Most industries have been undergoing a process of business digitalization in the last few years.
New market entrants, increased customer expectations, and the need for more efficiency forced traditional operators to adapt to the new age of seamless global trade.
The transport and logistics industry is no exception to this development. Being one of the fastest-growing industries worldwide, it needs to adjust more than ever from long-established practices to face the challenges of international trade.
The global logistic sector is estimated to reach a value of $16.445 billion by 2026.
Therefore, the digital transformation through the value chain is unstoppable and much-needed.
The current pandemic accelerated the need for digitalization solutions. Emerging key trends such as IoT, data analytics, automation, and streamlining workflows became crucial to ensure critical supplies were distributed during Covid-19.
These technologies allow seamless end-to-end collaboration and increased efficiency between the different stakeholders.
Digital trends in the logistics industry are no longer a choice but a certain future.
Digitalization Vs. Digitization Vs. Digital Transformation
Definition of Digitization
Digitization is defined as the conversion of any data into digital format. Digitization converts any analog signal into a digital format.
Example: Scanning a document and converting it into a digital formation, such as a PDF file. Recording a presentation in an audio or video format converts and store it in digital format.
Definition of Digitalization
Digitalization is defined as transforming any business into a digital format. The processes in industry are converted into digital form by using the digital methods and technologies in the firm. The business process relies on digital tools.
Example: The data is collected over the Internet is converted into business leads by digital tools.
Definition of Digital Transformation
Digital transformation is described as an organization embracing digital technologies and cultural change on a much larger scale. Digital transformation meaning is an integration of organizational reform with digital technology.
Example: Artificial Intelligent-based applications, Employee using Digital tools.
In this article, we would like to outline ten concrete reasons why digitalization is the future of every logistics company within the value chain.
Need to know something specific about the digitalization of business processes in the logistics industry?
Jump ahead to:-
- The future is digitalization
- Cost and time efficiency through automation
- End-to-end visibility - Real-time tracking
- The promising chance of interoperability through digitalization
- The Internet of Things(IoT)
- Digitalization as a basic requirement for blockchain
- Business optimization through data analytics
- Optimization of internal operations
- Time and cost efficiency through data comparison - QUOTING
- Customer Satisfaction
The future is digitalization
The world became digital - a truth not only for logistics but for all parts of life.
Many trends have been initiated before the pandemic and peaked in the last months due to global lockdowns. Daily life shifted to virtual working and learning and pushed e-commerce to a new level.
A digital life needs digital solutions for the industry to cope with the increasing demands in global trade and rising customer expectations.
Why do logistics companies need digital transformation?
Due to the numerous stakeholders in different countries within the supply chain, the digital transformation of businesses and operations is vital.
To enhance end-to-end visibility and efficiency, shipping processes and back-office operations have to become digital. Real-time freight rates, paperless bills of lading, and automation improve operational efficiency notably.
Even though digitalization is not the objective of the business itself, it is needed to enable more transparent and efficient solutions.
For a long time, the technology used in the industry like AS400 green screens had not made great leaps.
This has now changed drastically. Most of the important big players within the logistics industry have migrated their systems to more efficient and automated ones.
Digitalization allows them to process e.g. generate inquiries or receive quotes much faster.
According to a Forbes Insights survey, 65 percent of logistics companies recognize switching to the digital business model to survive in the digital age.
Cost and time efficiency through automation
Time is one of the most valuable goods in the logistics industry. Every step and process has to be timed perfectly to guarantee an on-time delivery without any disruption within the supply chain.
Very short shipping times let shippers struggle to meet their delivery goals. Delays often cause extra costs like detention and demurrage charges. The very complex operations overall in the maritime supply chain can be enhanced by automation through digitalization.
The use of very limited human resources can be optimized by the automation of back-office operations such as emails or faxes or making calls to track freight, get rates, or get the paperwork done.
With Freightify, you can easily transform your digital platform as an efficient rate management system which can reduce your time for generating an inquiry from 15 minutes to 15 seconds, with greater transparency and speed for both your team and the customers.
With digitalization, not only does time efficiency increase notably, but the error ratio also drops significantly.
End-to-End visibility - real-time tracking
Digitalization does not make back-office operations more efficient but also allows a flexible reaction of disruption within the supply chain.
In this context, real-time tracking helps to understand possible delays and therefore to plan accurate ETAs, which can be given to customers.
This results in happy customers and also reduces customer service call-ins from unsatisfied clients due to delays.
Another important advantage of end-to-end visibility is dynamic routing. Through permanent data sharing, it is possible to avoid upcoming delays through route optimization. This saves time in case of disruptions like a maritime bottleneck due to port congestion or blank sailing.
Receiving constant updates of the route and the ETA, shippers, and forwarders can re-route the shipment to ensure on-time delivery and customer satisfaction.
The promising chances of interoperability through digitalization
Digitalization helps companies not only to streamline data flowing through their operations but also gain data-based insights that can help with improving efficiencies.
But becoming digital as a company can do much more than that. Digitalization and data usage is the precondition to a global interoperability system between the different stakeholders.
Interoperability means the active exchange of data between different parties. This interaction would take the logistics industry and operations to a new, more transparent, efficient, and sustainable level. It would allow true end-to-end visibility and capture efficiencies that were never tapped before due to the absence of interoperable systems.
