Wherever you look, COVID-19 has dramatically impacted every industry. Supply chains are no exception. Spot container prices have skyrocketed — China-US container shipments that used to cost $2000-$5000 now cost around $30,000.
In addition to showing how much the global supply chain relies on cross-border trade, the pandemic also exposed how businesses were overly reliant on traditional logistics processes. Industry leaders had to quickly pivot to digital logistics operations so that they could make better decisions faster.
According to Yossi Sheffi, Professor at Massachusetts Institute of Technology (MIT) and Director of the MIT Center of Transportation and Logistics (MIT CTL), “… the pandemic pushed companies to use more digital tools to run their supply chains.”
Digital logistics enables businesses to conduct supply chain and logistics planning faster, keep up with evolving customer behaviors and expectations, and automate repetitive tasks so that logistics teams can perform higher-level activities. So while the ongoing supply chain crisis is challenging, industries may look back on their pivot to digital logistics during COVID-19 as a positive one.
In this article, we’ll explore what digital logistics is, what makes it different from traditional logistics, and what businesses should look for in a digital logistics solution.
What is digital logistics?
Digital logistics refers to the automation and digitization of processes related to the movement of goods.
Whenever there is a routine logistics process that relies on pen and paper and repetitive manual effort, there’s an opportunity to make it digital and automated. That’s where digital logistics comes in. Businesses often leverage cloud-based, Internet of Things (IoT), artificial intelligence, machine learning and even blockchain technologies to utilize the full power of digital logistics for supply chain management.
Digital logistics can impact any part of a business’s supply chain, including:
- Inventory management
- Transportation management
- Warehousing and warehouse management systems (WMS)
- Supply chain forecasting and analytics
- Customer notifications and real-time shipment tracking.
What is the difference between digital & traditional logistics?
Traditional logistics relies on analog tools like spreadsheets, clipboards, and pen-and-paper checklists, while digital logistics relies on digital technologies like web-based systems, mobile applications, and integrations between systems to support the smooth flow of information.
The stakeholders in a traditional logistics network are often siloed from each other — warehouse management teams have separate dashboards from freight movement teams and the same is true of fulfillment teams and warehouse management teams. In this model, the director of logistics is the only person with end-to-end visibility.
Digital logistics, on the other hand, breaks these silos down and gives each stakeholder in the logistics network visibility in every department’s performance. It also provides real-time inventory control, more efficient supply chain workflows, and granular analytics to improve your team’s decision-making abilities.
What makes digital logistics more efficient than traditional?
Businesses that leverage digital logistics and a digital supply chain have a competitive advantage over businesses that use traditional logistics for logistics management.
Here’s what make digital logistics more efficient than traditional:
Streamlined inventory management
Digital logistics allows businesses to optimize their inventory management.
Traditional logistics prevented businesses from making informed decisions about their inventory. Logistics teams didn’t have enough access to how their warehouses operated, so they couldn’t improve their warehouse receiving processes, their order fulfillment workflows, or their storage and stocking practices. With digital logistics, a business can achieve all of these objectives.
Digital logistics can adapt to real time situations more effectively than traditional logistics.
For example, if you have a product that has had declining sales each month, you can decide to hold off on placing a purchase order for it if you have enough stock. While that sounds simple enough, it’s unique to digital logistics because traditional logistics doesn’t have the flexibility to halt purchase orders or identify stock levels quickly.
With digital logistics operations, businesses can automate critical tasks like placing inventory orders to avoid stockouts. They can also automate repetitive tasks like data entry because they don’t have to enter the same information in multiple systems, as is the case in traditional logistics.
Visibility into every step of the logistics process enables teams with digital logistics operations to identify root causes and bottlenecks and come up with solutions to remove those blockers. Since traditional logistics is siloed, it’s much harder to identify where the bottlenecks are and develop solutions to remove them.
Why DTC brands are making the digital transformation
DTC brands have come to expect more from their logistics operations to deliver a better customer experience. Digital logistics empowers them to deliver faster digital fulfillment.
Here are a few reasons why DTC brands are making the digital transformation:
Reduced shipping and fulfillment costs
Traditional logistics prevented DTC brands from identifying where they could store their inventory to ship to their customers faster. This limited their customer satisfaction while also increasing their working capital costs.
With 3PL logistics providers like ShipBob, DTC brands and other shippers can identify where they should store their inventory, which helps them reduce their shipping and fulfillment costs.
Ample Foods, a San Francisco-based meal replacement company, was able to reduce its shipping and fulfillment costs by offering a higher percentage of its customers with 2-day shipping with ShipBob.
“From expanding into a second ShipBob fulfillment center, we are excited to be able to offer 65% of our customers with 2-day shipping, up from 32% by only having a single West Coast facility. Soon, this will be 100%. Not only is this better for our customers but we also gain a 13% savings to our bottom line.”
Pablo Gabatto, Business Operations Manager at Ample Foods
Instant access to data
DTC brands have gotten used to seeing key metrics associated with their websites, marketing, and customer retention in an instant. Digital logistics helps them do the same for their supply chains.
Brands like Superspeed Golf, LLC value the logistics data they have instant access to with 3PL partners like ShipBob.
“I just throw in what we placed at the factory into a WRO in the ShipBob dashboard, and I can see how many units we have on-hand, what’s incoming, what’s at docks, and so on. I can see all of those numbers in a few seconds, and it makes life so much easier.”
Harley Abrams, Operations Manager of SuperSpeed Golf
Custom subscriptions are common in the DTC world. Brands are constantly looking to offer personalized product experiences to each of their customers. Digital logistics that utilize open APIs give DTC brands the ability to customize every single order.
