Big Data Will Drive Logistics Transformation

Technology plays a big role in innovation and differentiation in logistics, according to a new report from eft. Investments in business intelligence and predictive analytics, in particular, have grown in importance in the logistics industry, as digital transformation spreads across industries to leverage opportunities in digital data.

The growing role of technology in the logistics industry is thanks in part to continued increases in technology budgets and investments in developers, data scientists and innovation centers. While 93 percent of the 356 executives in supply chain and logistics surveyed said technology was a key differentiator for them, many are still reluctant to adopt new technology. The report finds that 15 percent of respondents are very open to adopting new technologies while 78 percent are somewhat open and seven percent are not open.

An interesting finding shows that 37 percent of logistics providers think they are innovation drivers. However, only 22 percent of their customers see them as innovators, indicating a disconnect between perception and reality, according to the report.

“Clearly logistics businesses are modernizing and becoming more tech-savvy, said Haley Garner, Head of Research and Content at eft, in a statement. “The fact that logistics companies are hiring more and more developers and data scientists really brings suggests at a shift in the industry from an operations-heavy one to a tech-based one.”

The Logistics Technology Report reveals that 54 percent of organizations have an innovation center. The biggest role of the center is to create new solutions and products (52%), followed by differentiation between their organization and competitors (21%), to collaborate with customers (13%), and to solve long-standing challenges (10%).

Technology investments also continue to increase. In 2016, 65 percent of respondents said they would increase their budgets, down slightly from 74 percent last year. The slight decline may be due to legacy systems already updated, according to the report. “It is possibly the first indicator of the continued maturation of the technology boom we have seen over the last several years.”

The top reason for the continued investments is to create a differentiator for the business, according to 45 percent of respondents. Other big reasons include taking advantage of new technology (20%), updating legacy systems (15%), customer demands (13%), and keeping up with competitors (7%).

“This is in-line with the new technology-centric mentality of many logistics companies that is starting to infiltrate the industry,” according to the report. “This is also related with the industry-wide thinking of technology as a differentiator as it suggests companies are looking to gamble on new technologies should they create a competitive advantage.”

Another key finding shows that business intelligence and predictive analytics is picking up steam in the logistics industry. Over the next 12 months, 43.6 percent of respondents said they will invest in business intelligence and 30.9 percent said they will invest in predictive analytics. “This is indicative of the importance data is bringing to the industry,” according to the report. Investments in transportation management still tops the list.

In terms of data analytics usage, 29 percent of respondents said they use advanced analytics in their operations, with five percent reporting prescriptive analytics. In addition, 53 percent said they use descriptive analytics and 24 percent use predictive analytics.

However, 18 percent said they are not implementing data analytics. “This is a significant percentage of the industry to not be adopting one of the technologies transforming the business,” according to eft.

The one thing that logistics and supply chain companies generate a lot of is data. The challenge is collecting and using the data to create efficiency, improve customer and partner relationships and drive more revenue opportunities.