Logistics: the past and the present

The appearance of e-commerce and webshops has brought big changes in the field of logistics and Supply Chain Management. Let us see for example distribution centres and warehouses. In traditional logistics, distribution centre workers had prepared large amounts of orders for shipment in order to forward them with the help of big capacity trucks and lorries. Nowadays, however, it all has changed: in these new types of centres, smaller packages are being put together, which are delivered by parcel delivery services to the recipients. Customer needs matter more than ever – they give a whole new meaning and direction to most industries.

The transformation of distribution centers does not, of course, remain without consequences. Even the alteration of one step can have an effect on the whole process. This is no different in the case of Supply Chain Management either: delivery has to be much more flexible, so the proper storage strategy and the process of getting the goods to the customer needs to be worked out. Besides that, you need a lot of flexibility, because thanks to webshops you can receive an order at any time of day, and many webshops are already doing next-day delivery.

Everything is bigger and faster

The first and most important challenge in the time of e-commerce is speed. Even in Hungary most people use the opportunity of ordering online, which is available at most webshops.  Customer needs are growing bigger and bigger...

On one hand, the customer wants to get the ordered goods as soon as possible. On the other hand, they want to know exactly (within 1 or 2 hours) when they can expect the goods. The service provider then needs to be fast at processing the orders as well as organising and undertaking the delivery process.

Speed does not only get an emphasis in the delivery process itself. It is also important for companies (especially smaller, typically family-operated businesses) to keep up with technological trends concerning the field of logistics.

According to the statistics of the MPI Group, as little as half of logistics companies use new solutions which make everyday work at the warehouse and during delivery simpler and faster. In the same statistics they also point out that those companies which are not open to new things but build on outdated but working technologies and management can lose millions of dollars every year. This means that it’s worth it to keep up with the new, innovative technologies, with which you can increase client satisfaction and the income of the company, too.

The rise of 3PL service providers

At the time of e-commerce, webshops and distributors are reluctant to deal with logistics because they want to concentrate on producing and marketing more and better products. Because of that they tend to outsource delivery and logistics tasks to enterprises with the expertise in these areas. These suppliers are called 3PL (Third Party Logistics) services. It seems that with the appearance of e-commerce these types of companies will be dominant at the logistics market.

By outsourcing delivery to such a service provider, webshops are relieved of a lot of burdens: they save time and money, and they do not have to divide their resources that much; this means that the expertise of webshops in production and distribution, plus the experience of 3PL companies in delivery will prevail during the process. In addition, such providers are generally well-prepared and are aware of developments and innovations in the industry. This means that you will always choose the most up-to-date available solution for fast and problem-free service.

Big Data and Artificial Intelligence

Of course, besides the fact that the journey of a product from webshop to customer has changed a great deal, you cannot forget the types of technological innovations which determine logistics and e-commerce.

It is already visible from the example of chatbots that one of the digital trends that determine innovation is Artificial Intelligence. And these chatbots are actually starting to appear at many aspects of life – including commerce. A chatbot can for example be very useful at monitoring customer habits, so it can later make suggestions to the customer about new promotions and products. Of course, the use of chatbots in customer service cannot be overlooked either. If you connect the chatbot to the database of the webshop properly, Artificial Intelligence can find the answer in a few moments. Also, a well-set chatbot can be helpful in advertising campaigns and remarketing targeting.

The other technology which is important at almost all fields of the business world is Big Data. Big Data technology is suitable for processing a large number of data of different types – so it can help with the work of delivery or e-commerce companies in many ways.

In the course of shopping itself, it can help assess the needs of consumers: you can find out how many products have been sold in the previous years in different time periods or geographic locations. This way you can get ready for the big “rush” of customers around sales days like Black Friday.

Besides that, big data can be your best friend when assessing, planning and specifying your business plan. You can rely on data coming from your own experience, but you can also use national and international, public company data in order to get to know your competitors. Big Data can help make service more efficient and faster both for distributors and delivery companies – all you need is see the appropriate correlations and analyse the data correctly.

Source: HKTDC Research, MH&L, MultiChannelMerchant