How digitisation is transforming logistics and supply chain management

With the aggressive pace of economic growth, India is on a fast track to development, powered by innovation and disruption across key sectors, encouraging government policies and robust and aggressive growth in IT. Globally, as in India, the logistics sector is undergoing an unprecedented transformation fuelled by innovations in IT and digitisation.

Despite this, the Indian logistics sector, regarded as the backbone of a healthy economy, is highly fragmented and unorganised. As a result, the logistics spends in India currently amounts to 14-15% of GDP compared to the 5-6% of the GDP spends in developed economies. However, with focused initiatives on manufacturing, like the Make in India campaign and thrust on digitisation with the Digital India campaigns, the Indian logistics sector has slowly begun its disruptive transformation.

According to a study by The Associated Chambers of Commerce and Industry of India (ASSOCHAM), the logistics market in India is expected to grow to USD 307 billion by the year 2020, recording aCAGR of 16 percent on an average.

Some key areas where digitisation will play major role in transforming Logistics into a robust, IT enabled, intelligent service, include:

  1. Machine Learning &Data Analytics

Access to authentic and reliable data has been the biggest boon of digitisation. For the logistics sector as well, the intelligent analysis of data has helped create a massive transformation in not just managing client expectations but to also increase efficiency, cut costs and drive growth. Some key areas where data analytics is helping shape logistics, include:

  • Improved operational efficiency due to data enabled intelligence that enables effective decision making

  • Efficient management and tracking of inventory due to real time data updates, created through a data bank on routes and progression reports

  • Improved customer experience due to optimised, timely and effective execution and forecasting of logistics needs of clients.

  1. IoT

Internet of things (IoT) can be explained as the ability for multiple physical objects to connect to the internet and share data, without human intervention. This has effectively transformed several businesses, including logistics. Many logistics experts are already using these new resources to improve systems and supply networks, reduce costs, and look for opportunities to generate more revenue too. Listed below are some practical applications of IoT in logistics:

  • Safety in supply chain management by reducing human interactions and risk of accidents

  • Implementation of sustainable processes through optimisation of resources, including energy consumption

  • Seamless and end-to-end visibility of supply chain through digitally connected devices

Effective and optimised warehousing and yard management by reducing human intervention and enabling more machine-to-machine interaction.

Effective fleet management through digitally connected devices that can assist in tracking maintenance schedules, vehicle usage and service routes and cut fleet downtime

  1. Blockchain

Blockchain, a distributed database that maintains an ever-growing list of records called blocks, transfers information with a timestamp that is locked and cannot be altered. Modern logistics networks today cater to the expanding global markets, resulting in supply chains that span over hundreds of stages over months and multiple geographical (international) locations, including tonnes of shipping and customs paperwork and multi-level payments involving numerous stakeholders. Hence, logistics is an ideal sector where blockchain can be applied to:

  • Improve supply chain security and reduce fraud since all data is maintained on a public ledger 

  • Facilitate seamless processes by reducing bottlenecks as there is no longer requirement for certification by 3rd parties

  • Enhanced supply chain security and accuracy as hardcopy documents are replaced with digital copies

  • Accurate recording of data and real time tracking updates

  1. Artificial Intelligence(AI):

ZAI has been a buzzword in the supply chain world for a while. Worldwide, logistics and supply chains are undergoing a transformation as more “artificial intelligence” is being employed to manage both domestic and international movement of goods. Some key applications of AI include:

  • Reduction in human intervention and workforce and increased efficiency in delivery and warehousing (including sorting and distribution centres)

  • Efficient and intelligent harnessing of big data to drive cost effective supply chain management

  • Intelligent ‘Predictive analysis’ that is based on intelligent analysis of vast amount of data collected, over a period of time, helps to avert crisis/ mismanagement

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