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Logistics and Supply Chain Efficiency: 5 Ways Digital Transformation Can Be a Game-Changer

Logistics and Supply Chain Efficiency: 5 Ways Digital Transformation Can Be a Game-Changer

The digital revolution has brought down boundaries between consumers and companies in the retail space by a considerable margin. 

From having to drive miles for the latest stock of their favorite bread to a supermarket, then to e-commerce, and now, to the hybrid internet-enabled retail stores, digital solutions have brought shopping to the convenience of the customer’s own homes. 

This change has been facilitated by the onslaught of multiple digital systems beginning with the developing e-commerce apps for consumers to inventory management systems for retailers. 

However, the key elements that narrowed the gap in internet retail between buyer and supplier are robust logistics and supply chain mechanisms. 

E-commerce giants like Amazon have set the bar for online retail delivery. Consumers get products delivered in a timeframe as low as a few hours, irrespective of what they order in terms of size or price. This has translated into massive pressure for traditional retail businesses to digitally transform their logistics and supply chain operations to remain competitive in the internet-enabled retail market.

Let’s have a closer look at why the digital transformation of the supply chain is an inevitable paradigm shift that businesses need to watch out for.

Accurate Forecasting of Availability

One of the biggest challenges that any retailer faces today is not being able to meet product availability commitments. 

For example, if a customer orders an item that needs to be delivered within three days as there is an upcoming event on the 4th day for which the customer needs to use the product. 

The 3-day delivery commitment would have been made by the retailer based on their usual delivery practice for the selected route. However, any error in this calculation would result in the product arriving later than the 3rd day, thereby rendering it unfit or unusable for the event.

This would lead to a very negative impact on customer relationships and will ultimately lead to a loss of trust and loyalty. 

The answer to this challenge lies in digital transformation. Studies have shown that using machine language and artificial intelligence, errors in forecasting can be reduced by over 50%

This will significantly boost product availability and lead to positive customer relationships all through the year.

Regulatory Compliances and Reforms

Over the years, trade policies and government regulations of goods movement,  both international as well as intra-national, have improved and incorporated the latest technology. 

Businesses need to source their raw materials and inventory from multiple locations to meet demand. They cannot afford to let the delivery of resources be delayed due to compliance hurdles in their logistics and supply chain environment.

Information such as transit insurance, consignee information, shipment details, etc. needs to be available across multiple ports and transition hubs.

With digital systems, it is possible to maintain a useful checklist before every shipment is initiated. These systems make it easier for companies to manage data of shipments. 

By moving into world-class digital solutions, companies can benefit from better adherence to regulatory compliances and faster delivery of goods.

A smooth delivery system is made possible without incurring too many costs.

It also ensures that they are in line with expected standards of shipping rules, be it national or international level.

Improving Quality

Businesses invest heavily to ensure that only quality products reach the end consumer. The repercussions of taking a blind eye on quality can be quite severe. 

For example, a restaurant that ignores the quality of raw materials, that go into making their delicacies, could face fines worth millions of dollars upon finding. 

By bringing on-board digital systems to manage data about the quality of resources, it becomes easier for businesses to enforce strict quality control over their end products. 

For example, using data analytics farmers can be encouraged to plant crops according to seasonal demand. And with the right mix of fertilizers, to yield the best output for any season. 

The better quality resources will find its way into the end product and significantly raise the quality standards of the brand as a whole. 

This is a clear example of how digital transformation at various points in a supply chain can translate into valuable returns for all stakeholders involved.

Predicting Cost Dynamics

One of the most critical areas where digital transformation can work wonders in the logistics and supply chain sector is in the prediction of costs. 

Logistics providers are often unaware of losses that may occur due to several conditions such as seasonal demand, market fluctuations, raw material availability, and so on. It directly influences the business environments of those who rely on them to fulfill their supply chain commitments.

Today there are machine learning-enabled analytical models that help such entities prepare for unexpected logistical emergencies. They use insights into historical events to determine the most profitable course of action to mitigate such crises. 

This predictive capability ensures that delivery commitments are met without overshooting budget estimates. 

The price efficiency then gets passed on to end consumers, and ultimately, everyone in the value chain benefits from this digital innovation.

Enabling Integrated Automation

Eliminating or reducing manual overheads in the logistics and supply chain sector contributes significantly to empowering a faster delivery cycle for retailers. 

This is where automation of the warehouse as well as the logistics channel can create wonders. 

Today, there are intelligent warehouse management systems that can operate without human supervision. AI-powered robots can handle key warehouse activities like sorting, packaging, and transfer into production or delivery lines. 

On the logistics part, automated delivery trucks, drone-based delivery are all in different stages of development. And when brought into the mainstream, they will change the face of demand fulfillment like never before.

Conclusion

The supply chain and logistics sector can be transformed considerably with modern-day digital systems. From demand forecasting to reducing costs through automation, the extent of impact goes beyond what traditional IT-enabled transformation has done for this sector in the past. 

Gartner estimates that nearly 25% of all supply chain technology platforms will be having an embedded AI or machine language capability as early as 2023. 

The future of retail will need to broaden their digital ambitions and bring on-board innovative technology systems across their entire operational landscape to drive maximum value. And so holds true for any business that relies on an efficient logistics and supply chain system to meet end-customer demands.

The excitement is growing. Consumers are becoming smarter in their shopping habits across offline and online channels. And, Businesses all around the world realize the need to transform their business into a digital-first model to grab market share and sustain profitability in their bottom line.

Girish R
Girish R

Girish R currently leads the mobile solutions team at Fingent. Programmer for 17 yrs, he loves to write about technology, open-source, and gadgets. He blogs at Techathlon.com, LifeHacker, DIYer.

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cristy
October 12, 2019 09:35

Nice blog

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GoodFirms
November 19, 2019 12:42

Hello Cristy! Thanks for reading!

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