Necessity of Deploying Automation Technology in Logistics Management

ecommerce logisticsThis guest column is by Nishith Rastogi, Co-Founder & CEO, Locus.sh

Technology has a big role to play in improving the efficiency of logistics operations and also meeting the ever-rising expectations of the consumers. Though the penetration of technology in the Indian logistics sector has been quite low, there are huge opportunities to leverage it for the benefit of not only the logistics companies but also the end customers. In an increasingly technology-driven environment, logistics companies need to adopt technical solutions that not only align themselves to the needs of the business but also help them gain competitive advantage, and achieve growth and success.

The logistics industry can primarily be divided into two types, where one type is the in-house logistics operations of enterprises and the other provides support services to companies for example, third party logistics, fourth party logistics, etc. While both of these have its own pros and cons, what becomes necessarily important here is that, these two together account for approximately 14% of GDP expenditure (as per research firm Novonous). In comparison to other developing and developed countries, Indian logistics competitiveness has been significantly low (ranked 35 by World Bank) due to poor infrastructure, low technology penetration and an overall unorganized and fragmented nature of the sector. However, the logistics sector in India is estimated to grow at CAGR of 12.17% by 2020 and the technology market is steadily growing, with the rise in demand from the thriving logistics of eCommerce, foodtech, pharma and manufacturing sectors.

Foodtech companies, for example are adopting tech-based delivery algorithm so that they can track orders and their delivery boys live. This enables them to grow faster with smoother operations as against their competitors. Also, E-commerce companies have decided to invest in tech companies, which shows that online retailers are experimenting with different avenues to find suitable technology to cut delivery costs.

How Technology is Making a Difference

Technology adoption is driven to increase the efficiency in the internal operations and also to increase external responsiveness which is based on customer experience. Automation and optimization in the logistics and supply chain industry is paramount for delivering business solutions to local geographies. In all logistics operations, technology plays the role of an adhesive! Given the challenges in this sector, like rising fuel prices and stiff competition, it has never been more important than now.

An effective logistics management operation should yield 4 key results:

  1. Increase revenue
  2. Improve performance
  3. Reduce operation costs
  4. Improve customer service

We believe that organisations have started looking at automated logistics functions as critical rather than just a business-enabler. While the larger players with deep pockets have made steady investments in this, the smaller firms are yet to significantly adopt technology and talent.

Impact of Automated Logistics Technology Platform on Operations

The technology available is deployed through the use of various solutions provided in the form of platforms. These platforms help logistics operations with better methods and cost-effective processes to streamline their business. Some of the benefits of using technology are:

  • Intelligent Route Planning and Optimization

This results in accurate and efficient scheduling along with better vehicle utilisation on road. It is observed that automated routing tremendously increases the service delivery efficiency resulting in higher customer satisfaction.  

  • Timely Deliveries through Better Route Performance

With the appointed times set for the route and deliveries, it is possible to assess whether the route taken is compatible to the plan. This facilitates adjustments and therefore improves the delivery service. It further reduces any delays in the system.

  • Increases Transparency and Accountability

The dashboards on these platforms provide access to real-time tracking and tracing of deliveries and vehicles. It also provides enhanced visibility to end customers through a tracking link via SMS.

  • Reduces Returns and Saves Cost

Once the plan has been generated, the estimated time of arrival at the point of delivery or collection can be communicated to customers well in advance. This reduces the return of products and hence saves time and cost of redelivery.

  • Quick Response to Exceptions

It is possible, in real-time, to see whether there are any errors, enabling immediate corrective actions to be taken that do not cause losses to the client. This is made more efficient through alerts provided on exceptions like SLA breach, ETA breach, etc. This helps in faster and improved decision making.

Leading companies are hence adopting advanced technologies to run more effectively and to scale faster, which is key to the overall success of the company. By leveraging intelligent algorithms, companies can now help reduce their costs and make better decisions through predictive analysis.

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