How Covid-19 will drive digital transformation in logistics

In the UK's logistics sector, the Coronavirus is pushing more companies than ever before into adopting advanced strategies for digital transformation.

Terry Lewis

16/11/2020

The Covid-19 pandemic of 2020 is one of the most transformative events our planet has ever seen. For most, life and work changed overnight, with many professionals switching to remote operations as offices shut their doors.

However, despite the heartaches and headaches that Covid-19 has caused, the event has also become a catalyst for growth. Brands are using the things they’re learning from this sudden digital shift to plan for better innovation and continuity in the years to come.

The logistics sector is just one of the many industries using the latest pandemic as a launching point for rapid digital transformation. According to the Supply Chain, Logistics, and Transportation report (2023) by Forbes, around two-thirds of logistics companies say that they expect technology innovation to deliver significant gains in productivity and performance going forward.

Another 54% of the respondents said that they believe bringing technology into the logistics journey will lead to enhancements for the entire customer journey.

Covid-19 increases demand for innovation

For years now, logistics companies have been planning a gradual shift into a more digital environment. Companies know that access to AI, IoT, and other disruptive tools can contribute to greater productivity and efficiency for procurement and fulfillment. However, the Covid-19 pandemic has emerged as a crucial tipping point in many digital transformation roadmaps.

In the UK alone, 70% of organisations say that Covid-19 has increased the need for digital transformation in the procurement journey. Most businesses agree that better digitalisation and digital skills will help companies to mitigate the complexities of Covid-19 on business operations.

Covid-19 placed enhanced pressure on logistics groups in a world where supply chain disruptions were rampant. Teams that, up until now, were reliant on paper-based processes and legacy strategies have quickly discovered that they either need to transform, or risk falling behind.

Logistics must be digital to survive

The perceived impact that digital transformation could have on the logistics landscape is astronomical. According to one white paper published by PwC in April 2020, smart logistics could be a critical component in the success of the supply chain ecosystem going forward. The savings potential that companies could unlock with intelligent logistics could reach up to 50%.

So, how can companies make logistics more intelligent and digital? The key is investing in the right technology and specialist expertise. Unfortunately, the evidence suggest that many logistics companies are still a while away from becoming completely digital. The market still features a lot of smaller hauliers with heavy investments in legacy technology.

A common obstacle to the transformation of the logistics space for many companies is the overriding concern that switching to a digital roadmap will be an expensive process. However, as Covid-19 proved, not having the right digital strategies in place could be more expensive in the long-term. The companies without the right automation, IoT, and digitization strategies before the pandemic hit were the ones that struggled most to survive the impact on the supply chain.

In the long-run, investing in the right systems and processes to digitise the logistics landscape could actually reduce costs, and pave the way for better continuity too. 

The transformation trends approaching logistics

Just like most industries preparing for the “new normal”, the logistics industry is currently facing a series of trends that are sure to transform the way that groups operate. Already, remote working opportunities are growing around the world. Companies need a way to ensure that employees can continue to work safely without being enclosed together in small spaces.

Innovations in IoT and artificial intelligence would make it more possible for logistics professionals to work on systems from a distance. Intelligent robots controlled by IoT systems could pick and pack equipment and supplies without requiring the support of a human on a supply chain floor.

Machine learning and artificial intelligence could also play a role in making logistics processes more efficient in a time when no company can afford to lose money on poor procedures. Here are just some of the digital trends likely to effect the logistics industry going forward:

1.   AI and machine learning

The potential for machine learning and artificial intelligence in the logistics landscape is huge. The supply chain is a goldmine of both unstructured and structured data. For companies looking for growth, gaining access to that data, and analysing it will make it easier to assess every link in the availability and fulfillment chain. This can significantly improve operational efficiency.

Machine learning can help companies to uncover patterns in supply chain trends using algorithms that essentially allow companies to predict what might happen. These predictions and insights will ensure that companies can more effectively plan for production requirements, forecast demand, and boost inventory levels, while minimizing supplier risk.

2.   Cloud logistics

Cloud logistics is growing particularly appealing in the modern digital landscape, with around 60% of logistics suppliers currently making the move to the cloud, and another 30% planning on doing so soon. As data continues to shift to the cloud, logistics IT services are becoming more versatile, with on-demand and pay-per-use models.

Services on the cloud already offer a range of real-time cloud-based transport management systems that cover all the logistics processes a company could want, from procurement through to billing – making everything much easier for even the smallest companies. Logistics companies could even use the cloud as a way to allow their clients to make automatic requests, and check information about the supply chain in real-time.

3.   The Internet of Things

The IoT environment is set to be a true game changer in the current marketplace for most industries – including the logistics landscape. Combined with innovations in things like connectivity, thanks to 5G, and the arrival of more effective sensors, the IoT space could be transformational for logistics. In a supply chain environment, IoT connected sensors could monitor cargo for humidity and temperature levels to protect pharmaceuticals and food.

NFC or Near-Field Communication tags can help with things like product authentication, supporting a reduction in issues associated with counterfeiting and theft. On top of that, IoT could potentially pave the way for the remote work revolution. With the right connected tools, engineers and specialists could work on systems and machines from a distance. The opportunities are potentially endless.

4.   Autonomous vehicles

Although we may be a while off before autonomous or self-driving vehicles are a common part of the logistics landscape, this is another trend that Covid-19 could help to accelerate. In a world where it’s much more difficult to get people together to work within a confined space like a vehicle, autonomous devices are likely to become more popular.

Many experts believe that we’ll soon see the arrival of autonomous trucks and vehicles on roads that deliver goods that can be unloaded by forklifts that can also operate on their own. Vehicle-to-vehicle communications in the future will allow autonomous devices to reduce costs in various aspects of the digital logistics landscape. The right technology could even help companies to reduce the amount of fuel used by allowing for better route planning.

5.   An evolved outsourcing landscape

Third-party logistics operations remain in good health as businesses of all sizes continue to search for cost control opportunities that reduce overheads and unlock new opportunities. Companies going forward will continue to build on deeper relationships between shippers and 3PL providers. This will continue when logistics companies continue to demand more on-demand warehousing, transportation, and freight services.

There’s a good chance that companies will be relying more significantly on external providers for supply chain and transportation requirements. There may also be stronger connections in the years ahead between logistics companies and brands responsible for innovative technology tools, like IoT network providers and analytics teams.

It’s time for a transformation

The arrival of Covid-19 is something that none of us could have possibly predicted. Although the pandemic has been a terrible experience for everyone, it has also launched a new age of inspiration and growth among many industries. In the logistics landscape, the pandemic is pushing more companies forwards into more advanced strategies for digital transformation.

Are you ready to move into the next generation of logistics technology? Contact Nice Network today to find out more about what we can do to help you.