How Recent Technology Developments and Transformations in the Logistics and Supply Chain Industry are Impacting your Business Environment

By Michael Lütjann, CIO, Imperial Logistics

Michael Lütjann, CIO, Imperial Logistics

The rapid progress being made in information technology (IT) and the process of digital transformation emerging from this, are having an effect on every department at logistics companies. Using IT has long since become a feature that logistics specialists use to set themselves apart from their rivals. Digital processes in networking and linking those involved in supply chains will become even more important in the value-creation networks of the future and they will make a major contribution to the success of logistics services. However, digitalizing logistics processes does not just involve integrating those involved to a greater degree, i.e., networking, but it is more about mapping business processes in IT-managed workflows right across the company. Customers require valid data about individual logistics processes or transport stages so as to be able to derive key business management performance indicators.

Digitalization is much more than just transferring analogue data into a digital format, a process that started many years ago—for example, in the case of an electronic file for individual consignments and transport operations. An electronic file allows automated quality checks when it replaces paper documents. It maps business processes for each individual consignment in a workflow that is completely digital.

"When it comes to the area of “innovations,” companies should cooperate with digital start-ups and IT students"

The second example of the earlier digital generation involves apps; they are used so that all those involved in a logistics project can manage complex processes. Just imagine that a fashion store commissions a service provider to completely furnish an outlet—ranging from the carpet to the mannequins in the shop window and even the shelves. The supplier knows that it must not supply the shelves before the carpet. The individual stages for those involved—i.e., the transport company, the tradesmen, the suppliers—are all synchronized with the help of an app. Photos can be taken of any damaged furniture items on a smartphone when they are delivered and sent to the claims adjuster via the app. These are examples where IT tools increase efficiency and the speed of service, reduce error rates and simplify communications.

However, the latest version of digitalization has set in motion a more radical process of change in the world of logistics than the digitalization of what were formerly analogue procedures, as mentioned above. Established models, process and value-added structures are undergoing a fundamental change. Enormous ongoing technological developments, which are introducing tangible, disruptive changes, are the main driving force behind this. The best example here is the large number of new platforms for freight and warehouse exchanges. They are making complete functional positions, like brokers, superfluous and are creating transparency for users.

Logistics specialists have no alternative but to proactively face up to the digital transformation process and make use of the opportunities for innovations that are associated with it. The most frequent driving force here is the wish to simplify procedures, automate processes, reduce costs, tap into new business fields and obtain better decision criteria thanks to the intelligent use of data. However, digitalization also means that new job descriptions and qualification profiles are being created at logistics companies and our sector needs to prepare for this in terms of personnel marketing.

The digital transformation process at logistics companies is affecting four areas: organization and people, customers, processes and innovations. There are a number of different measures associated with each area that is affected. Employees need to be prepared to use innovative IT tools. This ideally takes place if we allow creative employees to work on particular projects. We can ease any fears and reservations about digital transformation by enabling employees to specifically understand the opportunities that arise through digitalization. At the same time, employees need to attend training courses and further training sessions to prepare them for using innovative IT tools.

When it comes to the area of “customers,” logistics specialists should support their strategic customers so that they can develop their own digital strategy and the two sides should work on developing suitable digital solutions for these customers. This may involve digital customer platforms or marketplaces, for example. Social media marketing is helpful in gaining new customers.

When we talk about the area covered by “processes,” we mean standardizing and automating business processes with the aim of increasing efficiency, quality and the speed of service. Our own logistics facilities in particular offer many opportunities here. Inventory operations with flying robots or using so-called wearables to simplify picking processes are just two examples of this.

When it comes to the area of “innovations,” companies should cooperate with digital start-ups and IT students. Interactive prototypes for new services and products can be developed together with customers in creations and design sprints in just a few days in the creative setting of co-working complexes at the digital hot spots near the start-up scene. This is how new solutions to logistical problems can be created from working methods that are suitable for digitalization. Logistics specialists should sensitize their customers in a partner-like manner to think about their own degree of digitalization. In an ideal situation, this gives rise to a business model that is suitable for the complete market. Whether we purchase a start-up, become involved in it, form one ourselves or let digital natives from our own company “off the leash” is of secondary importance. The main thing is that we need to make a start.

Digitalization steps, however, cannot just be resolved with IT professionals. Logistics companies particularly need those kinds of employees, who recognize the problem and bring with them an understanding of supply chains and operational experience. Digital transformation cannot be mapped without their skills.

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