May 14, 2021

The crucial role of technology in increasing logistics efficiency

This article was originally published on The Times of India.

Prior to March 2020, like most other industries, the logistics industry, too, was undergoing a gradual yet permanent transformation in terms of technological adoption. However, since the onset of the Covid-19 pandemic, the logistics industry found itself at the forefront of disruption with heavy restrictions on the movement of goods and people. The pandemic not only tested supply chain resilience and efficiency to the hilt but also paved the way for accelerated technological adoption across the sector.

With numerous networks and players in the logistics industry, digitization and incorporation of technologies make the sector more advanced, connected, and lucrative.  Between risk mitigation, cost optimization, and increased customer satisfaction, automation has become the cornerstone for heightened efficiency in the logistics sector. Here is how technology plays a pivotal role in enhancing the logistics sector’s operational efficiency.

Complete visibility of the consignment

Visibility in the logistics domain relates to being aware of what is happening to your consignment from the beginning to the end. While this seems deceivingly simple, achieving complete visibility of the consignment while following a traditional, manual business approach is an arduous, time-consuming process. Companies are often caught off-guard due to poor visibility. Now, although it can be a complex process, visibility is vital to business success, and to reap the full benefits of consignment, automation is key.

In the transportation and distribution division, new-age technologies not only help with total visibility but also identify the productivity of the vehicles in transit through GPS installation. Complete visibility of consignment automatically allows both the logistics service provider and companies to keep a track of their consignments and make alternate arrangements or rectify the problem when issues arise in-transit.

Milestone-based tracking

Real-time tracking of shipments has indisputably been a game-changer in the logistics industry. Today, by deploying technologies such as AI, ML, IoT, and Data Analytics; Logistics Service Providers through dedicated customer portals, help companies get access to milestone-based tracking, thereby enabling them to view the details of the shipment from one hub to another along with the exact date of delivery. Milestone-based tracking enables firm control and a more in-depth collaboration throughout the supply chain.

Route optimization

In a nutshell, route optimization is the process of discerning the most cost-effective route for a vehicle carrying a shipment. However, it is slightly more complex than finding the shortest point between the pickup and delivery points. Leading-edge technologies have significantly reduced the transit time of the shipments through route management systems. The advanced algorithm efficiently calculates the shortest and most cost-effective route depending on the two locations. Route optimization not only saves cost but also time and manpower in the long run.

Paper-less offices and virtual payments

A no-brainer, the advent of technology and widespread digitization have given way to paperless offices, especially in creating applications for key documents such as lorry receipts (LR) and proof of delivery (POD). Automating these processes has not only resulted in increased efficiency but it will also bring the logistics industry a step closer to facilitating contactless logistics.

Apart from this, the mass adoption of digital payment solutions such as debit/credit cards, UPI-based payments, net banking, etc., have been game-changers. Particularly in the logistics industry, the introduction of virtual fuel cards has been a big step in providing the much needed visibility and transparency in financial transactions that were predominantly done by way of cash earlier. The elimination of cash-based transactions has enabled an efficient process as the e-toll system automatically calculates the charges according to the vehicle’s assigned route.

Geofencing and System integration

A location-based service, Geofencing entails marking a certain area or creating a virtual boundary – a geofence. With this, the logistics company gets milestone-based notifications when there is a movement within the geofence. Numerous touchpoints including the company’s office, driver homes, client warehouses, etc. are part of this marked area. They typically receive notifications when a vehicle moves from their facilities towards the client, when it reaches within 5 km of the destination, and when the vehicle finally leaves the warehouse. Simply put, Geofencing helps a company track the exact movement of the vehicle.

Furthermore, with system integration, various software’s, like the one at the warehouse, the client’s office, or within the vehicles can remain connected to the same database and exchange real-time information. Thus, relevant data becomes available across platforms without the need for employees to re-key information in different databases. This ultimately allows information to be shared among all stakeholders involved while boosting efficiency by reducing the chances of human error.

Minimum-Maximum quantity with Threshold limit

Technology has bridged several glaring gaps that previously existed in the logistics industry, one of the major ones being supply and demand mismatch. IoT-based systems share notifications for out-of-stock items to both the downstream and upstream sides of the supply chain process. This leads to an optimization in product availability making sure it’s present 24×7, throughout the year to the end customer, making it a seamless and convenient process.

Evidently, technology now plays a key role at every stage of the supply chain process. Advanced methods like connected warehouses, geofencing, route optimization, and digital payments are cohesively leading to improved performance. On the back of such strides in technology, supply chains are becoming more efficient with high levels of accuracy due to reduced human intervention. While human effort is decreasing rapidly, critical activities are being mapped in real-time with glitches being identified almost instantaneously. From transportation to shipment to tracking and delivery, supply chains will continue to transform with the evolution of technology. Needless to say, the future of logistics is now. How well companies embrace these advancements will be the key touchstone for customers while choosing their service providers going forward.

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