MDacne is a DTC brand that offers custom acne treatment kits to its customers. Since kits are unique to customers, orders don’t ship as standard SKUs. In a traditional logistics environment, the mDacne team would have to manually enter order information for fulfillment. With ShipBob’s open API, they can leverage the automation and customization that’s native to digital logistics.
“ShipBob’s API lets us build custom logic since we ship personalized products with lots of variations in the kits we send. We can write a few lines of code instead of creating a manual kit for each possible order combination as we’d have to do in a tool like Shopify.”
Oden Harth, CEO & Co-Founder of mDacne
What to look for in a digital logistics solution
Every business is making the shift to digital logistics, but not every digital logistics solution is created equal. How do you choose a digital solution? Here are the key features you should look for:
If you’re a modern ecommerce brand, you probably have five or six tools that make up your tech stack. You should make sure the digital logistics solution you choose integrates with all your other tools so that your customer and order information moves seamlessly across all of them.
You need to have access to accurate data that’s easy to understand so that you can make more informed decisions about your shipments. For example, ShipBob’s analytics reporting tool uses real-time inventory data that customers love to use daily.
“At my previous 3PL, nothing seemed to come easy. Even getting a reshipment was nearly impossible. I felt like I had to babysit them. Everything was done on spreadsheets and it was very difficult to get the fulfillment data I needed.
Now, we’re working with a tech-enabled 3PL that seamlessly provides data to help us make business decisions. ShipBob’s analytics tool is a game-changer and it’s helped me grow my business tremendously.
With ShipBob’s free analytics tool, it’s so easy for any of my team members to pull data in real-time.”
Courtney Lee, Founder at Prymal
There’s no point to choosing a digital logistics solution that’s hard to use. It removes any efficiencies offered by digital logistics and it can create confusion among your team members.
Before signing up for a digital logistics solution, request a demo first to see what the user experience is really like. ShipBob provides a demo and price quote before getting businesses on its platform.
The digital logistics solution you choose has a direct impact on your customer experience. Ensure that the solution you go with has dedicated account managers so that you have a point of contact to solve any logistics challenges that occur while shipping your products.
Top digital logistics solutions & companies
Section should include a table providing high level info on some of the main digital logistics companies.
What they do
|ShipBob|| All-in-one logistics solution|
|DilX|| Digital supply chain solutions|
|MIXMOVE|| SaaS logistics solutions|
|Siemans Digital Logistics|| Digital logistics & consulting services|
|FourKites|| Supply chain visibility platform|
Going digital is easy with ShipBob
Making the switch from traditional to digital logistics by yourself is hard.
If your fulfillment logistics is in-house, you need to get your team on board with a digital logistics solution you choose and you need to train them to use it effectively to see significant results.
If your fulfillment logistics is outsourced, you’re often at the mercy of whatever digital logistics solution your fulfillment partner uses already. And if it doesn’t meet your analytics and tracking needs, you likely won’t be able to change their mind.
With ShipBob, switching to digital logistics can happen effortlessly. ShipBob’s end-to-end tech-enabled logistics platform enables you to reap all the advantages of digital logistics without having to go through the pain of choosing a solution and training your team on it.
ShipBob’s distributed warehouse model also upgrades your supply chain. Based on your historical order data, ShipBob can recommend where you should store your inventory in 20+ fulfillment centers. By doing so, you’ll be able to reach your customers faster, pay less for shipping and for inventory management.
ShipBob also offers real-time analytics that are easy to access and understand. You’ll be able to view all your fulfillment metrics and quickly make decisions to maintain supply chain velocity.
“ShipBob’s analytics tool is really cool. It helps us a lot with planning inventory reorders, seeing when SKUs are going to run out, and we can even set up email notifications so that we’re alerted when a SKU has less than a certain quantity left. There is a lot of value in their technology.”
Oden Harth, CEO & Co-Founder of mDacne
Want to learn more? Readthis review to see how ShipBob’s logistics capabilities compare to other 3PLs.
Digital logistics FAQs
Here are answers to common questions about digital logistics:
What is digital transformation in logistics?
The digital transformation of logistics is the evolution of traditional logistics processes that were conducted with analog tools to modern logistics processes that are powered by digital technologies.
What are the three types of logistics?
The three forms of logistics are inbound logistics (the logistics involved in receiving, organizing, and storing inventory), outbound logistics (the logistics of order confirmation, picking, packing, and shipping out to a customer), and reserve logistics (the logistics of returns).
All three types of logistics can benefit from digitization and automation: digitizing inbound logistics keeps information updated in real-time to prevent stocking errors and misplaced inventory; digitized, automated outbound logistics are more efficient and cost-effective and improve order accuracy; and handling reverse logistics digitally helps simplify a frustratingly complex process.
What is logistic digitization?
Logistic digitization is the process of digitizing elements of a business’ supply chain or logistics. Rather than relying on manual, paper-and-pen methods for their logistics, more and more businesses are choosing to digitize or automate logistics processes to make their operations more efficient. Logistic digitization can involve artificial intelligence (or AI), cloud platforms, the Internet of Things (IoT), machine learning, and other technologies that streamline the movement of goods.
What is a digital logistics manager?
A digital logistics manager is responsible for deploying, managing, and maintaining the digitization and automation of a business’ logistics. This can include selecting and implementing a 3rd-party digital logistics platform, developing end-to-end visibility through technology, automating processes to improve efficiency, tracking key metrics and real-time data, and more.
What are some examples of digital logistics?
A couple of examples of digital logistics include:
- Integrating with a business’s tech stack to enable two-way flow of order information. This eliminates manual order entry across systems, which reduces errors and saves time for logistics teams.
- Sharing tracking information with customers. Every customer is used to tracking their order immediately after it’s been placed. Recording tracking data and sharing it with customers is an example of digital logistics in action.