How Is Digitization Changing Logistics Industry

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Summary: “Digital Transformation Spending in Logistics Market is projected to reach US$ 94,972.3 Million by 2026 at a CAGR of 10.7% during the forecast period; growth in e-commerce coupled with quick delivery of goods to gain competitive advantage which drives market demand”

The global digital transformation spending in logistics market is projected to be driven by rise in demand for digitalization of business processes and increase in cost pressure on the service providers. The logistics industry has adopted digital advances at a slower pace than other industries, which could be potentially disastrous even for the major players in the industry. Hence, digitalization of business processes drives the digital transformation spending in logistics market. Additionally, digitalization is happening across industries, and the benefits are revolutionary for companies with greater consumer awareness and reach, higher productivity, and innovative business models. However, the end-users have to make significant initial investments and incur high maintenance costs. These act as restraints of the market

Logistics companies spend on digital transformation to increase efficiency, optimization, and speed and timing of logistic services, thereby increasing customer satisfaction and revenue. Among a range of rapid technological evolutions and in an increasingly digital environment where digital transformations are affecting the industry, most of the CEOs of transport & logistics companies appreciate digital solutions (to engage with customers, and optimize production and operations) as major areas of investment.

Growth in e-commerce coupled with quick delivery of goods to gain competitive advantage has led to high demand for transport management systems and warehouse management systems. Moreover, increase in the number of Internet users along with rise in popularity of social media platforms has contributed to the surge in awareness about digital solutions. Innovative digital solutions and sharing platforms are being incorporated within the enterprise infrastructure. Vinculum Solutions, an India-based company, focuses on delivering solutions (Vin eRetail WMS) and products specific to the retail industry. The solution supports easy order delivery, last mile delivery, and integration of manufacturers, logistics companies and web stores among each other.

The online sales channel has become more complex and has induced manufacturing businesses to adopt digital transformation. Moreover, as an alternative to in-house fulfillment, a large number of retailers have shifted from Internet order processing to 3PLs, which are equipped and experienced in warehouse management system to handle these online needs. This is expected to propel the Warehouse Management System (WMS) market in the next few years.

Several strategies and approaches have been established to increase the efficiency of logistics over the years. Collaboration is considered to be one of the most promising factor in these strategies. These startups as well as leading players are prepared to collaborate with each other and complement their offerings. Sharing of these platforms encourages collaborative working, allowing the key players to retain their dominance. The deal becomes a win-win for the two companies as the new player gets easy access to the market which might not be welcoming and the market leaders increase their efficiency and develop new business models, such as shared networks.

Digitalization of business processes is a key trend boosting market growth. Obsolete systems and labor-intensive processes create more challenges and complexities, slow down operations, and hinder the ability of the industries to grow revenue. These manual tasks can result in significant inefficiencies and productivity losses for the businesses. Hence, the logistics industry strives to form a complete digital, flexible, and connected supply chain optimized for e-commerce and last-mile, last-minute delivery. Technological advancements have led to increased adoption of digital transformation across the transportation and logistics industry.

The global digital transformation spending in logistics market is largely driven by merger & acquisition and partnerships. For instance, in October 2017, IBM acquired Sydney-based Vivant Digital, a small boutique digital consultancy. This acquisition addressed the growing needs of clients seeking transformation though innovative digital business models and enhanced customer experiences. Key players profiled in the report include Hexaware Technologies, IBM Corporation, JDA Software WMS, Logitech Corporation, XPO Logistics, Mindtree Ltd., Oracle Corporation, Samsung Electronics, SAP SE, Sanco Software LLC, Syntel, Inc., and Tech Mahindra Limited.

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