3 Ways Digital Transformation Enhances Capacity
After consecutive pandemic years, supply chains are a mess. As a result, businesses are running out of stock just as surging consumer demand drives up prices for remaining goods, contributing to record inflation and further disrupting consumer markets.
This reality was acutely on display in February 2022 when more than 100 containerships collectively carrying over $25 billion worth of products waited 18 days on average to unload their containers at Los Angeles and Long Beach ports.
Unfortunately, diagnosing the problem is the easy part. Solving supply chain challenges is decidedly more difficult, especially as businesses grapple with the implications of Russia’s invasion of Ukraine, the Great Resignation, persistent strong consumer demand, and other disruptive elements that will surely arise in the weeks and months ahead.
In response, many companies are turning to digitalization to make supply chain logistics more efficient, effective, and sustainable. In a survey by MHI and Deloitte, 80% of supply chain entities reported that they are accelerating digital transformation in response to the pandemic, making it clear that innovation is key to enhancing logistics performance.
Here are three ways that leveraging digital transformation to improve supply chain and logistics outcomes can improve capacity.
1. Connected devices enable more responsive decisions. Supply chains are predicated on effective connections, and today’s expansive network of internet-connected devices, including Internet of Things (IoT) ecosystems, make these connections more potent and powerful than ever before.
For example, location trackers providing real-time progress reports enhance visibility into supply chain operations, helping identify bottlenecks and implement immediate solutions.
Similarly, driver apps that manage scheduling and availability can help companies keep their logistics operations optimally staffed and engaged.
Finally, a collection of IoT devices, such as temperature sensors, equips every part of the supply chain with actionable insights to ensure that sensitive cargo is optimally stored and transported.
Taken together, these connected technologies can inform the entire supply chain. By 2025, more than one-quarter of supply chain decisions will be made using intelligent edge ecosystems, according to a Gartner analysis, as connected technologies enable more responsive decisions for companies navigating a complicated and interconnected supply chain environment.
2. Automated systems streamline operations. Artificial intelligence (AI) and machine learning (ML) technologies are rapidly advancing, redefining real-world logistics operations in the process. Moving forward, supply chain entities can expect to leverage these technologies to make their operations more streamlined and responsive than ever before.
For starters, many enterprises and small and mid-sized businesses (SMBs) still rely on input-heavy technologies such as spreadsheets and fax machines to facilitate logistics management. Artificial intelligence can perform many of the dozens of back-office steps and touchpoints required to keep supply chains running smoothly, streamlining days of work to just a few minutes.
In addition, supply chain entities can generate sophisticated load routing and building, making logistics management more efficient and effective by maximizing the amount of cargo on a particular load and helping that cargo take the most effective delivery route.
For example, suppose a weather event disrupts one region. In that case, AI systems can account for these changes by suggesting adjusting delivery times, scheduling team drivers, or traveling a different route.
Streamlined, automated operations make supply chain entities more efficient while amplifying their capacity to respond to changing circumstances and emerging challenges.
3. Mobile technologies enhance sustainability. The supply chain ecosystem is expansive, including more than 1.5 million trucking companies. It’s powered by a cohort of workers where the average driver is approaching 50 years old, exacerbating an already fraught employment landscape. It’s estimated that the United States needs 80,000 more truck drivers to meet current demand, requiring companies to retool their recruiting efforts for younger generations.
Mobile technologies offer one solution. Emerging professionals don’t want to make dozens of phone calls to book a load. Rather, they want to use mobile apps that are as powerful and intuitive as the apps they use to schedule an Uber, order food, or consume media.
Therefore, supply chain entities can adopt user-friendly mobile apps that engage new, younger workers. This includes features like “click to book” functionality that modernizes scheduling and management.
Mobile technologies improve sustainability in various ways, but their impact on employee engagement and retention is critical to enhancing sustainability in the months and years ahead.
Digital Transformation Defines Logistics Management
Today’s supply chains are a mess, something that is especially apparent right now. Unfortunately, many of these challenges will not abate with time. Instead, they will continue to reverberate into the future, demanding a solution that enhances logistical outcomes.
Digitalization is foundational to these efforts as connected devices, AI algorithms, and mobile technologies enhance supply chain capacity at a critical time.