Logistics are the lifeblood of international trade, and trade in turn is a powerful force for economic growth and poverty reduction. Logistics needs have evolved significantly in recent years. The global pandemic saw changing customer demands paired with unprecedented supply chain disruptions. According to an EY survey, 57% of businesses were affected by serious disruptions, while 71% saw demand for their products rise. Increased visibility and efficiency became top priorities, as more and more transactions moved online and expectations around delivery rose. But, in this post-pandemic world, needs have changed.
On April 21, 2023, the World Bank released recently its 7th edition of the Logistics Performance Index (LPI) report. It is a measure of 139 countries’ ability to move goods across borders with speed and reliability. It measures the ease of establishing reliable supply chain connections and the structural factors that make it possible, such as the quality of logistics services, trade and transport-related infrastructure, and border controls. This LPI helps developing countries identify where improvements can be made to boost competitiveness.
According to LPI 2023, end-to-end supply chain digitalization, especially in emerging economies, is allowing countries to shorten port delays by up to 70 percent compared to those in developed countries. Moreover, demand for green logistics is rising, with 75 percent of shippers looking for environmentally friendly options when exporting to high-income countries. On average across all potential trade routes, 44 days elapse from the time a container enters the port of the exporting country until it leaves the destination port, with a standard deviation of 10.5 days. That span represents 60 percent of the time it takes to trade goods internationally.
For businesses dealing with the many challenges of the supply chain, digitalization is no longer optional but necessary to survive in an uncertain economy. This turbulence brings continued supply chain disruptions. 2023 will continue to be a competitive environment as businesses fight to maintain narrowing margins. Despite these difficulties, those that respond with agility and resilience will set themselves up for success and growth in the years that follow. Increasing costs are among the many challenges affecting companies across the globe. Transportation now accounts for around 6-10% of total costs, which is a huge increase from the 2-4% standard of the past. Logistics disruptions, quality issues, evolving tracking regulations and production problems are adding to the list of challenges that leaders need to grapple with in the next 12 months. Executives should focus on achieving short-term wins and organizing and using their data to create system agility.
In 2023, new factors and potential disruptions have emerged and supply chain priorities are shifting in response. Speed still matters. But, with high energy prices, economic uncertainty, geopolitical challenges and falling customer demand, it can no longer be at any cost. The ability to anticipate and adapt to volatility and demand, and to operate efficiently and effectively in any scenario has become a necessity. Businesses are increasingly interested in logistics partners who can offer better visibility of their cargo. This gives them more predictability and more control to speed up, but also slow down and pivot.
There are certain key elements logistics partners can offer which help maximize supply chain resilience, agility, and flexibility. These include:
- End-to-end visibility – visibility across all stages of the supply chain offers a clearer view of inventory and activity and improves the ability to identify and address disruptions. A 2022 McKinsey survey found 45% of businesses lack visibility. This can be addressed through the introduction and integration of data collection and systems and allowing for better collaboration and decision-making. Visibility can also improve supply chain sustainability, by pinpointing inefficiencies and identifying less carbon-intensive solutions.
- Diversification – supply chain partners can boost flexibility and resilience by supporting the diversification of material sourcing and production hubs and offering access to a variety of transport types or warehouse and distribution center locations. In 2022, Deloitte found more businesses were using diversification to boost protection against disruptions, ensuring there are multiple options at all stages of the supply chain. It also empowers a business to optimize its supply chain for a variety of factors, including reducing emissions, costs, and geography, among others.
- Planning – using a logistics partner with the right technologies and products can replace downstream contingency firefighting with upstream supply chain planning. This means that when disruptions arise, businesses have the tools they need to respond more proactively and cost-effectively and mitigate the risks.
In today’s environment, businesses are increasingly placing a premium on flexibility and agility. Evolutions in supply chain management and technologies mean logistics partners can offer much more than speed. Instead, they can work with businesses to achieve greater customization. They have the potential to differentiate supply chains, adapt to the needs of customers and respond quickly and effectively to disruptions.
