Innovation and automation have already brought big swings to the logistics industry in recent years. Businesses are undergoing severe transformations with automation and new technological solutions changing the way people work in the supply chain domain. So now, they either have an option to 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 tough for companies to decide what should be their long term and short term focus, and if logistics automation is an area that is worth investing in.
The prominent trends that are gradually driving logistics towards automation:
- Modern Customers: As in the case of most of the 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 is putting intense pressure on retailers and manufacturers as the only way to retain market share now is to keep pace with customer’s delivery expectations, which gives a sharp hit on companies freight movement cost. The only way to manage this is by adopting automation in logistics at different stages, from procurement to tracking to boost the speed of end to end flow of goods and optimise the processes to create a positive impact on companies profitability.
- Supply Chain Innovations: With the massive availability of cost-effective technology and the internet, innovation and automation are seeping into all the different layers of the supply chain. The digital supply chain is hence, becoming a big trend affecting the logistics industry. The power of IoT and sharp data-driven insights at different steps of the supply chain render a huge 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 deterioration of B2B relationships. Management of supply chain by organisations is hence, being driven towards automation to address the concerns of higher cost and scarce capacity. Businesses are adopting capabilities like procurement/bid optimisation, visibility, route planning and optimization to make their logistics processes robust, simple and free from human- bottlenecks.
- Software-driven process changes: The rising cost of man-power and intense competitive pressure on product price is driving organisations towards the implementation of 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 at analysis and decision-making areas of organisations. Automation due to the development of AI and RPA solutions solve talent supply gaps and make tracking, calculation or claims management faster and better in quality, largely contributing to the overall performance of the organisation.
- Logistics-As-A-Service: According to an ARC report about the ROI of “logistics as a service”, companies saved between 2 and 10 per cent on freight costs. Considering the significance of logistics spend in companies total budget, companies need to have the right skillset to uncover the issues, develop solutions and execute changes. LaaS is designed to reduce costs and improve customer experience. Cloud-based innovations enable improved control over logistics and supply chain process 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. LaaS is a powerful technological trend in logistics as it doesn’t just bring down cost 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 cost-savings and improved operational efficiencies for businesses. Since logistics expenditure is one of the largest budgetary items for manufacturers, finding ways to reduce costs is always a priority, more so because shippers are now rapidly realising that the only way to compete in the market is to embrace automation and technological innovations in their logistics functions.