- Digitalisation threatens to fundamentally disrupt logistics but could also help the industry reduce its inefficiencies and shrink its environmental impact. Efficiency, optimisation, speed and timing have always been crucial in logistics and transportation. Today, amidst a range of accelerating evolutions and in an increasingly digital environment where digital transformations are affecting the industry, it is even more so. Demographic and digital trends are combining to drive growth, but logistics businesses cannot afford to rest easy and enjoy the fruits of this global boom in shipments.
How is digital logistics different from traditional logistics?
- Digital logistics recognises the growing convergence of logistics operation and technology strategy.
- Digital logistics is driven by a new generation of web-based, enterprise logistics applications that enable collaboration and optimisation, leveraging a central logistics information backbone that provides visibility across the enterprise and extended supply chain.
- With digital logistics, these new enterprise and supply chain logistics applications are tightly integrated with core warehouse, transportation and labor management systems to enable new process models and ensure fulfillment excellence.
- Digital logistics breaks down operational silos. It impacts not only the cost side of the value equation, but also fuels growth through the ability to deliver personalized, customer-focused logistics, with faster cycle times and exceptional customer satisfaction.
The need for Digital transformation in logistic
As other industries with close links to logistics, such as retail, are revolutionised by digital technology, the chances of digital disruption engulfing the logistics industry increase – for instance, the rise of e-commerce has led to new digital entrants in the last-mile delivery market.
More significantly, digital platforms will become increasingly important in the logistics industry, allowing small companies to have a global reach and compete with the sector’s established giants. Over the next few years, the race to build a dominant global platform will transform the customer’s experience of logistics and will be the central issue in determining which enterprises will be the winners and losers in a truly digital logistics industry.
With the logistics industry suffering from some very significant inefficiencies – for instance, 50% of trucks travel empty on their return journey after making a delivery – digital transformation can also bring important social and environmental benefits by increasing efficiency and cutting down energy consumption and emissions.
Digital Logistics Framework
Companies embracing digital logistics will recognise there is a progression of capabilities that begins with functional excellence, moves to enterprise logistics management, and ultimately to the supply chain integration and collaboration that will characterise supply chain leaders.
Stage 1 – Functional Excellence: Despite the current focus on integrated enterprise logistics management and supply chain integration, digital logistics must be built on a foundation of functional excellence. Many companies have embarked on aggressive supply chain initiatives, for example, only to find they were unable to achieve their objectives due to an inability to perform at the local distribution center level.
Companies embracing digital logistics will achieve functional excellence in at least three key areas:
- Distribution: Adoption of improved fulfillment processes and current generation, real-time warehouse management system (WMS) technology.
- Transportation: Many companies are mired in inefficient transportation processes and lack the technology to automate load building, optimise inbound and outbound freight movements and efficiently manage carriers.
- Labor and resource management: Few companies have taken advantage of the opportunities to significantly increase productivity, quality and employee retention available through today’s advanced labor management solutions.
It is extremely hard for companies that do not have the foundation of warehouse, labor and transportation excellence to move to the next level of digital logistics, since they cannot execute effectively the more complex strategies that are driven at the enterprise or supply chain levels.
Stage 2 – Enterprise Logistics Management: When functional excellence has been achieved, companies can then embrace true enterprise logistics management.
Key capabilities that will enable integrated enterprise logistics management include:
Supply chain visibility and event management: Many companies have made increasing supply chain visibility a top corporate priority. In today’s high velocity logistics environment, end-to-end visibility to inventory, orders and shipments across the supply chain is emerging as an essential capability to reduce network-wide inventory levels, maximise customer satisfaction and respond dynamically to logistics events.
- Centralised command and control: Increased supply chain visibility provides many benefits, but is not an end in itself. Companies must be able to act upon this information to effect action across the enterprise and beyond. This requires a new generation of enterprise command and control applications that provide enhanced levels of logistics efficiency and support new roles and responsibilities.
- Online logistics scorecarding and metric systems: Visibility to performance metrics is needed to drive continuous improvement. In a digital logistics environment, performance metrics (i.e., “logistics scorecard”) are widely distributed throughout the organisation. They are accessible online, and allow the user to flexibly drill down on the information to gain additional understanding and determine the root cause of problems.
Stage 3 – Supply Chain Integration and Collaboration: Companies need the flexibility to quickly integrate with key trading partners to communicate information, synchronise activities, and collaborate across logistics processes. While direct system-to-system integration is often optimal, it is not always practical, and in some cases not sufficient to enable true collaboration. By constructing a series of collaborative digital applications specific to the roles of individual supply chain participants, “hub” companies can increase collaboration and synchronisation. This will drive improvement in supply chain velocity, efficiency, and customer service.
Digital technologies therefore offer the chance for individualized, tailored, accelerated and more effective strategy for businesses. If you want to know about the power of digital transformation, Anglo African team can help you, do contact Naazreen on 2331636 or via e-mail at firstname.lastname@example.org.