Digital Transformation in the Logistics Industry: A Beginner’s Guide

As more and more buyers hop online to make purchases, the logistics industry is staying busy. In 2021, nearly 60 million parcels were generated in the United States per day.

While the logistics sector might be experiencing high demand, it’s edging toward a chasm. To stay competitive and relevant, leaders in this space must decide what to digitize and to what degree. 

As such, digital transformation in the logistics industry is at a peak. Business leaders in this space are looking for ways to modernize their existing technology and embrace new systems. 

Today, we’re looking at how to approach digital transformation at your own logistics company by embracing some of the top trends. 

The Role of Digital Platforms in the Logistics Industry

Digital technologies have long been mainstays in the retail market. From VR-embedded smart mirrors to shopping carts that give buying suggestions, this industry hasn’t shied away from ditching traditional models. 

However, the logistics realm has been slower to adapt. Many packaging, shipping, and delivery companies still operate much as they did ten years ago. 

This resistance to change can be detrimental, especially for smaller companies. Early adopters are already outpacing them by building widespread global platforms.

Here are the top trends early adopters are following: 

1. Optimizing Logistics Services

Major retailers are offering quick turnaround services, such as next-day or same-day shipping. In response, logistics companies have had to re-imagine their service models. They’re implementing digital platforms to gain visibility into every facet of their operations. With these systems, they can move faster and more efficiently, even in the largest cities. 

2. Fully Connected Supply Chains

Some of the digital tools that are allowing logistics companies to achieve full transparency, visibility, and connectivity include:

• Advanced data analytics
• Enterprise software
• Robotics and drones
• Augmented reality (AR)
• Blockchain
• The Internet of Things (IoT)

These tools increase the speed of operations and help logistics companies stay responsive to buyer needs and demands.

ERP software, for example, is built just for this purpose. This software also helps companies use sales data from associated retailers in a more actionable way. When logistics leaders have insights into order transaction history and communications, they can:

• Optimize demand forecasting
• Add more capacity as needed
• Streamline operations planning
• Reduce excess inventory 

3. Improved Data Management

Logistics is an industry driven by real-time buyer behavior. However, these actions can be hard to track and analyze without the right software. 

Digital solutions, like analytics as a service, can help companies capture and harness these insights. Then, they can use the data to:

• Make operations more efficient
• Reduce operating costs
• Respond more quickly to customer needs and preferences

4. Delivery Optimization

There are some geographical regions that delivery trucks simply can’t access. There are also rapid deadlines that they can’t realistically meet. 

Thankfully, advances like drone deliveries and digital trucks are helping delivery trucks expand their scope.

On the processing side, developments in 3D printing are promising. These tools allow logistics companies to embrace on-demand production strategies that other parts of the supply chain are already using.

Together, these capabilities make the delivery process easier, faster, and more widespread. 

5. Product Sustainability

Companies across nearly every industry are embracing Environmental, Social, and Governance (ESG) initiatives. Logistics is no exception. Buyers want to know what logistics companies are doing to create more eco-friendly, sustainable products and processes. 

Digital platforms, like those provided by the top ERP vendors, are helping these companies automate and eliminate many manual tasks. This is lowering the amount of waste and pollution created while minimizing companies’ carbon footprint.

6. Unified Support and Collaboration

Logistics teams work closely with other departments in an organization. This includes the warehouse team and the transportation team. These employees need the ability to connect and collaborate with one another in a matter of seconds.

Thankfully, enterprise systems, like supply chain management systems, open those lines of communication. Everyone can work from the same centralized dashboard, which also aids in version control and reduces the potential for manual error. 

Potential Barriers to Digital Transformation in the Logistics Industry

With so much at stake, why isn’t every logistics company clamoring to start a digital transformation? 

The reality is that there are risks. While digital systems can be beneficial, they can also be challenging to implement. Some of the most common issues that prevent widescale digital adoption include:

• Finding the right talent
• Accommodating business changes (e.g., acquisitions and mergers)
• Communicating with stakeholders and suppliers who aren’t as tech-savvy
• Working around regulatory restrictions 
• Siloed systems and departments that impede collaboration 

Balancing Digitization and Demand in Logistics

Logistics companies are sought-after providers – thanks to a meteoric rise in eCommerce over the past few years. 

To maintain this status, logistics businesses must be willing to follow other parts of the supply chain into the future. This includes employing digital tools where appropriate. 

Embracing digital transformation in the logistics industry can open new opportunities for revenue and connection. Is it time for your operations to take that step? Contact our ERP consulting company below for a free consultation.