The role of smart logistics in the supply chain of the future

December 22, 2021 09:51
Photo: Pickupp

As we fast approach the end of 2021, many businesses may be sprinting toward the New Year with open arms. Some countries have finally emerged out of long-held lockdowns, and international borders are slowly starting to open. But while the world may be ready to move on from COVID-19, the effects of the pandemic are still taking effect, and are set to reverberate for a long while still to come.

The current global supply chain crisis in particular is predicted to get worse before it gets better. The ongoing jams of container ships, combined with labour shortages in the industry, are continuing to disrupt transpacific trade. At the same time, shipping firms are struggling to cope with wild fluctuations in demand caused by the pandemic.

The supply chain conversation is no longer just about hastening recovery - but rather, how global supply chains will be reborn anew in the wake of such unprecedented disruption.

E-commerce prevalence has reached new heights - and according to McKinsey & Company, online penetration is expected to stay higher for good, at 6 -13% above pre-COVID levels. Companies large and small will need to effectively navigate these changing demands, and do so with speed and precision.

The rise of tech logistics players in the market is already helping. Organisations have found they can increase cost efficiency and transparency, as well as enable greater customisation through data analytics. Logistics businesses will also play an increasingly important role in reducing fragmentation, connecting on the ground logistics supplies to create a traceable end-to-end supply chain. Here are three ways that smart logistics will help companies to survive and thrive in post-COVID market conditions.

1) Meet booming demand amidst disruption

While the shift to digital shopping has been afoot for many years now, the pandemic prompted an unprecedented rise in online purchasing around the world. According to UN trade and development advisors, UNCTAD, retail sales in the e-commerce sector rose dramatically from 16% to 19% in 2020.

While this would typically be welcome news for the industry, the disruption being felt across supply chains is making it challenging for organisations to capitalise on, or even simply meet, demand. It’s reported that it will take 180 days for a container ship to travel from Asia to the US. That’s three times longer than it took pre-pandemic, and the crisis is predicted to continue affecting trade beyond the Lunar New Year in February. Delays in shipments are also having a knock-on effect on payments, creating a vicious cycle for small and medium businesses.

smart logistics technology could help shorten the delivery time by using predictive analytics to optimize available resources and cost, as well as automated route-planning and bundling to boost efficiency. With the advanced logistics tech, lead time can be reduced up to one week, and guaranteeing two to three times the shipment volumes. Given the current state of the world’s supply chains - this kind of competitive advantage could very well define success.

2) Simplify fragmented supply chains

As global supply chains continue to expand and become more complex, the task of managing so many fragmented parts, and ensuring they are working cohesively, is becoming more difficult. This is making companies large and small re-examine both their supply and distribution networks. Supply sources are set to become increasingly diversified in the years to come. In Deloitte’s CFO Signals™ report, more than two-thirds of CFOs expect their supply sources will become more diversified over the next three years.

It’s now more critical than ever for logistics operations to be flexible and adapt to the fast changing landscape at hand. There is a growing need to be nimble, adapt to meet new customer requirements and provide new and different logistics service offerings to minimise the effects of disruption. For example, some companies are exploring fast last-mile delivery solutions.

Smart logistics platforms and third party logistics (3PL) will also need to work together to help reduce fragmentation across the entire supply chain. Collaboration with digitised technology platforms that can connect on the ground logistics players will help ensure a traceable end-to-end supply chain, which will boost cost efficiency and transparency for businesses.

3) Drive delivery optimisation through technology

Technology has a crucial role to play in helping organisations to optimise and shorten their delivery process, and could even determine whether or not a company survives beyond the COVID era. For large multinational corporations that manage shipments by region, for example, an aggregated data platform can help reduce the complexity often experienced when using several different operators. Ultimately this can result in more cohesive delivery, at a lower cost.

A logistics data platform with advanced optimisation and validated analytics can help companies to predict and therefore more effectively manage fluctuations in consumer demand, without eroding their margins. Analytics can also help them to harness customer data to provide the hyper-personalised experiences that are now expected. Some logistics suppliers now offer 24-hour GPS tracking technology, for example, meaning you can log goods and logistics orders in real time to ensure safe and transparent delivery.

The pandemic has led to a raft of strong and opposing forces that have left many businesses struggling - from burgeoning demand to unprecedented disruption and increasing fragmentation. It is also becoming imperative to optimise supply chains and logistics operations. Smart logistics will be a critical part of the global supply chains of the future, and that future is already knocking on our door.

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Co-Founder and CEO, Pickupp