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AdexinBlog4 Ways Digital Transformation Is Transforming Logistics and Supply Chain

4 Ways Digital Transformation Is Transforming Logistics and Supply Chain

Oct 3, 2022
5 mins
alona remez
Alona RemezBusiness Development Manager

Digitization is an ongoing effort for all companies, and it’s essential for supply chain organizations to align their processes with business strategy and modern technology solutions. As it becomes increasingly important for businesses to improve productivity, reduce costs and increase flexibility, companies are moving away from paper-based systems and embracing digital transformation as a key factor for future success.

In an increasingly digital world, supply chains are undergoing a transformation. This article will explore four ways that digital transformation is transforming logistics and supply chains.

What is digital transformation?

“Digital transformation” is the buzzword on everyone’s lips. One definition of the term is “transitioning from a traditional, analog organization to a digital one.” A digital business has less reliance on physical devices or tools like equipment or paper and more reliance on automation, software, platforms, and networks.

This process has helped organizations eliminate inefficiencies and become more agile and flexible. With digital transformation, the performance of a business has become more about the delivery of technology-enabled products and services for the end user than it is about the underlying technology itself.

The following are some of the key ways in which digital transformation can impact supply chains and logistics:

  • Supply chain management, also known as SCM, is the acquisition, creation and supply of goods and services that may be either physical or virtual to support the business process.

  • Customer experience management, also referred to as CX management, is the use of digital technologies in order to improve the customer experience. This is often used interchangeably with customer experience (CX) but we prefer to differentiate between the two: While customer experience encompasses all aspects of a company’s interactions with its customers and potential customers, CX management refers specifically to efforts made to incorporate each step of that interaction into their business strategy.

  • Business process management (BPM), also known as business process optimization, is an approach to enhance organizational agility and responsiveness through the effective design and management of processes.

  • Digital business is the use of digital technologies to create new business models and paradigms, which is often called digital business or DX. It combines intelligent technologies, analytics, data and design to create unique customer experiences using digital solutions that enhance and enable better ways of working.

1. Increased efficiency

One of the first ways in which digital transformation impacts logistics and supply chains is through improved operational efficiency. Operational excellence, or OpEx, refers to the ability to create value by optimizing costs and/or revenue across all business activities.

Operational efficiency is critical to success. It allows companies to operate more efficiently and lower costs. A company’s ability to operate efficiently will ensure it can compete in a difficult market environment. If a company can’t efficiently operate, they won’t be able to turn a profit, which will make them less likely to survive in such an unstable market.

Digital technologies can improve operational efficiency in a multitude of ways, including:

  • Transportation management systems (TMS) are a vital part of a successful supply chain strategy. They enable you to plan and manage every stage of your supply chain journey, from initial order quotation and booking through transit monitoring and shipment release. Taking full advantage of the benefits of transportation management enables greater efficiency, which can lead to lower operation costs, higher customer satisfaction, higher sales and a stronger brand.

  • Enterprise resource planning (ERP) is a method that tracks a wide range of business processes and aids in easy access to the information contained within them. This type of system helps companies manage their resources and is used in many industries including manufacturing, retail and distribution.

  • Manufacturing execution systems (MES) provide companies with the tools they need to track production and manage their manufacturing operations. These systems offer features for tracking production, scheduling tasks, managing quality control, and more.

  • Warehouse management systems (WMS) help companies manage their warehousing operations by tracking inventory, managing orders, and issuing invoices. A WMS typically includes features for collecting and storing warehouse transactions of all kinds, from receiving shipments to sales orders, or issuing returns and adjustments.

Digital technologies can help companies automate business processes and increase productivity, leading to increased efficiency and reduced costs. Digital technologies such as Robotic Process Automation can be used for data entry and transaction processing, which can help speed up business processes and improve accuracy.

Digital technology has allowed businesses to manage their operations faster and more efficiently, improving product quality and reducing costs in the process.

2. Greater transparency

The increased transparency and visibility digital technology has allowed companies to have with their supply chains is a major benefit of digital transformation. 

One of the key benefits of digitization is its ability to provide businesses and consumers with real-time information about supply chains. This improves efficiency and increases transparency and visibility throughout all stages of a company’s supply, production, distribution and delivery processes. For example, by tracking the movement of goods and materials in real-time, companies can better understand where things are in the supply chain, which helps them make decisions about production and inventory management.

Digital technologies can be used to improve supply chain visibility in various ways, which include:

  • Radio-frequency identification (RFID) uses radio waves to identify and track objects. It's been used for decades to track inventory in retail stores, manage orders and deliveries for products shipped by eCommerce vendors, and more.

  • GPS is a technology that uses satellites to track objects such as vehicles, shipments, and more. The GPS satellite network allows your device to obtain its current location based on the position of satellites in the sky and by calculating the distance to each satellite. These calculations are performed by software in your device, which connects to the satellites via radio signals. Using a process known as trilateration, your device can then pinpoint your exact location within a matter of meters.

  • Sensors are devices that can track the temperature, humidity, pressure, and other attributes of objects. This type of data helps ensure that equipment is functioning at peak performance and provides early warning of potential problems.

Companies can also use these digital technologies to better understand how their supply chains are performing. This can help them identify inefficiencies and problems so that they can address them quickly.

3. Improved customer experience

Customers are at the heart of everything we do. They are central to our success and growth. Customer experience is increasingly essential to companies that want to succeed in their markets, so it’s critical that companies focus on delivering a great customer experience.

Digital technologies can improve the customer experience in many ways, including:

  • Digital technologies like web and mobile apps make it easier for customers to interact with companies online or on their mobile devices. Customers can check the status of orders, print or download receipts, and more.

  • With social media, customers can share their experiences with companies and other customers online. Social media is increasingly being used as a marketing tool in addition to being a feedback mechanism; it can be on social networking sites like Facebook or review sites such as TripAdvisor.

  • Customer relationship management (CRM) software is used to track and manage all aspects of a company's contact with its customers. It can include features for tracking customer data, managing customer contact information, and providing notifications about a product or service.

With digital technologies, companies can enhance customer service by providing faster, more accurate customer service. For example, chatbots and AI-powered customer service allow for a seamless experience that is customized to fit the needs of each individual customer.

In recent years, companies have made tremendous strides in managing the customer experience. The digital technologies that are now widely available -- such as mobile phones, digital CRM tools, social media and online communities -- have given companies a wealth of new ways to interact with their customers.

4. Greater flexibility

Digital technologies can enable businesses to become more agile and flexible. For example, digital technologies allow companies to quickly scale up or down their operations as needed. This provides greater flexibility for companies that are responding to changes in consumer demand and market conditions. Digital technologies also enable businesses to create more agile processes, enabling them to adapt quickly to changes in business requirements.

Final thoughts

The logistics and supply chain industry is quickly evolving as digital transformation has a major impact on companies. By using tools such as the internet of things (IoT), big data, and cloud computing, companies can improve their operations’ efficiency, transparency, and flexibility. Digital transformations create opportunities that allow businesses to stay competitive in their rapidly changing world of business.

For more information on digital transformation and how it can help your business, visit Adexin now. We offer a broad range of services that can help you get started with digital transformation, including consulting, training, transport management system development, paper to digital, business automation, and more.

Contact us today to learn more.

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