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What is digitalization?
As Gartner describes it, Digitalization is the process of changing business models and providing new revenue and value-creation opportunities through the use of digital technologies.
What does this mean for logistics?
The logistics industry has always been rather slow to adopt new technologies. But as certain technologies have been proven in other sectors of the economy. The logistics industry has begun to slowly adopt new technologies that have been proven to improve operations and increase efficiency. For examples barcode scanners
Digitalization in logistics is the process in which new technologies are applied in logistics operations in order to improve the company’s efficiency.
Thus, the integration of digital capabilities in the areas of storage and preparation of orders, as well as transportation and other logistics services.
Put another way. Digital transformation moves an organization from an analogue to digital condition. You’ll be replacing old, inefficient procedures with more modern, more effective ones that use digital technology like cloud computing.
Digital transformation in logistics and supply chains can imply a variety of things, including:
Improving information and material movement inside and across businesses via the use of digital technology.
Incorporating digital technology to enhance the consumer experience.
Increasing the efficiency of company operations by using digital technology.
Developing new business models and paradigms via the use of digital technology.
How is it impacting logistics?
Transport has an important role in today’s society with a large impact, it employs about 10 million people accounting for 5% of the gross domestic product (GDP) In Europe. Effective supply chains are fundamental for European companies’ ability to compete and remain competitive in the world economy. However, digitalization is lacking with transport being among the least digitized industries with the highest potential (McKinsey, 2019). On top of that, the ambitious climate goals set by the European Commission require the sector to decrease its greenhouse emissions by 90% by 2050.
Better digital integration across the value chain and the logistics industry at large allows businesses to cut waste, operate more efficiently and become more reliable. Moreover, it would allow smaller players to better compete with incumbents and better secure their market position against outside disruptions. In addition, optimizing shipping/delivery routes and improving transport asset utilization also have important societal and environmental benefits.
Improved Productivity
Companies in the logistics industry are benefiting from the most recent digital technologies. Many organizations, for example, use cloud-based software from service providers to automate their supply chain. To centralize their activities they must do so.
Logistics organizations will eventually realize the necessity of a single technological platform for information flow automation in the future. As a result, they will be able to serve their consumers with consistently high-quality service.
Ensure that the processes between those involved and trading partners
Most shipping organizations are now using blockchain-enabled digital shipping solutions. Trade partners will feel more secure as a result. Moreover, this is a big step towards the logistics industry’s goal of promoting technological innovation in all aspects of its operations. As a result of advancements in digital technology, clients can now follow the progress of their purchases from beginning to end. Customers and logistics companies both benefit from the ability to track goods. They save both time and money by using it.
Companies no longer need to tell customers when they can expect their products to arrive. As a result, clients may obtain the information directly over the internet. Automated messages may also be sent to customers if there are any changes. When all participants in the shipping process have access to the same information, trust grows, and bottlenecks are reduced or eliminated.
Better Routing
Improved routing resulted from increased investment in new technologies in the logistics business. Companies are putting money into cutting-edge technologies to prevent delivery delays caused by drivers getting lost.
Driving to your location has become a lot more efficient because of digital technologies. As a result of roadworks, traffic accidents, and unforeseen delays, such software is useful when routes are congested. It is suggested that the motorist choose other routes.
Logistics organizations save money because of efficient routing (thanks to digitalization) since trucks travel the shortest distances and consume the least amount of petrol.
BetterFleet preventative maintenance
Thanks to digital technology, it is now feasible for logistics businesses to carry out preventative maintenance on their cars. Using remote diagnostics solutions, companies can keep an eye on their fleets. They’ll be able to see which vehicles need service this way. There are several advantages to spotting maintenance issues with a car as soon as they arise. As a result, vehicle downtime is reduced since possible faults are addressed before they may arise. There is a decrease in costs. Because of this, customers know they can rely on the logistics company to deliver on its promises.
Logistics Intelligence
Data has grown as a consequence of the digitization of logistical procedures. Advanced data analytics and business intelligence must be prioritized as areas for future investment. Decision-making in a regular company context is not difficult, but intelligent judgments still exist, such as marketing strategy decisions. These need Cognitive Computing-based solutions and AI assistance.
As a result of advances in cognitive computing and AI-enabled digital technologies, the logistics sector can tackle difficulties such as improving customer experience and reducing costs.
What can we expect in the next 5 years?
Artificial intelligence
This technology will play a significant role in transforming the industry. Artificial intelligence is already making planning easier in warehouse management thanks to more accurate predictions and faster processes. The use of Artificial intelligence and Machine Learning will enable logistics companies to identify every link within the supply chain.
Blockchain
Blockchain is a decentralized database that is stored on many computers that are connected to the Internet. While predominantly associated with cryptocurrencies, blockchain is used in many areas, including the logistics industry.An example can be seen in how the blockchain allows companies to manage the entire supply chain from factory to consumer. Each container is marked with a unique identifier that contains details about the product’s origin: lot number, expiration date, shipping date, etc. This enables tracking a product at every stage of its life cycle and confirms its authenticity.
3D Printing
McKinsey expects the 3D printing sector to be worth $550 billion by 2025. This technology is driving up customer expectations. It creates new opportunities for businesses to optimize their logistics operations in novel ways by reducing the need for long-distance physical transportation of goods. Once this technology is adopted, local and regional supply chains could be changed forever or even eliminated.
Data Analytics and Real-time Supply Chain Visibility
New data standards and start-ups are helping bigger companies to clean and digitalize their data, enabling them to then use that data for predictive optimization and advanced analytics. Thanks to this very valuable data on traffic patterns, weather, road, and port conditions can be used to take action and reshape demand and redirect supply becomes seamlessly. Data analytics will also enable the optimization of routes and provide accurate and predictive assessments of potential delays.
RFID and IoT
RFID and IoT technology are becoming valuable assets in logistics. From streamlining cargo operations to vehicle tracking, the cost of inefficiencies caused by a lack of visibility is rapidly reduced. Many businesses are using RFID technology to reach nearly 100% shipping, receiving, and order accuracy; 99.5% inventory accuracy; 30% faster order processing, and a 30% reduction in labor costs.
The logistics industry is digitalizing more and more every day. Businesses are beginning to automate transportation and use new ways of connectivity to track goods at all delivery stages. Artificial intelligence, blockchain, 3D printing, Data Analytics and Real-time Supply Chain Visibility, RFID and IOT are technologies that are being adopted in businesses across the globe, the benefits they bring have the potential to make these businesses more competitive and their process more efficient and robust.
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