Interoperability is still a vision of the future because it is only possible if stakeholders follow data standards to ensure cross-company data interaction.
However, the business transformation to a digital system is the first step into a brighter future with new opportunities.
The Internet of Things (IoT)
An important requirement for end-to-end visibility within the supply chain is to have IoT devices at nodal points across the value chain.
These devices help the company to enable real-time tracking of their containers, measure the temperature and humidity to ensure quality standards of sensitive goods, and be able to comprehend any problem or disruption in the shipping process.
IoT devices collect data that help optimize processes and improve efficiency and costs and push them to the cloud.
With 4G LTE-based sensors, data transmission is faster, data latency is less and insights are more in ‘real-time'. The development shows how fast technologies evolve. For instance, 4G is going to be the new status quo as 3G will shut down by 2022.
This stresses the importance of the adaption of digital systems in the future.
Digitalization as a basic requirement for Blockchain
Blockchain is one of the greatest developments in the digital age.
It offers companies an end-to-end solution for more efficient operations. It is a decentralized public ledger system that allows for community ownership of data, with the records being immutable without explicit approval from all the stakeholders within the network.
For the maritime industry, this would mean more visibility into the network and helping eliminate unnecessary intermediaries from within the supply chain. It can reduce bottlenecks and clerical order, while smart contracts would increase transparency.
To leverage blockchain technology, digitalization is key. Coupled with big data and artificial intelligence, blockchain can bring extraordinary gains in the context of supply chain interoperability.
Business optimization through data analytics
Most logistics stakeholders would agree to the benefits of storing data arising from operations. However, data is often just siloed without any purpose or use. Data is only useful when it is used.
For making data utilitarian, it is critical to ensure the collected data is streamlined - for instance, data should be digitized to be accessible.
This access is not only for all team members but also for different software that analyzes data and helps optimize internal and external processes. The right data usage would impact the workflows within the company, improve operations, and create the foundation of the implementation of blockchain and interoperability.
Optimization of Internal Operations
The logistics industry, and especially the maritime industry, rely on complex operations between numerous stakeholders. The need for fast and on-time delivery forces companies to adapt their often outdated business operations to the digital era.
Companies are often lacking inefficient back-office operations and visibility within the company. Teams don't have the needed transparency to operate in a fast and efficient way. The cutthroat competition within the market of logistics providers is increasing the pressure for all involved companies to optimize time, costs, and operations. The maritime bottlenecks due to the pandemic are especially hard to cope with for companies that don’t have enough cohesion within their operations.
Time and cost efficiency through data comparison - quoting
One of the greatest achievements of digitalization is the time and cost-efficiency for the company using the new technology. Back-office operations can be automated and monitored with the same software and be accessible from any place in the world for all team members.
One advantage for the inside operations of the company is that data is available for all members of all the departments in the organization.
Aside from making data ubiquitously available across the organization, redundant processes such as sending or receiving documents - like invoices and bills of lading - can be automated.
Human resources can be used in a much more efficient way while administrative operations run automatically in the back.
White-labeled solutions like that of Freightify, guarantees you the best rates in real-time and increases your time efficiency by almost 450 times - reducing your quoting time to less than 30 seconds instead of 4 hours!
Since the advent of Amazon within e-commerce, customer expectations have reached a completely new level. End-to-end visibility through real-time tracking lets customers be part of a new consumer experience.
Tracking the product and knowing where the order is at any time during its transit, is the new standard.
Furthermore, Amazon changed the industry with its incomparable flexible delivery options and efficiency to ramp up fulfillment to meet customer needs.
These rapidly evolving customer expectations have set the standard for a new, digitized industry where transparency and efficiency are key to prevail against competitors.
The retail industry is a customer-facing industry - their success crests and troughs with customer satisfaction. For a lasting and successful business, it is important to align operations with customer needs and goals.
As the retail consumer increasingly tilts towards the digital experience, digitalization within logistics becomes crucial for companies to sustain their position in the market and stay competitive in the future.
There are many reasons why digitalization became an integral part of a successful business. The main advantage is the efficiency gain.
Automating back-office operations enables companies to track and monitor complex business activities with relative ease. The increased time and cost efficiencies allow workers to focus the business and not on time-consuming paperwork or redundant tasks.
Digitalization also brings in data streamlining, optimizing internal and external operations, and ensuring they meet customer and business goals. In essence, digitalization is a helpful tool that gets the best out of the company and assures its lasting success.
Want to take your first step towards the digitalization of your logistics business?
Schedule a personalized demo with our experts to explore the opportunities digitalization has to offer for your organizational processes.
What Is Digital Transformation?
Digital Transformation uses digital technologies in business processes such as sales, marketing, and customer services. Logistics adapted from an old traditional business process into the new age of digital trends. The digital trends in logistics created a massive impact on the industry because the logistics industry was entirely dependent on the manual process before.
What are the benefits of digital transformation in logistics?
- Automation of the inventory control process as part of the overall supply chain.
- Lowering transportation costs in the supply chain.
- A greater level of transparency in logistical operations.
- Better customer service.
- Logistics and supply chain management becomes efficient and consistent.
- A more significant number of opportunities to make decisions in real-time is possible.