In recent years, innovation and automation have brought big swings to the logistics industry. Businesses are undergoing severe transformations with automation and new technological solutions changing how people work in the supply chain domain. So now, they either can be proactive and take advantage of these technological changes or are forced by the market trends to adapt and react.
These growing pressures and complexities have made it challenging for companies to decide what their long-term and short-term focus should be and if logistics automation is an area worth investing in.
The prominent trends driving logistics toward automation
As in the case of most industries, Logistics is also being massively shaped by customer expectations. In this era of Amazon delivery, Customers at all levels of the supply chain have massive expectations concerning the speed of goods delivery. Moreover, there are reports that 15% of consumers expect delivery rescheduling in the event of delivery failure and 29% expect items would be delivered to their current location. This puts intense pressure on retailers and manufacturers as the only way to retain market share now is to keep pace with customers’ delivery expectations, which sharply hits companies’ freight movement costs.
The only way to manage this is by adopting automation in logistics at different stages, from procurement to tracking, to boost the speed of the end-to-end flow of goods and optimize the processes to positively impact companies’ profitability.
Supply Chain Innovations
With the massive availability of cost-effective technology and the internet, innovation and automation are seeping into the supply chain’s different layers. The digital supply chain is becoming a big trend affecting the logistics industry. The power of IoT and sharp data-driven insights at other supply chain steps render a vast potential for businesses to improve efficiency, directly impacting their bottom line through cost reduction and faster revenue generation.
Rise in e-Commerce
The explosive growth of e-commerce has severely boosted consumer demand and E-commerce is expected to create the majority of the B2B sales by 2020, reports Four51. Today’s customers discover new products every microsecond and need them to be available immediately at the right price, with near-zero delivery charges. Failing to do so leads to the deterioration of B2B relationships.
Management of supply chain by organizations is hence, being driven towards automation to address the concerns of higher cost and low capacity. Businesses are adopting capabilities like procurement/bid optimization, visibility, route planning and optimization to make their logistics processes robust, simple and free from human- bottlenecks.
Software-driven process changes
The rising workforce cost and intense competitive pressure on product price are driving organizations towards implementing freight management systems, ITS, etc., in their In-House Logistics functions. Reduction in unnecessary maintenance costs and errors in simple and repetitive processes have improved logistics efficiency in organizations’ analysis and decision-making areas.
Automation due to AI and RPA solutions’ development solves talent supply gaps. It makes tracking, calculation, or claims management faster and better in quality, mainly contributing to the organization’s overall performance.
According to an ARC report about the ROI of “logistics as a service,” companies saved 2 to 10 percent on freight costs. Considering the significance of logistics spending in companies’ total budget, companies need the right skill set to uncover the issues, develop solutions and execute changes. LaaS is designed to reduce costs and improve customer experience. Cloud-based innovations enable enhanced control over logistics and supply chain processes with access to real-time information. This allows companies to be more agile concerning disruptive events and fluctuations.
LaaS facilitates the integration of logistics processes with other business processes flexibly and fluently. It is a powerful technological trend in logistics. It doesn’t just bring down costs and make logistics processes efficient but also allows businesses to focus resources on core business functions.
In the current logistics and supply chain industry, automation and technology have opened multiple avenues for business cost-savings and operational efficiencies. Since logistics expenditure is one of the primary budgetary items for manufacturers, finding ways to reduce costs is always a priority. This is because shippers are now rapidly realizing that the only way to compete in the market is to embrace automation and technological innovations in their logistics functions.