5 Ways Digitalization is Impacting Logistics

Here’s how supply chain digitalization is helping companies better serve their global customer bases.

Digitalization is transforming every corner of the business environment, and promises to change the way nearly every industry conducts business, measures it success, and serves its customers. “As manufacturers and retailers continue to transform their strategies,” supply chain software provider JDA points out, “the next challenge distributors and logistics providers face is that they need to accelerate their ability to deliver their services.”

Manufacturing and retail transformations, technology disruptions, and digitalization of data have redefined the roles of distributors and third-party logistics providers (3PLs). “The rate of change is accelerating,” JDA continues, “driving the transformational initiatives of distributors and 3PLs to stay relevant, create differentiation, and execute long-term growth strategy.”

Five Key Digitalization Trends

For shippers, the race to stay in the game will largely be supported by the investments in and adoption of technology. Here are five trends to watch in this area:

1. The definition of supply chain digitalization is expanding. The digital supply chain is “a conceptual umbrella term that will continue to be used to identify supply chain software, communications, and automation efforts that meet certain digital criteria.” ARC Advisory Group’s Steve Banker says the term is broad enough to include a wide range of technologies and use cases. “Very often the digital supply chain terminology is used to describe a digital transformation that meets the digitization criterion,” Banker points out in his Forbes column, “and is advanced in another aspect such as supply chain scope, depth, and breadth of analytics, or incorporation of data from the ‘digital edge.’”

2. Machine learning and artificial intelligence (AI) are enhancing logistics. Banker says machine learning is especially useful for large, dynamic data sets where the relationship between the dependent variables and the independent variables is fluid. This, in turn, is helping shippers aggregate and assess data in a way that allows them to better serve their global customers. “Large amounts of data are more prevalent than ever in today’s supply chains, thanks to computing enhancements and technologies on the digital edge,” Banker writes. “As a general technology, machine learning is applicable to a wide-range of logistics technologies.” For example, it’s being used to enhance warehouse management systems (WMS), robotic vision systems, supply chain planning, supply chain visibility, and more. “Furthermore, fulfillment operations are placing a greater premium on adaptability to meet shorter fulfillment horizons,” Banker writes, “and the constantly changing needs of the market.”

3. More companies are experimenting with warehouse robotics. The persistent labor shortage and advancements in technology are pushing more companies, logistics providers, and 3PLs to explore the use of robotics in their operations. In fact, they’re already proving their value in select warehouse applications, with the technology expected to reach a tipping point in 2019. “Expect the technology to have an impact that extends beyond e-commerce fulfillment,” Felecia Stratton points out in Inbound Logistics. “The ability of the current generation of robots to work alongside humans while performing low-value tasks that increase overall warehouse productivity applies across a range of industries and warehouse tasks.”

4. Immersive technologies are allowing supply chain businesses to enhance employee and customer digital experiences. According to Gartner, virtual reality (VR) will reach mainstream adoption in the next two to five years, with augmented reality (AR) going mainstream in the next five to 10 years. The research firm also says that these technologies are already in use in a variety of industries. “These include enhanced repair and maintenance capabilities in manufacturing, logistics, and warehousing,” Gartner points out in a recent report, “and better purchasing choices for customers leveraging product visualization or store layout and planning.”

5. For most, extended supply chain visibility is still the main goal. Visibility—or being able to “see” orders in real-time as they move from the point of manufacture to the point of delivery—is a hot topic for all companies right now. “Many digital supply chain initiatives come in the form of extended supply chain visibility,” Banker confirms, pointing to Pfizer’s digital supply chain journey, which was driven by the desire to gain real-time shipment visibility across its large and complex extended supply chain, as proof. According to Banker, the company wanted to replace the disparate systems, intermittent phone calls, and emails with a connected digital network. “This digitization project resulted in the Pfizer Trackit application that tracks the shipment of 15,000 stock keeping units utilizing data from Pfizer and supply chain partners,” Banker writes, “while allowing customers to access timely and accurate data through an online application.”

Odyssey Logistics is paying attention to the key digitalization trends taking place in the supply chain and will keep you informed of new developments as they surface.