Why Digital Logistics is the Future of Supply Chain Management

Written By
CloudSort Staff

The cost of inventory storage is rising every year, and the available space for industrial warehouses is shrinking. At the same time, e-commerce is booming and the demand for faster, more efficient deliveries is higher than ever. The solution for supply chain executives? Ditch the old-school, analog approach to logistics and go digital.

Even though digital logistics is becoming more widespread, some supply chain executives are sticking with analog because it's what they're used to and change can be daunting. To be sure, the cost of investing in new technology, coupled with the uphill task of persuading internal stakeholders to overhaul old processes, presents barriers to wider adoption of digital logistics. But the downsides of sticking with analog are too big to ignore. In analog logistics, stakeholders can only view their own performance data. Paper-based records are easy to lose and can be difficult to transport from one facility to the next. Manual processes are time-consuming and can be error-prone. Face-to-face communication can be slow and can be constrained by geography. 

In contrast, digital logistics is more efficient and more accurate. Electronic records are easy to store and can be quickly retrieved and automated processes are rapid and virtually error-free. With a digital logistics platform, every stakeholder has complete visibility into every department’s performance. This gives them the ability to quickly identify and solve problems, leading to a more efficient and effective logistics network. Digital logistics also opens up new opportunities for customer engagement and service, such as offering interactive tracking and customer portals.

What Makes Digital Logistics Better?

  • It creates a customer service that is proactive, engaging, and efficient. Digital logistics leads to more streamlined and efficient transportation of goods, ultimately resulting in a better customer experience. For example, by using big data and analytics to predict demand, digital logistics can help ensure that the right products are shipped to the right locations at the right time, reducing the chances of lost items and backorders. By using RFID tags to track inventory levels, digital logistics systems can help retailers avoid stock-outs and provide customers with real-time information on product availability. And by using cloud-based software to manage and monitor the supply chain in real time, digital logistics can help businesses respond quickly to changes in demand, ensuring a more seamless and responsive customer experience.
  • It drives down the cost of inventory. In a traditional supply chain, businesses often maintain higher levels of inventory than necessary to account for uncertainties, such as delays in shipments. With a digital logistics platform, businesses can more accurately track their inventory and shipments, leading to reductions in inventory levels and associated costs. For instance, a clothing retailer that uses digital logistics to track their inventory and shipments can more accurately predict when items will sell out and need to be restocked. This allows the retailer to maintain lower levels of inventory, which reduces costs associated with storing the excess clothes.
  • It reduces the need for paper documentation. In the past, logistics were primarily documented on paper. This practice created a web of inefficiencies and was often error-prone. With digital logistics, documentation is done electronically, which enables the entire logistics process to be handled more quickly and accurately. For example, when a shipment is booked, the shipper can create a digital record of the shipment which can be accessed by the consignee, carrier, and other parties involved in the shipment. This digital record includes all of the relevant information about the shipment, including the commodities being shipped, the route, the expected arrival time, and any special instructions. This digital record can be accessed by anyone with the proper permissions, and can be updated in real-time as the shipment moves through the supply chain.
  • It speeds up the flow of information between departments. Cutting our addiction to paper not only helps the environment—it catalyzes faster and more accurate communication. A company that uses digital logistics can automatically send order information to the fulfillment department as soon as an order is placed, rather than waiting for someone in the sales department to manually enter the information. This reduces the amount of time wasted in back-and-forth communication between departments and speeds up the overall process of getting shipments where they need to go. 
  • It's endlessly customizable. API-powered customization can help logistics companies offer more value to their customers by providing a more personalized and streamlined experience. By integrating with various third-party applications, logistics companies can offer a more customized and efficient service that can save time and money. For example, a logistics company can use an API to integrate with a customer's accounting software to automatically generate invoices. This can save the customer time and hassle by eliminating the need to manually input data. API-powered customization can also help logistics execs keep track of their inventory levels and delivery status in real-time. This information can be used to optimize routes and delivery times, which can ultimately lead to much-desired cost savings.

Making the Case for Digital Logistics

Many logistics and supply chain executives may fear they’ll have a tough time convincing internal stakeholders to transition from traditional logistics to a digital logistics platform. For one, going digital can be a costly and time-consuming investment, and it may not be immediately clear how it will improve or streamline business operations. Some team members, especially senior employees who have built a lot of reputational capital at the company, may be resistant to change or unfamiliar with new technologies. Further complicating a transition is the expectation that executives will need to provide ongoing training and support to ensure that everyone is able to successfully use the new digital tools and platform.

There is no silver bullet when it comes to making the case for change, but with a clear value proposition, internal stakeholders can be convinced of the benefits that digital transformation can bring to the supply chain. Here’s a few key messages to keep top of mind:

  • Highlight how digital logistics can simplify existing processes and make them more efficient. 
  • Explain how digital logistics can provide real-time visibility into the status of shipments, so that potential issues can be identified and resolved more quickly. 
  • Describe how digital logistics can enable predictive analytics to be used in order to anticipate future needs and trends, so that supply chain leaders can be more proactive in their planning. 
  • Share case studies or examples of other companies that have successfully implemented digital logistics solutions and achieved significant improvements as a result.

Factory workers are on the ground. They see how production is organized, how materials are procured and delivered, and how finished goods are shipped out. They understand the system and how it works. But for most executives, the supply chain is an abstraction. It's a set of relationships and processes that are managed by other people. As a result, executives often don't have a clear understanding of the supply chain or how it works. This lack of understanding can lead to decisions that are based on outdated information or misguided assumptions. 

Digital logistics systems are designed to give executives a better understanding of the supply chain. By providing real-time data and visibility into all aspects of the supply chain, digital logistics empower executives to make informed decisions that can improve performance and optimize resources. In today's competitive environment, every advantage counts. Organizations that adopt digital logistics will be well-positioned to gain an ever-important edge.