Right path to digital transformation in logistics
Characterized by low-margin business models, Freight and Logistics companies have traditionally had very limited scope to invest in the digital initiatives advancing other industries. Now, the physical disruptions and economic shocks imposed by the pandemic, and even more recent geo-political impacts, have emphasized the importance for Freight and Logistics players to rapidly accelerate their digital transformation. But not everyone is responding at the same pace or in the same way.
According to global Accenture research, the industry has fragmented digital capabilities. More than three-quarters of our survey participants believe the industry has historically lagged behind in digitalization maturity.
of respondents agree: “Any Freight and Logistics company not focusing on building digital capabilities will seriously endanger their business.”
of respondents agree: “Overall, at an industry level, there is not only an ignorance of digitalization, but also a lack of roadmap in terms of what needs to be done”.
The industry is in various stages of building the foundational technologies that will allow companies to respond to market challenges. Based on their digital maturity, measured against 10 digital capabilities grouped into three transformation vectors, we identified:
Even the most sophisticated digital leaders have functions or processes that still lag other industries with fully built-out digital capabilities. Many of those further behind have yet to get to grips with the transformation task ahead of them.
Many Freight and Logistics companies may perceive the pace of their digitalization progress as appropriate, but they have only scratched the surface. Research shows they are:
Neglecting the customer front end
80% of respondents characterize investment in customer-facing automation as ‘important’ or ‘very important’. But they also say investment in customer front-end functionality is currently their lowest priority and only a few have fully built out a digitalized customer front end.
Still transitioning to digital processes
75% of respondents still have a large percentage of analog office administration processes, including processing jobs, warehouse operations and accounting. Their plans to automate these processes are focused on the next five years, suggesting a lack of urgency to acquire entry-level digital capabilities.
Struggling to visualize accurate and quality data
Many companies capture sales data, trade lane information, shipment volumes and weights to support internal profitability reporting. But data warehouse capabilities are lacking. Few Freight and Logistics companies are able to capture data from a wide range of sources and use it to inform management decisions.
The Freight and Logistics industry is poised for a radical shake-up as emerging technologies and new business models are harnessed to stabilize global supply chains. But getting to this future will require Freight and Logistics companies to put the foundations of digitalization in place, automating and integrating business and logistics processes and ensuring data accuracy and quality.
As the industry works towards digital transformation, we recommend the following steps to get started:
Take an honest look at your situation. Use our analysis of clusters and segments to understand where you fit compared with your peers. Be clear on your starting point.
Learn from the Leaders and Efficient Followers. Determine where you need to get to by looking at the best in your segment. Where are the sweet spots for quick wins?
Create customer-centric investment strategy. Will you invest across the digital spectrum or decide which areas are most important to meet the needs of your customers?
The Freight and Logistics industry needs to find the fastest and most efficient route to digital transformation. This is essential for the continuous adaptation needed to succeed in a future with ever growing customer expectations and where supply chain disruption and volatility have become business as usual.