever. Every day, more than 85 million documents, parcels and packages are shipped and delivered around the world. Alongside this massive increase in boxes to handle, technology has grown and matured – and so have businesses and consumers.

A disrupted industry

This huge scale change that has hit the logistics industry means they need to rethink how they do things – fast. Customer expectation levels are now higher than ever, thanks to technologies giving them what they want faster and more economically than ever. New technologies present logistics companies with the chance to drive greater efficiency and more collaborative operating models than previously, but they are also being used by start-up companies to disrupt the sector.

The pressure is on. It has been estimated that as much as $4.7 trillion of revenues per year is up for grabs in the logistics space, and the World Economic Forum has forecast that between 2016 and 2025 there is potential growth of $1.5 trillion for digital transformation in the industry. Companies that want to thrive must embrace digital transformation and use technology to adapt proactively and remain agile.

Information is money

Efficiency, optimization and speed have long been vital to successful logistics, but the pace at which technology has evolved has taken the industry by surprise. The digital economy takes place in real-time and customers today are not willing to sit and wait for days for products to arrive.

So when it comes to shipping pallets, boxes and goods from one place to another, information management, data, analytics and visibility have all emerged as vital factors for logistics companies. Data is at the center of everything. Technology enables the creation, gathering and analysis of more data than ever, and visibility of that data enables improvements and operating efficiencies. In logistics today, supply chain efficiency can make or break a business.

Disseminating data differently

The most successful logistics companies in the world have embraced big data and acknowledged that it does not follow the same straight lines their deliveries do. Data delivers results when shifted up, down and through an organization, where it can be used to give a real-time picture of current and future demands on a company’s supply chain and be available to multiple touchpoints within an organization.

Digital technology solutions are helping companies improve this visibility, which in turn enables them to operate in more flexible, adaptable ways. Joined-up companies with significant logistics operations now take data gathered in-store and use it to tailor inventory, ordering, stock allocation and resources. Using analytics to predict demand, or spikes in consumer spending due to unexpected trends, is a whole new way of looking at the traditional supply chain.

Getting there?

Other areas where logistics companies are leveraging digital technologies to transform the ways they work include how they actually deliver goods. Amazon recently launched its Prime Air service which aims to get packages to customers in 30 minutes or less using drones. Drones could have a key role to play in the healthcare sector, for example, in urgent cases where blood supplies or emergency medications need to be delivered fast. Companies as diverse as UPS, 7-eleven and Daimler are all currently developing drone technology for last-mile deliveries in the near future.

Autonomous trucks are another technology-powered delivery mechanism helping transform the logistics industry. The logistics industry has long been known for its major inefficiencies: for instance, 50 percent of delivery vehicles make their return journey empty. It is hoped that the programmability of autonomous, ‘smart’ delivery vehicles and trucks can plug this inefficiency gap – and even have a positive environmental impact by cutting down on energy consumption and emissions.

The Internet of Things influence

Logistics is an area seemingly made for Internet of Things (IoT) technologies. With everything connected through the supply chain, companies can use IoT sensors and smart chips connected to parcels and pallets and track shipments through the many stages of a delivery – while updating all the administration and back end in real time.

IoT is setting the pace in the logistics space, making processes autonomous via connected pallets, real-time asset tracking, the aforementioned connected vehicles, real-time locating systems (RTLS) and more.

Time to transform

But are companies transforming fast enough? In 2016, PwC surveyed logistics company senior executives in 26 countries and found that just 28 percent believed they had reached an advanced level of digitization.

The potential for logistics companies is there to transform digitally and use technology to make themselves more agile to reduce operational costs and increase revenue. If they don’t seize the opportunity they risk hitting the kerb.

Discover how IoT and big data are transforming asset and fleet management in logistics and transport in this ebook.

Steve Harris

I’ve been writing about technology for around 15 years and today focus mainly on all things telecoms - next generation networks, mobile, cloud computing and plenty more. For Futurity Media I am based in the Asia-Pacific region and keep a close eye on all things tech happening in that exciting part of the world.