Logistics

How digitization impacts the Logistics industry?

Most industries in the world are undergoing tremendous changes, transportation, and logistics (T&L) are also adapting to the changing times. Changing the present processes brings in a lot of risk and opportunity; new technology, new market entrants, new customer expectations, and new business models are forcing the traditional systems to grow and meet the ever-increasing customer expectations. There are many ways the sector could develop to meet these challenges, but embracing digitization has become inevitable for the logistics sector.

Areas of disruption in logistics sector

  • Customer expectations are increasing greatly : Both individuals and businesses expect to get goods faster, more flexibly. Consumers expect their goods at very low or no delivery cost.
  • Manufacturing is becoming more and more customized, which is good for customers but hard
    work for the logistics industry. Add it all up and the sector is under a lot of pressure service better at the lowest cost possible. It can only hope to do this by making maximum and intelligent use of technology, from data analytics, to automation, to the ‘Physical Internet’.
  • This promises lower costs, improved efficiency, but it is a challenge to cope up with these new technologies for a traditional industry like logistics. It is currently lagging many of its customers in this respect.
  • Competitive environment with new entrants are bringing in a sort of unprecedented disruption. According to recent studies, these third party logistic service providers bring in a lot of pressure to the industry. The traditional logistics service providers face significant digital hardship from new technologies such as autonomous vehicles and 3D printing as well as from platform-based business models and the sharing economy. An increasingly competitive environment is another big factor in the mix. Some of the sector’s own customers are starting up logistics operations of their own, and new entrants to the industry are finding ways to carve out the more lucrative elements of the value chain by exploiting digital technology or new ‘sharing’ business models, and they don’t have asset-heavy balance sheets or cumbersome existing systems weighing them down.
  • Sharing of data is also putting a lot pressure on service providers. Customers expect complete transparency and accuracy in tracking their order. This has influenced Uber-style approaches to last-mile delivery,  partnerships at corporate level, the whole sector is redefining collaboration. But much of this is hampered by inconsistencies in everything like shipment sizes, processes or IT systems. The Physical Internet promises great things for the sector, coming along with increased standardization in logistics operations.

Logistics – future scenarios

What will the logistics marketplace look like in five to ten years?  The graphic by PWC given below points that technology plays a key role in the coming decade, but affects the market in different ways. The role of new entrants and the level of collaboration are also key influencing factors on the future scenarios.

Data Analytics in supply chains

Data and analytics have impacted industries to speed up processes, it offer visibility to partners and customers, digitize value chains and, in a context of digital transformation, come up with new business models. In many sub segments of transportation and logistics, it’s about disrupting or being disrupted with data and information at the core.

Most of them revolve around location, connection of devices (Internet of Things), big data analytics, cognitive computing and obviously the platforms where data are captured, processed and leveraged/accessed such as mobile platforms, information capture and processing platforms but also the networks and data environments such as the cloud. When it comes to security of assets and data – IoT applications enable efficient  authentication, biometrics and asset tracking.

The global market size for digital transformation in transportation and logistics was valued at USD 54.92 billion in 2018 and is anticipated to rise up to USD 145.28 billion by 2025 with a CAGR of 13.0% during the forecast period. There is high adoption of digital technologies in the field of transportation and logistics as developing robust new platforms solve problems related to asset under utilization, reduces supply chain inefficiencies, improve demand-supply matching, and increase connectivity and visibility across systems. With the improved operational connectivity and visibility between present systems, stakeholders are able to seamlessly connect to each other throughout the supply chain.

Digital business requires digital supply chains.

Digitization in logistics documentation and supply chain management is the need of the hour.

  • Profound digital transformation is occurring in several areas and challenges the status quo.
  • Innovative uses of technologies in areas such as data analytics, the Internet of Things and the cloud are disrupting existing players.
  • Various parties in the supply chain move at different speeds. Industry 4.0 and its intrusion have made digitization a necessity across the logistics, transport and manufacturing industries supply and demand are expected be always-on.

Attracting the right skills for digitization is one issue, but developing the right strategy is even more crucial.

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