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How does digital transformation influence the logistics market?

The global movement towards digitalization is transforming the logistics market as well. Digital is changing the channels of goods movement, delivery formats, and management processes. Companies that invest in digital technology are taking over as industry leaders. This article will throw some light upon the essential changes for digital transformation in logistics and show which technologies are best to implement. 

What is happening in the warehouse storage and logistics market now?

The development of e-commerce and the increasing requirements for delivery - multichannel, efficiency, transparency, accuracy - stimulate retailers and logistics operators to improve processes’ efficiency and introduce new technologies. 

Post COVID-19, the global logistics market size is predicted to grow from 2,734$ billion in 2020 to 3,215$ billion by 2021, at a Y-O-Y of 17.6%. Until recently, innovations in transportation were mainly related to cargo tracking. However, with the emergence of new companies seeking to capture the logistic market collaborating with tech startups, logistics has accelerated dozens of times. Using innovative technologies such as cloud logistics, IoT, Big Data, and Blockchain, the industry develops.

TOP 4 critical changes for digital transformation in logistics

Automation of work using ERP and other software

The use of ERP and other software is the easiest way to start improving processes in the company. You can begin by integrating ERP, WMS with various services or developing your extensions. An ERP integration can be beneficial for your business if you want to have real-time reporting, boost productivity, reduce operational costs, and improve business insights. In this article, you can find out the main types of integrations, get the ERP integration Guide, and see examples of successful integrations.

Development and provision of additional services

Data is the most valuable "commodity" in the world. With the help of Big Data, there is a tendency to revolutionize the company’s business models. The use of AI has simplified demand information, route optimization, allowed risk management, and predictive analytics. Thus, the enterprise’s costs can be reduced by an average of 49%, and the implementation of new innovative solutions occurs in 44% of cases. Eventually, Big Data will change the logistics business model from reactive to predictive. Predicting Analytics uses data from online suppliers to predict sharp sales changes, which means that the supplier can send additional goods as soon as necessary.

Blockchain technology is expected to increase world GDP by 5% and international trade by 15%. Blockchain-based product tracking schemes will ensure complete transparency and traceability of products along the product’s entire route. With the help of the blockchain, you can automatically issue and pay bills, and the payment will be processed as soon as the goods arrive at their destination.

 

Another option is to consider on-demand solutions or software as a service (SaaS). With any SaaS software model, it’s important to make sure that the software uses a secure environment with potential failover for everything including multiple sources needed for supporting WAN and check if there is sufficient connection speed to the SaaS vendor’s location. 

Implementation of RFID and GPS tracking

These are more expensive solutions, and they are not suitable for everyone. But they can significantly automate many processes. One of them is RFID (Radio Frequency Identification) - a wireless technology that uses radio-frequency electromagnetic to transfer data. With RFID technology’s help, you can monitor and track every process and improve efficiency by automating all steps that usually involve humans. RFID-tagged items connect to the warehouse software and automatically give information about their arrival and departure from the warehouse. It saves time and the amount of stuff involved and boosts speed, accuracy, and safety. 

The GPS tracking systems allow to monitor and analyze inventory and vehicle movements, receive data on parking, control the amount of equipment in operation and supervise the impact of equipment and the condition of the rack equipment. It also helps to receive information about service intervals, monitor engine hours, regulate the loading of equipment and prevent its unauthorized use.

RPA and Virtual Reality

The main task of modernizing warehouse logistics is to reduce the number of people and increase the number of machines at all stages. Of course, a fully robotic warehouse is ideal. For example, Volkswagen's warehouse in Dresden is considered the most famous example of an automated warehouse globally. No people are working in this warehouse, only robots. This solution can be very costly. 

Another digital trend is the use of VR/AR. The specific of virtual reality lies in the fact that it visually programmatically combines two initially independent spaces: the world of natural objects around us and the virtual world recreated on a computer. So, this technology could work under three main conditions: 

  • Receiving a video stream of good quality, 

  • Ability to process this video stream and supplement it with a virtual objects’ layer,

  • Output of the processed data to output devices for perception by the end-user.

Conclusions

Regardless of the company’s size, the transformation will help compete successfully in the warehouse and transport logistics market. We can recommend investing in software if you have a regional or medium-sized company, while for large corporations it is worth automating routine processes. The logistics industry is becoming one of the drivers of digitalization. The need for deeper automation of control processes is becoming more popular and it seems only natural to analyze Big Data, automate processes, implement Blockchain and Robots, use Artificial Intelligence in logistics, warehouse and transportation. 



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