Businesses across every sector are now adopting digital technologies and reshaping their models in line with new digital transformation trends. They come up with new processes or modify the existing ones, build new company cultures, and even introduce brand-new customer experiences to satisfy the changing needs of consumers and market demands.
Digital transformation in logistics and transportation helps companies from the sector to take advantage of new technologies and stay competitive in a market that is continuously expanding.
The global market size for digital transformation in this industry was valued at $54.92 billion in 2018 and is expected to reach $145.28 billion by 2025, registering a CAGR of 13% during this period.
The high adoption of digital technologies in the field helps transportation and logistics companies to solve a wide range of problems, from asset underutilization and supply chain inefficiencies to increasing connectivity and visibility across different systems.
Are you wondering what digital transformation in logistics and transportation looks like? Here is a comprehensive guide to help you understand the value of digital solutions in the rapidly changing industry of transportation and logistics.
What is digital transformation?
Digital transformation is the process of reshaping products, services, and entire business models by adopting digital technologies. The good news about the transportation sector is that it used to be viewed as backward but today figures among the pioneers in terms of digitalization.
But only large logistics companies can afford to build internal IT departments. Digitalizing the entire process range is also capital intensive. That’s why large organizations have a better chance of carrying out digital transformation initiatives.
Logistics isn’t only about digital tracking or calculation of good flows. It’s also about physical processes that need to be automated. This is where robotics and the Internet of Things (IoT) come in. While some innovations require a large investment volume, smaller logistics companies can also take advantage of digital tools to reinvent their business models and deliver value to their customers.
What makes the transportation industry a perfect candidate for digital transformation?
The transportation sector continuously deals with many different challenges related to:
- connectivity and visibility across different devices and systems,
- underutilization of assets,
- lack of efficiency in the supply chain.
Digital transformation initiatives allow such companies to build a robust platform that solves these problems. Limited use of technology may have a negative impact on the efficiency, productivity, and market growth of businesses today. Professionals working in the logistics sector point to the lack of necessary skills and expertise throughout the supply chain. This is why companies often need to rely on external resources to make digital transformation happen.
Transportation and logistics give priority to values such as optimization, speed, efficiency, and timing. Since all industries out there are now experiencing a technology outburst, it’s only natural for digital transformation to become a necessity for the transportation industry.
Benefits of digital transformation for logistics companies
Increased speed and time
Speed and time play the most important role in the transportation sector. Minimal time and high speed form the core competitive advantage for companies in this industry. Digital transformation initiatives that utilize Robotic Process Automation (RPA) for automating time-consuming processes can help companies a lot in keeping pace with their competitors. By delivering services faster to customers, they get to position themselves as leaders in their industry.
Connectivity among different devices
Another critical benefit of digital transformation is that it allows building hyper-connectivity among devices by using sensors. This is where technologies like the Internet of Things (IoT) come into play. They enable companies to bring together devices that use sensors to send critical information over one network.
By enabling physical objects with the ability to interact and communicate with other things and business users involved in decision-making, digital transformation stands to disrupt the entire sector. Connected devices can also accelerate processes and contribute to the increased speed of reaction.
Business Intelligence insights
By digitizing transportation logistics processes, companies see an increase in data volumes. Generating such an amount of that data means that organizations need to look into modern technologies like data analytics and Business Intelligence.
Data-driven decision-making requires support from cognitive computing and Artificial Intelligence and Machine Learning solutions. This is where digital transformation can help as well. It enables companies to overcome different business challenges such as:
- supply chain management,
- process optimization,
- cost control, improvement of customer experience.
Visibility across all the key factors
Generating massive volumes of data comes with its unique challenges and complexities. To unlock the value of data, companies need efficient tools and technologies. Logistics, transportation, and supply chain businesses launch digital transformation strategies that focus on managing the visibility across factors that affect their decision-making process.
Thanks to modern analytics tools, companies can now carry out data visualization and take advantage of modern dashboards with self-service capabilities that offer user-level digital transformation. Such tools present a large amount of data in a meaningful, concise, and pleasant form so that it can be used by managers in decision-making.
Greater health of machines and equipment
Transportation and logistics companies need to ensure that items arrive in the right location, at the right time, and in the best possible condition. That’s why it’s essential that all the machines and equipment remain in service and don’t wear out unexpectedly. Such a scenario may cause downtime and delays.
Digital transformation helps companies to keep an eye on their equipment at all times and alerts them even months before a piece breaks down. Innovative technologies such as data analytics, cloud computing, and Internet of Things sensors, together with machine learning algorithms, enable a powerful trend called predictive maintenance that allows businesses to avoid downtime caused by damaged equipment.
Key technologies for the transportation and logistics sector
Companies aiming to improve shipment visibility and increase trust in the movement of international cargo can take advantage of blockchain today. Blockchain-based innovations such as smart contracts and decentralized apps (dapps) offer secure data distribution, decentralization, and validation. Blockchain technology is finding more and more use in supply chain visibility.
Augmented Reality (AR) and Virtual Reality (VR)
According to Accenture, Augmented Reality is going to revolutionize the processes of picking, packing, and commissioning processes in warehouses and cross-docking areas, providing logistics companies with a competitive advantage.
Virtual Reality can be used to significantly improve the delivery process, making it safer and more efficient by superimposing important information directly into the windshield of drivers. That way, drivers wouldn’t even have to glance at their handheld device to see alternate routes, traffic jams, and blocked roads.
VR could even increase the quality of the service when drivers are at the point of delivery. For example, drivers could use VR-powered glasses to see information about the weight, content, and handling instructions to ensure that the packages are delivered safely.
Process automation software is expected to increase the automation level to almost 100% in areas such as customer invoicing and transport planning process. By using Robotic Process Automation, transportation companies will optimize their processes, reduce costs, and simply deliver a better customer experience to their clients.
Business Intelligence platforms
Digital platforms that offer a wide range of data analytics features are going to make the entire supply chain much clearer and transparent. This, in turn, will allow companies to keep on optimizing their operations in other business areas such as sales.
Big Data analytics solutions will provide an ecosystem of information, allowing businesses to drive greater efficiencies within their organizations and avoid common problems deriving from asset underutilization.
Within the logistics sector, 3D printing holds the promise of increasing the decentralization of finished goods production. 3D printing might significantly change today’s transportation volume, allowing companies to integrate additional value chain activities and extend their product portfolios.
Many traditional organizations in the transportation and logistics industry have bespoke legacy applications at the core of their IT systems. To become more agile and standardize business operations, these companies need to migrate to modern solutions that are now replacing traditional tools in many other sectors.
There’s no denying that what used to be one of the most traditional and technologically backward sectors is now at the forefront of digital transformation.
Transportation and logistics companies are taking advantage of brand-new solutions that allow increasing operational efficiency, removing unnecessary costs, and improving the customer experience. They invest in digital transformation strategies because it’s the only way to survive and thrive in the current market, gaining a competitive advantage for the years to come.
If you’re looking for a development team with experience in delivering software solutions for the transportation and logistics industry, get in touch with us. At Codete, we deliver tailor-made solutions dedicated to this industry to help companies deal with issues posed by their legacy systems, solve problems, and achieve business goals faster.
You may also be interested in reading: