Digital Transformation in Logistics: Benefits and Key Technologies

The transportation and logistics area is closely interconnected with other sectors of the economy. Therefore, the increased efficiency of logistics services contributes to economic development as a whole. This fact applies to both separate countries and the global economy.

Up until recently, digital transformation in logistics was implemented at a rather slow pace. However, in recent years, the situation is changing because new players, who work more closely with technology companies, appear on the market. This refers to the market worth hundreds of billions of dollars, and many players would like to substantially increase their market presence.

Resorting to digital transformation, logistics service providers can successfully address three major challenges of the sector, namely flexibility, sustainability, and transparency. So let us take a closer look at this issue.

Digital Transformation Benefits for Logistics and Transportation

Digitalization is a big challenge for any industry. However, companies implementing it in their business receive several important benefits:

• optimization of routes and reduction of time necessary to execute specific operations to speed up deliveries;
• inventory control process automation as part of the whole supply chain;
• transportation cost reduction;
• increased transparency of logistics operations;
• improved customer services;
• elimination of a significant part of routine operations;
• efficient and uninterrupted vehicle fleet management;
• more opportunities to make decisions in a real-time environment;
• risk reduction, etc.

The main operations involving digitalization are as follows:

• Data analytics. It will be possible to collect much more data, process it more efficiently, and access the required data from anywhere in the world (cloud technologies).
• Customer communications. The possibility to interact with a company through a digital interface is more convenient for customers and improves operation transparency as well.
• Operational processes. Using full or partial automation, it is possible to optimize and speed up the main logistics operations.
• Vehicle and equipment monitoring. More efficient vehicle and equipment operation, as well as machinery preventive maintenance, is ensured using on-board GPS trackers, devices for assessing equipment condition, and other technological solutions.

Key Technologies for Digital Transformation in Logistics

Technological advancements are changing not only our daily lives but entire sectors of the economy. The following tech solutions produce the greatest impact on the transportation and logistics sector:

1. Big data and machine learning. Data is the most precious resource in the modern world. And machine learning technologies allow finding its practical application to carry out efficient planning, forecasting, automated decision making, and other tasks.
2. 5G technology. High-speed communication networks can unite people and machines in a single information space, giving a new impetus to IoT technologies.
3. Artificial intelligence. This technology provides the broadest possibilities. By applying AI, businesses can conduct efficient risk management, optimize routes, and use predictive analytics.
4. Cloud logistics. As data moves to the cloud, logistics services become available as a pay-on-demand service. For instance, services like Shipwire and Freightly provide cloud-based real-time transport management systems.
5. Internet of Things (IoT). Smart trucks send data on their movements and idle time, enabling dynamic route planning and increasing vehicle fleet productivity. To transport goods like medications and food, sensors have been developed to monitor temperature and humidity inside transport containers. DHL, a German courier, parcel, and express mail service, already uses warehouses connected to the IoT.
6. Mobile applications. Along with other technologies like IoT, Cloud, and AI, mobile application development is also an important tool used for digital transformation. This approach allows receiving data and controlling processes directly through a smartphone or tablet.

Technology advances quickly, and successful use cases inspire businesses to implement them faster. Consequently, the whole matter should reach a cumulative effect: companies will copy best practices from each other, and that will generally take the market to a whole new level.

The Journey to Zero-emissions Transport

Digitalization opens up for greater visibility, reactivity, planning, and efficiency in logistics. All of this will soon be a necessity in order to stay competitive. But digital transformation technologies may be one of the catalysts to trigger systemic changes that can lead to rapid reductions in CO2 emissions across the world.

“As it is, the industry focuses most on time efficiency and low pricing but additional value propositions could allow e-commerce shops, traders & buyers to consider new practices in their supply chain. This is an opportunity for transport companies to activate new proposals and complementary services that enable sustainable practices & zero-tailpipe-emission fleets.”

— Andreea Spaima, Co-Founder at GrassHoppr

Decarbonization of transport will play a crucial role in reducing greenhouse gas emissions. These are the several directions we need to move to achieve it:

• Decarbonisation of different transport
• Using resource-friendly production methods
• Further developing electric mobility
• Greening freight transport (by increase rail freight traffic)
• Exploring alternatively fueled vehicles

Digital transformation technologies face unprecedented opportunities to lower the carbon footprint of the industry.

To summarize

Digital transformation in logistics is an integral part of the digital transformation taking place in the entire global economy. Modern technologies are just tools in this process. The most difficult thing in this transition is the “collision” of the traditional system with the necessity to quickly adapt to changes in the external environment.

Those companies that currently bypass the active use of digital technologies in their processes should seriously think about it to maintain their positions in the contemporary rapidly changing world.

As part of the digital transformation, Lvivity tries to offer its clients an integrated approach involving both strategy development and convenient tools for its implementation. Contact us, and we will be able to offer you the best solution to your business challenges.