In February I joined a panel at the Journal of Commerce’s TPMTech23 conference to discuss “dissecting what the logistics industry actually wants from technology”.
Given WiseTech Global is a major technology provider to the logistics industry you might expect my response to be simply “they want CargoWise!” But the reality is much more nuanced when you look at what is driving technology investment decisions – and what challenges must be overcome.
Logistics has always been the foundation of civilization – but now civilization is demanding we keep up.
Digitalization in other industries and our personal lives means our customers and their customers expect fast access to up-to-date information and the ability to respond quickly, and even better to be able to predict and avoid incidents.
True digital transformation is not simply about plugging in new technology and expecting massive benefits
It involves changes to processes (many current logistics process were originally developed for horses, carts and sailing ships); organizational and cultural change – a willingness to do things in a different way; and greater cross-industry and cross-geography cooperation to enable the standardization, interoperability and information sharing that will eventually enable straight-through processing.
Without a doubt, the COVID-19 pandemic accelerated digitization of the logistics industry, but there is a long way to go – we need to keep the momentum going.
It is critical to understand what is driving digitalization plans
For example, S&P Global Market Intelligence’s study, Digital Transformation Projects Take Hold Among Shipping and Logistics Firms, released at TPMTech23, found that the majority of shippers (70%), logistics service providers (64%) and carriers (57%) have a digital transformation plan.
The S&P research revealed that for all groups, the top areas for technology investment tend to be things that will improve products and services, ie positive or growth drivers:
- Shippers: purchase order management, supply chain planning and route optimization, and real-time tracking.
- Logistics service providers: purchase order management, real-time tracking, and freight booking/tendering/capacity management.
- Carriers: cargo tracking, operator monitoring, and remote connectivity.
This does not mean that greater efficiency and cost savings (ie negative or cost drivers) aren’t important – they are now simply expected additional outcomes. And let’s face it, tighter economic climates force us all to focus on the things that matter most in order to ensure the sustainability of the business.
Flexibility is key to finding balance
The Global logistics: The link between technology and productivity study, conducted by Reuters, found that meeting customer expectations and managing the costs of the business were almost equal in being cited as the biggest challenge in logistics operations by one in four logistics supply chain professionals. Finding a balance between the two is critical for logistics providers to both flourish and be resilient.
In the Reuters research, almost half (48%) of respondents said that the COVID-19 pandemic had accelerated migration to the cloud.
Similarly, the S&P study found that shippers most often turned to cloud and data storage providers to assist with their digital transformation plans. Cloud-based services allow businesses to quickly scale up or down to match their business needs without impacting capital expenditure. Cloud-based models allow logistics companies to invest in technology to grow their business, even in in tight times.
Where next? We must maintain the momentum of digital transformation of our industry. It is time to come together and agree on standards that will allow interoperability between systems and visibility across the entire journey of the supply chain.
Want to learn more about the link between technology and productivity? Download the Reuters report now