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AdexinBlogWhy is now the best time to introduce digital technologies in logistics?

Why is now the best time to introduce digital technologies in logistics?

Oct 24, 2022
5 mins

Digital technologies in logistics

In the 21st century, digitalization has become a part of business life. In order to stay ahead in this dynamic environment, companies introduce different types of innovations and enhance their capabilities by introducing new technologies. Logistics is no exception – companies aspire to implement IT solutions for managing orders, vehicles, warehouses or inventories.

The past two years have seen logistics companies trying to adapt to a new reality. Due to flight cancellations, social distancing, and quarantine measures, it took time for companies to adjust the rules for their employees and open the borders.

The global logistics industry is estimated to boost by $205.44 billion in 2020. After a devastating pandemic, the world economy is on its way of recovery. The world is experiencing digital transformation and this has significantly increased consumer demands over the last few quarters.

What are the reasons for logistics digitalization?

The world is facing major problems at the moment and one of the main solutions the human race has come up with is digitalization. With the help of it, companies in the logistics industries are striving to solve global problems such as the following:

1. Reduced fuel cost

The oil market is subject to considerable price volatility; fuel prices are therefore not static. A drop in oil prices can significantly reduce the cost of product delivery. This can be used by companies as a strategic advantage, saving money on logistics and making their offers more competitive. However, the flipside is that a sudden increase in fuel costs can lead to significant losses if it isn’t passed on to customers quickly enough by raising shipping costs beforehand.

Logistics functions are so important to businesses, yet they are often overlooked. Supply chain managers need to focus their attention on hidden costs. To do this, they should first accept that logistics functions need to be digitally transformed and automated. In other words, organizations need to begin the journey of implementing a transportation management system or TMS, if they haven’t already.

2. Improved client experience

Business digitalization is a process that involves every aspect of a company and allows them to use technology to improve the efficiency of their products. The goal is to deliver products quickly, without delays at any step, from initial conception and development to manufacturing, packaging, and distribution.

In the eCommerce business, consumer demands are on the rise as well. A study shows that 40% of buyers are fine with receiving their orders within two days, 18% want their products in a day, and the rest of the clients are willing to wait up to four days.

3. Solve the driver shortage issue

The professional driver shortage is one of the main reasons why the advancement of the logistics sector is hindered. Most of the time, young candidates are not accepting of the working conditions, hence there is a predicted 25% growth in the shortage of specialists in the member countries of the International Road Transport Union.

A trucking industry that mainly relies on a workforce that is 45 years old or older, who are reluctant to award the job to young people, is not without problems. The industry needs a fresh start and it’s important that timely solutions are built in order for progress to be made.

Digital development areas in logistics

Digital transformation in logistics refers to the development of internal aspects of a company, including the introduction of programs, devices such as drones and sensors, into the activities of an enterprise. 

Changes regarding digitalization in logistics may be made in the following three areas within the organization:

1. Hyper automation

The level of automation determines the elements that are made in the firm. There is a close connection between the technology used and the corresponding purpose. 

Hyperautomation is the optimal use of multiple emerging technologies that together provide a best-in-class solution to automate where automation was never possible before — undocumented processes that rely on unstructured data inputs. By integrating these technologies, hyper automation offers the power and flexibility to address complex business needs with an open and powerful platform that can be easily tailored to your unique needs.

For example, Robotic Process Automation (RPA) is a software solution that automates and streamlines repetitive, transactional business processes. The software uses an outsourced workforce and advances in technology, such as Artificial Intelligence and Optical Character Recognition, to work around each step of the process. It can be integrated with other processes and technologies to handle multiple operations with fewer staff members.

2. Elastic logistics

Elastic logistics is an approach for supply chain management that works to reduce waste and increase efficiency. It is a system that relies on a flexible supply chain, which provides more flexibility, responsiveness, and effectiveness of supply chains. This makes it easier to manage, but also gives suppliers the leeway to be creative in their manufacturing tasks or distribution methods.

Elastic logistics is a revolutionary approach to supply chain management, which uses technology and automation to create a completely automated warehouse fulfillment system. This not only allows for greater efficiency and accuracy, but also makes it possible for warehouses to link with customers in real time. Thus, creating a win-win situation for everyone involved.

Elastic logistics offers the advantage of automation, which enables a company to more greatly control its supply chain. It offers better flexibility in scaling and packaging, helping businesses to adapt more efficiently to changes in demand. Reduced human error also allows for greater accuracy in packaging when orders are processed on an automated line. 

Third-party partnering is an additional advantage of elastic logistics. Companies can lease warehouses both locally and in distant locations to adjust to short-term demand fluctuations in their operations. This is advantageous, as it reduces the risks previously associated with investing more money into internal operations.

3. Green logistics

Sustainability has become a fashionable topic of late. Everyone, it seems, is talking about the importance of striving for sustainability in their products, services and business practices. But what does sustainability really mean? And how does actually achieving it impact logistics?

Eco-friendly logistics is a new area of logistics and supply chain management. Eco-friendly logistics aims to improve the environmental performance of freight transportation, warehousing, distribution and other processes by organizations within the logistics industry. The intention is to reduce the negative impact on the environment during transportation, warehousing goods, and other processes. This area seeks to organize the activities of cargo companies in such a way that they benefit their economy, nature, and people at all times.

Green supporters of business have long been looking for smarter ways to run their companies. This can include fleet management, warehouse management, and inventory control as well as data collection automated operations in order to improve efficiency and reduce waste of resources and energy.

Final thoughts

Logistics has drastically changed over the course of the years - with more companies moving towards a digital transformation, it has become easier for them to streamline their supply chain and improve customer service performance. This allows for relevant sales strategies at optimal costs, improved productivity and faster time to market.

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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