How do a digital logistics system and a logistics ERP make businesses efficient?

• Ensure lowered costs

When a logistics ERP integrates with a digital logistics system, it helps view critical data like the time spent by a truck driver to transport freight to a specific location and automatically assign specific trucks and drivers to transport products. In this way, when the time spent transporting freight from one place to another is tracked, the best route to follow can be determined, ensuring fuel costs are kept low. Similarly, freight will be assigned to trucks so that the company will utilize the entire capacity of trucks. Hence, the business will save fuel costs related to more trucks carrying low quantities of freight. (lower than the capacity)

• Improve process coordination

In a traditional logistics setup, it is challenging for multiple stakeholders to interact with each other. As a result, each individual operates individually, which leads to communication gaps. Communication gaps have adverse consequences on a firm’s logistical network. For example, a truck driver may have to transport freight from Mumbai to Delhi on a specific day, but inventories may have been exhausted. Hence, this will lead to delays in transportation, leading to a lack of coordination in business processes.

Data like the average level of inventory the business is required to hold, the level of demand, the number of trucks needed to transport a specific quantity of freight, etc., may not be available in a traditional logistics setup. Due to the lack of data, it may become difficult to plan logistical processes within the enterprise. Digital logistics systems and a logistics ERP help view data and improve business processes over time, hence cutting costs and leading to efficiency in the long run.

• Ensure speed of processes

In the absence of logistics process digitalization, the speed of logistical processes may slow down. This is due to a high level of reliance on messages and calls. Stakeholders often need to follow up with each other, which delays decision-making within the organization. For example, the transport in charge may need to allocate freight delivery to a truck driver, but the truck driver may not be able to connect with the transport in charge on time. It will lead to delays in the delivery of freight.

When a logistics ERP solution integrates with a digital logistics solution, the entire allocation of trucks to freight and the schedule according to which the freight needs to be transported from one location to another can be easily determined. Hence, there is a greater speed of logistical processes within the enterprise.

• Reduced scope of errors

Humans are prone to making mistakes. Hence, when coordination takes place manually, there may be multiple errors that may arise. For example, these may be related to freight allocation to drivers, determining loading/unloading points, or determining the time to travel on a specific route. However, when it comes to digitalization, there is complete accuracy related to calculations like the time taken to travel from one location to another, the average fuel costs, etc.

Since digitalization ensures zero scope of error, it ensures that there are no delays in logistical processes, saving crucial business time.

• Ensures proper inventory management

Inventory management becomes a challenging task when a logistics ERP system does not meet with digitalization. There may be situations when there may be more inventory than required, leading to wastages. Additionally, there may be scenarios when the inventory level in the warehouse is insufficient. Both situations can impact the business bottom line if not managed properly. Logistics digitalization helps ensure the optimum inventory level is present, keeping costs low and ensuring the demand for inventory is met on time.

• Helps analyze logistical data

As a small or medium enterprise, there is a lot of data generated every day. Some questions that may pop up in one’s mind may be, ‘’How do I know the average fuel cost of carrying freight in a truck from one location to another?” or “How can I determine the number of delivery delays in a month?” When a business is small, some follow-ups or manual calculations may be sufficient to reveal such information, but it becomes complicated to track data over time. Lack of data disrupts the entire logistical ecosystem, and manual processes no longer remain a viable option when a business starts to expand. Hence, big data comes into the picture.

When big data is put into use, all the logistical data within the enterprise is analyzed. It helps reveal critical business information like the number of delays in a month, the best route that a truck must follow to minimize the time to transport freight and the average fuel cost. In addition, this data helps the enterprise in predictive analysis. Predictive analysis refers to using tools to make predictions based on the information that has already been collected in the past.

Putting it all together..

By reading this blog, we hope you’ve obtained a better understanding of why digital logistics systems are critical. Combining a logistics ERP with digital logistics systems can help you cut costs, improve the bottom line, and boost business efficiency. Is your business well prepared to improve its logistical operations?