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Digital Transformation in the Logistics Industry

Facing fierce competition from a host of newcomers, logistics organizations trail behind the digital curve compared to other industries.

A number of key disruptors are challenging the livelihood and longevity of logistics enterprises. From strongly funded and scrappy startups, to customers-turned-competitors and shrewd competitors hatching completely new business models while partnering with—or acquiring—other players in the space, rivalries are fierce in the logistics ring.

A common thread among these threats is that most of the competition is deftly sparring with digital gloves. Integrators are taking bigger chunks of market share away from traditional logistics organizations by offering more streamlined end-to-end services, and suppliers themselves are digitalizing their offerings and operations. Today’s traditional logistics concerns are hard-pressed to avoid the flurry of digital jabs coming from the competition, let alone squarely land punches of their own.

Adding to this challenging scenario is the fact that logistics trails behind the digital curve compared to most other industries sectors, like media, telco, banking, and retail. Here, where poor transparency serves to exacerbate an already fragmented industry, traditional logistics companies are plagued by underutilization of assets, old and inefficient manual processes, and outdated customer interfaces that serve to decrease response times.

What’s needed is a prudent plan to weave in digital best practices and change the fabric of beleaguered logistics infrastructures.

Logistics’ Digital Solution

The blueprint for transformation draws upon three key digital actions: develop new business models and offerings, digitalize core operations, and build a robust internal digital foundation. The success model for logistics organizations requires a number of inputs. Some of these include:

1. Develop New Business Models and Offerings

  • New Digital Platforms. Building robust new platforms will help remove supply chain inefficiencies, solve problems associated with asset underutilization, improve demand-supply matching, and increase visibility and connectivity across systems.
  • Advanced Analytics. Putting powerful data-driven solutions to work can create new analytics tools that, in turn, can be sold to clients to help them optimize their own operations and efficiencies.
  • Control Tower. Providing solutions that boost operational visibility and connectivity between previously siloed systems allows stakeholders to more seamlessly connect to one another throughout the supply chain.

2. Digitalize Core Operations

  • Advanced Analytics. Similar to the benefits derived from the offering of new analytics tools, logistics organizations themselves can use advanced analytics to optimize operations in pricing, routing, and partial load shipment consolidation.
  • Customer Experience. Putting in place a digital front end not only provides customers with a convenient one-stop shop experience, it also improves internal operational visibility and automates previously manual processes.
  • Process Automation. Increasing the automation of core internal business processes can help ease labor-intensive logistics operations, like digitizing procurement with e-auctions.
  • Equipment Data. Digitally monitoring equipment health facilitates more effective predictive maintenance.
  • Next-Generation Solutions. Eyeing future operational improvements via robotics, artificial intelligence, and even augmented reality can help further elevate a logistical organization’s operational efficiencies in distribution, warehousing, and picking and packing.

3. Build a Robust Internal Digital Foundation

  • Talent. Logistics enterprises must actively target and attract smart digital talent in order to compete, maintain efficiencies, grow into new areas, and deliver on the promise of value for customers.
  • Systems. Proffering the tenets and benefits of digital throughout the logistics organization helps rationalize investments in more flexible technology systems throughout the value chain.
  • Agility. Logistics concerns need to be nimble in solution development in order to maintain the pace of digital and maximize its benefits.

The Importance of Partnership in the Logistics Industry

Maximilian Rabl, CEO of LoadFox, discusses the significant impact the company’s complementary partnership with BCG Digital Ventures continues to have today.

Meet BCG’s Logistics Leader

Center for Digital in Transportation
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