Competition is fierce in the logistics sector and therefore having a competitive advantage that sets your company apart, either from a business or consumer-demand perspective, is vital for survival and cashflow. However, as consumer expectations increase and put pressure on order fulfilment cycle times and costs, the challenges and complexities for logistics operations grow. Because of these challenges logisticians are now looking at how technology can help them both from a productivity aspect as well as from a customer experience angle.
The impact that digitalisation and technology can have on a company is huge. Below, we discuss four areas which can be positively impacted.
Firstly, digitalisation and technology can impact business processes and can provide greater transparency by providing real-time data and information at each step of the process – from product creation right through to product delivery. Not only does this help management with transparency on transactions, it can also aid the customer service element because digitalisation will show which orders are urgent as well as allowing a fast, efficient and confident response to status enquiries. This type of technology should also minimise companies failing to meet their agreements and contracts. This will result in customers having greater confidence in your company as well as helping to secure long-lasting and profitable business relationships with suppliers.
Secondly, logistics operations should look at how specifically embracing the IoT technology into their transportation can improve processes and productivity. For example, IoT can optimise driver schedules which in turn will decrease delivery times and improves driver efficiency. It can also improve customer experience as a customer can be alerted in real-time when they should expect delivery of their product. It could also allow the customer to know greater details about their delivery, including the condition of the parcel, as IoT technology can report information such as temperature and the amount of moisture found on the parcel. With customers becoming more and more demanding, it is not surprising that they could start demanding greater knowledge of the delivery in the future. It may be a competitive advantage now but could become the norm in the future.
Thirdly, the technology will help order process automation. Slow or incorrect order processing leads to unhappy customers as well as the prospect of further shipping delays caused by the knock-on effect. These types of incidents can lead to late dispatch penalties for companies, which are hard to budget against, along with further expense for re-shipping and re-stocking order errors. All these types of order issues result in increased order processing costs. Therefore, using technology that foresees these inaccuracies is vital for improving efficiency. Research has shown that automating and improving order processing results in businesses reducing their cost by over 55% and a huge 96.6% if they work on increasing the accuracy of their orders. It is not hard to see why this effect happens – having an automated order process means that less time is wasted and it helps a company to fully optimise its resources including the workforce. Freeing up resources can save a huge amount of money as employees aren’t fire-fighting and fixing inefficiencies that exist.
The final area which we look at within this post is how warehouse picking can be impacted. This is a huge area for the logistics industry because order picking can account for up to 65% of operational costs within a business. So, it is no wonder that companies are turning to technology to help reduce these costs. Augmented Reality (AR) is one of the main technologies that is pushing forward improvements in this area. AR can help deliver accurate on-screen instructions in relation to real-time data. Therefore, every employee should have all the essential information they require to work more efficiently and reduce operational costs. When Samsung introduced this technology in their warehouses they experienced a 225% increase in productivity and a 10% reduction in warehouse errors. This demonstrates how AR can have an influential effect on operations through order cycle time reduction and reduced order errors. This again will positively impact customer service and help when building a loyal customer base along with building the wider reputation of the company.
There is no doubt that technology and digitalisation are the new driving force for efficiency and competitive advantage in the logistics sector. If companies want to stay ahead of the competition then they need to start embracing new and game-changing technology. By embracing technology, it will not only help efficiency within their business, but it will position them to be at the forefront of meeting the increasing customer demand challenges.