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Author: Ana Stanca
Demand Generation Leader, Enghouse Transportation
Part 1 of 2
The transportation and logistics (T&L) sectors are undergoing a major transformation and much of that shift can be attributed to the rapid rise of ecommerce.
Triggered by the Covid-19 pandemic, consumers have adapted their spending habits to online shopping and have made serious inroads to the brick-and-mortar business model.
The on-demand nature of online shopping has created an environment where customers expect delivery of their products in a matter of days, expectations ratcheted up by Amazon and other online shopping sites which have created a new generation of supply chains using regional distribution centers to make deliveries.
Management consultancy McKinsey estimates the total value of omnichannel distribution will hit $840 billion by 2025, with as much as $600 billion of global value ‘up for grabs’ by contract-logistics companies, which collectively account for a fifth of omnichannel logistics total market value in revenues today.
This means T&L companies need to step up their game to meet the new paradigm.
Last year, IT thought leader Accenture said T&L companies need to look to digital solutions to “facilitate rapid and even real-time logistics information exchange, eliminate friction and accelerate business processes.”
The benefits to T&L companies going digital include, but are not limited to, the following:
One of the factors feeding the digitalization trend in the global freight forwarding market is the rapid adoption of cloud computing.
For many businesses around the globe, cloud computing is increasingly becoming the norm.
As many as 89 percent of companies now use a multi-cloud approach while 80 percent take a hybrid approach, using public and private clouds.
The shift to cloud computing is not slowing down. Ninety-seven percent of IT leaders intend to expand their cloud systems even further, according to Turbonomic.
All of which places Electronic Data Interchange, or EDI, at the forefront of future business digitalization.
EDI is the electronic interchange of business information using a standardized format; a process which allows one company to send information to another company electronically rather than with paper. Business entities conducting business electronically are called trading partners.
Digitalization is defined as the “pressing need to replace all your legacy, outdated, paper-based processes with the latest digital tools and systems.”
In its two-part whitepaper entitled, “Keeping Up to Speed with Logistics Transformation,” Enghouse Transportation provides an informative primer for both small and large companies that guides them through the process of getting into the digital game and learning how to manage and order shipments and embrace EDI from the cloud.
Accenture says that any freight and logistics company not focusing on building digital capabilities will “seriously endanger their business.”
In 2016, PwC sounded the alarm for T&L firms, urging the industry to abandon outdated legacy paper systems and embrace the digital world. That guidance remains in place today, but only more pressing than it was seven years ago.
So, what is holding companies back?
PwC found that the three biggest factors for companies not going digital is a simple lack of digital culture and capability across the sector (50%), a concern that moving to digital will expose the business to possible cybersecurity problems (38%), and questions about how much such a transformation would cost (38%).
Shockingly, PwC found that 75 percent of practitioners still have a large percentage of analog office administration processes, including processing jobs, warehouse operations and accounting by pen and paper, or at best amateur Excel coding.
“Overall, at an industry level, there is not only an ignorance of digitalization, but also a lack of a roadmap in terms of what needs to be done,” said Accenture.
The sector says it’s catching up. But where there are plans to automate these processes, they are expected to happen in a vague time frame between now and ‘five years out’.
In the second part of this white paper, we will present an easy-to-adopt, safe, and highly flexible ‘on-ramp’ for companies to begin the digital transformation. Contact us today to start the conversation.
