Digital transformation in transportation and logistics
In an increasingly real-time economy speed and timing are key. It might sound obvious but the consequences for supply chains, logistics and the transportation industry are huge.
Efficiency, optimization, 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 next revolution of industry, known as Industry 4.0, it is even more so.
In this overview we take a look at the main challenges regarding digitization and digital transformation in (goods) transportation and logistics (T&L) and, inevitably, the digital supply chain.
Speed and timing as a competitive advantage in an increasingly real-time economy
First, let’s briefly look at the importance of speed and timing in general as they are essential everywhere. Feel free to skip this part and go to the topics you’re most interested in, using the table of contents above.
We’ve tackled how speed often is a key differentiator in today’s ‘digital business‘ context before. When used well, speed is a competitive advantage. We also mentioned how real-time economy evolutions affect organizations in another article.
Research shows how 76.9 percent of executives agree or highly agree that the evolutions towards a real-time economy has an impact on their business processes. And, obviously, in transportation and logistics (and supply chains), processes are ubiquitous and hyper-connected. A majority of executives also feels that the move to a real-time economy affects their organizational structure and business strategy.
This shouldn’t be that surprising and we’re pretty sure that if today the same research would be conducted (it dates from end 2013), the results would even be higher.
Over 70 percent of executives are in high or very high agreement that the shift towards a real-time economy affects their organizational structure.
The human and connected drivers of faster business
Among the many drivers are obviously consumers, users, in other words people, who are expecting more and are increasingly mobile. This goes for all industries and in transportation and logistics, customer experience and engagement rank high in the top priorities as well.
Several evolutions, including mobility, enabled a shift in behavior which is further enhanced by the experiences customer are used to in other contexts than the interactions and transactions with your business.
It’s the famous ‘spill-over effect’. At the edge of each supply chain sits an end customer just as, at the edge of each process sits a user, a logistics partner or any other stakeholder. The focus on the customer or as Forrester calls it, the customer-obsessed operating model, is felt everywhere.
Just think, for instance, how in the context of a customer-adaptive enterprise the big data focus has moved towards fast data. Or how we move towards the edge in data analysis (edge computing and fog computing) in a context of the Internet of Things (IoT). Or how capturing and processing information fast is essential (without forgetting the accuracy). Real-time economy might be a bit of a misnomer as real-time first describes a capacity. Though we also increasingly see it as a reality.
Hyper-connectivity inherently comes with a dimension of acceleration and speed. The connectivity of processes, people and how it is used.
CEOs see mobile technologies for engaging with customers, cybersecurity tools and data analytics as the three most important areas in which to invest. Source:PwC
Speed and timing as challenges in logistics and beyond
So, customer expectations and competitive differentiation require speed and timing, which are drivers of several important changes in transportation and logistics, with speed being a competitive advantage.
We mentioned a few examples of when and where speed and timing are crucial in logistics and beyond. Here are a few examples of other areas where they are real game changers.
- Data-driven marketing aims to engage people at the time and in the context which makes most sense and – thus – increases conversions/actions.
- Information management, more than ever, is about living up to the credo of the right information at the right time for the right process(es), people, context, purposes and so on.
- Customer service: the demand for fast responses is higher than ever and here as well it is a lot about information and communication (at the right time, etc.) but also because of these increased customer expectations regarding speedy (and accurate) answers in a mobile world.
- The roll-out of new business models or technology deployments, taking decisions and/or product launches: you don’t want to be too soon nor too late.
In the end many of these examples are essential reasons why, as businesses, we’re so fond of big data and in this context certainly fast data and data analytics, delivered by unleashing artificial intelligence and cognitive computing on sets of data which we need to time so many things right and even in a predictive way as we do with predictive analytics.
Businesses don’t want data. They want visibility and dashboards to be fast and timely as they know it’s key in today’s digital transformation economy and realize it won’t change anytime soon, well on the contrary. And it is no different in logistics, transportation and supply chains.
Hyper-connectedness in transport and logistics
Whereas most of the previously mentioned examples have to do with information and communication there obviously also is the physical world of pallets, boxes, goods, paper documents, the books you just ordered online, the list goes on.
This brings us to the transportation and logistics industry where information management, data, analytics, visibility and king customer all play a key role.
After all, with each handling, shipping and any other treatment of goods come processes, information flows and interactions. With the lines between digital and physical blurring, few industries are so hyper-connected on all levels than those who are active in supply chains.
In the end, transport and logistics has one major task: making sure that any of the mentioned and other items arrive at the right time and place in the best possible condition.
Whether it concerns distributors, end customers, transportation firms, retailers or any part of a supply chain: there is always someone waiting for something.
As in lots of real-life scenarios in a connected and globalized world, there are many parties involved to get an item from where it is manufactured to its end destination. The longer the waiting times for these parties, the longer it takes overall and the more time, resources, money and sometimes reputation can be wasted when a provider is too late and others need to wait. Obviously these delays don’t necessarily have an impact on the end destination. There is still something called warehousing and stock management and supply chain management is far more complex than depicted here. Just imagine all the processes that one party in the supply chain needs to complete (from the reception of an item to shipping it out in its original shape and form or as part of another item at the end of a manufacturing process).
Over a quarter of transportation and logistics companies have no digital strategy in place.