Logistics is a complex system where mistakes are expensive. Tracking deliveries, managing inventory, coordinating transport companies all require resources and time. Manual processing of processes will lead to delays and errors that will cause the company to lose money and customers.
In this article, we will look at what logistics processes can be automated, what technologies can be used for this, and how this will affect business efficiency.
Problems that arise when organizing logistics
Let's imagine that there is a company that supplies fresh produce to cafes and restaurants. Due to the short shelf life, customers expect fast delivery. But logistics is built manually, which leads to problems:
- orders take a long time to process: managers receive them via messengers, social networks and calls, and then add them to Excel spreadsheets;
- fuel costs are rising: drivers receive a list of addresses and plan routes themselves, but do not always choose the best options taking into account the weather and traffic situation;
- supply chains are manually monitored: the client has to call the company to find out where the order is, and the manager cannot give a direct answer — you must first contact the driver;
- document management is inefficient: managers print and sign invoices manually and then hand them over to drivers, which slows down the logistics process and does not exclude errors;
- customers go to competitors: cafes and restaurants are unhappy with delays in deliveries and are choosing more reliable options.
Statistics show that these problems concern the entire field of logistics. According to data McKinsey, the three main “pain points” in the transportation industry are cost management, route optimization and increased productivity.
Logistics automation: what is it and what processes it involves
Logistics automation is the introduction of digital technologies that control all stages of the transportation of goods. These services can:
- Plan routes — the system itself will choose the best ways to deliver goods, taking into account road congestion and fuel costs. Example: UPS has put into practice ORION routing system and reduced the number of kilometers that couriers travel by 100 million.
- Track shipments — Customers will see in real time where the item is and how much is left before arrival. Example: Maersk uses Captain Peter system, which allows you to track more than 400,000 containers at all stages of delivery and quickly resolve problems.
- Keep inventory records — the program will calculate the remaining goods and help you replenish stocks on time. Example: Amazon uses Kiva robots, which reduce the time to pack an order by 2-3 times.
- Control document flow — the service will create and send invoices or invoices automatically, as well as eliminate the risk of data falsification. Example: blockchain platform from Maersk and IBM reduces document processing time by 10 times, and cargo delivery time by 40%.
According to data Polaris report, the global logistics automation market was estimated at $38.76 billion in 2023, and the figure will continue to grow. This means that the demand for the delivery of goods and the volume of transportation and warehousing operations will increase, and with them, the need to optimize processes.
Who needs transport logistics automation
Automation programs will be useful to everyone who works with logistics processes. Let's look at examples:
- producers — optimize supply chains and will be able to control inventory in warehouses;
- online stores and marketplaces — will establish transport routes, reduce delivery times and increase customer satisfaction;
- distributors — They will begin to centrally track orders, reduce fuel costs and store surpluses;
- transport companies — They will be able to more effectively manage the fleet by monitoring the location of vehicles, analyzing routes and saving on fuel.
How does automation of logistics processes work
There are programs for transport companies and other market participants that help manage all logistics processes: routes, warehouses, and document management. Initially, these were traditional IT solutions based on algorithms, but the introduction of AI has significantly expanded their capabilities.
Let us examine the main functions and principles of operation of transport programs.
KT.team case: service for selecting transport companies for the marketplace
What was the problem: managers selected transport solutions manually, taking into account many factors — shipment schedules, warehouse and driver work, weekends, etc. As a result, the cost of shipping one order was 20% of its cost.
What I wanted to do: create a service that will automatically select the optimal transport company for a specific order based on tariffs, SLA and other indicators.
What KT.team did: we have created a separate service for logisticians that communicates directly with transport companies and transfers only the final decision to the marketplace, who will deliver the order and what pickups are available.
The result: the client got rid of manually configuring logistics and received a separate service that analyzes delivery conditions himself and provides a ready-made solution for a specific order.
How much does logistics automation cost
Several factors influence the cost of automation:
- company size — small businesses can use cloud solutions, and large enterprises need powerful corporate systems;
- the volume of logistics operations — the more orders, routes and warehouses, the more complex the service and the more expensive the implementation;
- number of users — the rate depends on the number of employees who will use the system;
- functionality — if you need to combine the service, for example, with CRM or ERP systems, the cost will increase.
In addition to the specifics of the business and system, any implementation of a transport program will require additional costs, for example, for a license, employee training, the purchase of equipment and technical support.
Results: how logistics management automation helps businesses
Let us summarize why it is worth abandoning manual logistics processes. Logistics automation:
- saves employees time: there is no need to manually process orders, plan routes and control warehouse operations;
- reduces business costs: the system plans the movement of drivers and couriers in accordance with the weather and the current traffic situation, which reduces mileage and saves fuel;
- minimizes errors in document flow: invoices, invoices and customs documents are generated automatically;
- speeds up order processing: OMS automatically processes incoming orders, distributes them to warehouses and transfers them for delivery;
- allows you to control all stages of logistics: GPS monitoring tracks the location of the cargo and helps predict the time of arrival to the client.
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