Logistics Technology: from data analytics to full digitalisation

Improving the services or products offered, achieving efficiency and minimizing costs are the main drivers for technology adoption in many industries including logistics, transportation and postal.

Digital Transformation is definitely on the agenda now for logistics service providers and carriers but there has been a lot of reluctance in the past years that has delayed its adoption. What have the reasons behind this delay been? Probably the lack of skills, different systems that need to communicate with each other and a failure to see and recognise how it could all work effectively together.

Where is the market at

Things are changing, in fact, from a recent survey conducted by S&P Global Market Intelligence it emerges that the industry has started looking at the technologies available, recognising their value, and understanding where their adoption could have a major impact.

The research highlights that the main areas where technology can have a major impact are:

  • Purchase order management
  • Supply chain planning
  • Route optimization
  • Tracking

Once the priorities are identified, it is easier for both shippers and logistics operators to determine where to invest and in which technology. The choices of software solutions out there are extensive now and go from logistics and supply chain management to transportation management, depot management etc… and the difficult part now is to find the right fit for he business.

There are still some gaps in the industry that need to be filled but the right path towards technology has certainly started to be clearer. 

Where the gaps are

The logistics industry includes a lot of players and it is fragmented between shippers, logistics service providers, transportation carriers, subcontractors. A possible legacy mindset and lack of recognising the Return on Investment has meant that the adoption of the latest innovations now available thanks to the advancements in technology for logistics has been happening at a slightly slower pace than in other industries. 

We also need to recognise that this industry had to deal with an unpredictable surge in demand during and after the pandemic with the boom of e-commerce and the new customer habits being formed. It had to act and do what was possible at that time and adjust to a diverse and surging environment.

Investments were mainly dedicated to fleets, new depots, finding and recruiting new drivers, depot personnel while new processes arised, the majority of which dealt manually. 

Now that the e-commerce market is established, the gaps left by this sudden growth are becoming clear. First of all, the deliveries logistics steps from the first mile to last mile have not been connected to each other. Then the data necessary to create historical databases have not been collected, most data in terms of routes and customers remain in the drivers’ heads.

Also the insights required  to demand forecasting in supply chain and plan distribution accordingly were not existing. Finally, most operators still suffer from lack of control and visibility over what happens once the package leaves the depot. 

The industry has started recognising these gaps and investigating how to address them in order to achieve a more efficient and profitable way of working. Technology has advanced and can have a major impact on all of them transforming and facilitating the whole process. 

What can work:

To bridge the existing gaps and unlock the full potential of digitalization in the logistics industry, several strategies and technologies can be employed.

Integrated Systems and Interoperability:

One of the major challenges in the logistics sector has been the lack of interoperability between different systems. Investing in integrated solutions that seamlessly communicate with each other can significantly improve efficiency. Cloud-based platforms and Application Programming Interfaces (APIs) can facilitate real-time data exchange between shippers, carriers, and service providers. <Link Milkman Platform>

Data Collection and Analysis:

The logistics industry has traditionally relied on manual processes, leading to a lack of comprehensive data. Establishing robust data collection systems can provide valuable insights into historical trends, customer behaviors, and operational efficiency. Advanced analytics and machine learning can then be applied to this data, offering predictive capabilities for demand forecasting, route optimization, and supply chain planning.

End-to-End Visibility:

Enhancing visibility throughout the supply chain is crucial. Implementing tracking technologies, allows real-time monitoring from origin to destination. This visibility not only improves security but also enables better decision-making, as stakeholders can proactively address issues such as delays or disruptions. An example on how Milkman Technologies achieves this visibility can be found here.

Predictive Analytics for Demand Forecasting:

Leveraging predictive analytics can transform the way logistics operators manage inventory and plan distribution. By analyzing historical data and market trends, companies can optimize their stock levels, minimize excess inventory, and ensure timely deliveries. 

Communication Platforms:

Establishing effective communication channels is essential for managing logistics operations. Implementing centralized communication platforms that connect all stakeholders in the supply chain can streamline coordination and provide real-time updates. This can range from mobile applications for drivers to centralized dashboards for managerial oversight as per our Driver App and Depot App.

In conclusion, the logistics industry is on the cusp of a digital transformation, and addressing existing gaps requires a holistic approach. By embracing integrated systems, data-driven decision-making, automation, and effective communication, logistics stakeholders can position themselves for sustained success in an increasingly digitized landscape. The journey toward a more efficient and profitable future in logistics begins with a strategic investment in the right technologies and a commitment to embracing change.

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