by Brian Sheehan Brian Sheehan

As digital reshapes retail and marketing, and those extreme changes become more frequent, the effects continue to trickle into the once-insulated logistics industry, reshaping how it operates and providing opportunities for growth along with the chance to increase process efficiency across all facets of the industry.

Customer Expectations

Customer expectations are increasing bit by bit. There is an increasing demand for faster deliveries, more flexible deliveries, reduced or eliminated shipping costs, and of course, safe delivery without damage to the package.

Consider how much has changed with logistics in the past 50 years, then consider how little difference there is from as far as 20 years ago. It is within the past 10-15 years that we have seen the industry really begin to evolve. With the advent of the internet, the changes are set to rapid fire. As the drive for improved CX increases, shipping and handling is just as integral to the customer experience as anything else, and a greater demand is continually applied to it. You only have to look at Amazon’s most recent efforts on shipping to get a good clue to how this looks:

  • Faster shipping, even overnight shipping when it absolutely must get there the next day.
  • Package tracking for the customer to monitor their order.
  • Delivery flexibility, for example, when the delivery address needs to be changed last second.
  • Reduced, or even no cost with a membership to access special services.

E-Commerce, in fact, is counted as one of the largest drivers of the global courier service industry. The promises of Amazon, Ebay, and others, are increasing the demand on packaging, warehousing, and fulfillment as different companies fight to keep up. In a competitive marketplace, after all, if you do not match pace you get left in the dust.

Everything comes down to improving efficiency to better meet customers’ demands.

Shipping

Shipping is no longer just putting a package on a truck and dropping it off at the nearest distribution center to be dropped off at the destination by courier. This all still happens, but it is increasingly much more calculated.

Blip Systems in the UK is attaching sensors to street lights throughout cities in Europe to track traffic congestion in real-time. This works by detecting the presence of smart devices that the drivers keep with them such as cell phones. The blips recorded are time stamped with each hit and a detailed real-time traffic flow map is generated for it. With the information here gathered, road engineers are able to analyze all of the collected data to identify what causes traffic congestion and then experiment to design streets that avoid this congestion.

There is a great opportunity here to take advantage of to improve delivery services. We already see it on a real time basis with mobile apps like Google Maps where you are directed to the path of least resistance (traffic) based on how congested different routes are. If these traffic patterns are analyzed to predict traffic and then regularly used to prepare future routes for deliveries, transit time could be cut even more.

E-Commerce Rates Growing

In 2015, only 7% of sales revenue came from e-commerce. The forecast for e-commerce rates taking over current total sales revenue has jumped to 17%. Keep in mind that this growth is augmented by the digitization of some items that consumers used to buy and have shipped to them. For instance, when was the last time you ordered a CD instead of buying it in the iTunes store and downloading the mp3s? The gaming community has also largely stopped buying physical games and instead, purchases and plays using online and/desktop software like Steam. The decline in sales of products that once inflated the logistics business only serves to highlight the strength of the increasing e-commerce market.

Improved Communications

One of the most easy things to overlook in quantifying – simply for how obvious it is – is the improvement in communications. The process of digitizing supply chains can, and is, eliminating the communication silos that have plagued the logistics industry (and others) with slow response times. Because digitized supply chains are in part focused around a single central hub of information that is accessible to all at all times, there are no more bottlenecks, breakdowns, or disruptions in communication to fight through. This is a difference between days or weeks between communications, to them happening in real time.

As with any changes in the marketplace, we will continue to see shifts that change what different industries look like, but not what they are. Will more product parts be 3D printed at manufacturing sites, or even at shipping sites? Probably, and we will see these changes happen accordingly as this process and others are adapted in the continued effort to improve efficiency in the logistics industry from manufacturing the product to the point of delivery.