A truly resilient supply chain goes far beyond reducing transit times and increasing speed to market. By choosing a partner that understands that different circumstances and customers require different speeds and paths, businesses are bolstering their supply chains with a new capacity for resistance and recovery. Business occurs faster than ever due to the constant rollout of technological advances. Companies and their supply chains must be nimble if they wish to remain or become competitive in today’s digital environment. To achieve supply chain agility, logistics companies can harness the power of self-managed onboarding, as well as change and exception management.
Leaders will have their work cut out for them in 2023, but those that focus on creating a system of agility and efficiency will be rewarded in the years to come. A good strategic plan includes investing in smart solutions, adopting new technologies like the cloud and standardized software and keeping data clean and optimized. 2024 and 2025 will be here before we know it and 2023 will have hopefully only made us stronger and more resilient.
Self-managed services give direct, hands-on control to businesses, rather than relying on outside entities to complete tasks. For example, imagine a company that wins a huge new client. If the business relies on managed services, then the team will have to submit an onboarding ticket to the service provider. This ticket will end up in a queue behind all the requests that came before it from other companies. This means it could take days or weeks until the managed service provider onboards the new client, cutting into potential revenue and harming the new client relationship. On the other hand, if the business is self-managing its integration solution, then the team can immediately start the onboarding process. There is no backlog of requests that must be completed prior, so the business can start trading with the new client in as little as a few hours.
The same example applies to change and exception management. Data discrepancies, incorrectly coded order fields, and inaccurate inventory levels can be detrimental to a business. With self-service change and exception management, the company can address issues as soon as they occur, making the impact they have on the business minimal to none. Furthermore, any updates to the processes can be handled internally. Otherwise, the company would be at the mercy of the managed service provider to discover and fix any issues that occur in the system. Logistics companies experience countless moving parts daily. Real-time visibility into supply chains is essential for logistics companies to stay organized and manage their business. One way for them to achieve this is through integrating their EDI and APIs.
When integration is done right, EDI and APIs work together to provide better supply chain visibility and can even help with onboarding. API integration gives deeper insight into B2B integrations within your digital ecosystem, while EDI helps start and orchestrate business processes.
For example, EDI can be used to kick-start the ordering, shipping, and fulfillment processes. APIs on the other hand can be used for shipment tracking, status updates, and inventory management. When used in tandem, the two technologies complement each other by providing an all-encompassing view of a business’s supply chain and helping automate tasks. Automating tasks while increasing visibility helps companies to improve productivity, reduce errors, and grow revenue, all while having more control over their processes.
End-to-end automation and EDI modernization can greatly increase the productivity of event-based workflows. When events are mapped to an automated workflow, humans are removed from the equation. This means that there is no waiting for a human to complete a task before the next step in the process can occur. Rather, technology is utilized to quickly and accurately perform each step in the workflow.
As more businesses adopt and demand their trading partners to use EDI, logistics companies are finding it increasingly vital to implement an innovative and modern EDI system. Otherwise, they will risk losing out on business opportunities.
API-based integrations are growing enormously in popularity. The reason that logistics companies are focusing on implementing API-based integrations is that APIs perform real-time processing rather than batch processing. Therefore, logistics companies can strategically incorporate APIs to receive near-instantaneous data and updates regarding customer orders and shipments. These updates can also be sent to customers and trading partners. This is important because customers are demanding more frequent updates and touchpoints from logistics companies concerning their orders. More frequent updates allow customers to better optimize and manage their business processes.
Furthermore, API-based integrations complement EDI integrations which tend to utilize batch processing. However, API-based integrations are not a complete replacement for EDI because they require more resources and customizations to set up and manage. Therefore, companies are opting to supplement EDI integrations by incorporating APIs where it makes the most sense. This minimizes the amount of effort that goes into managing the API integrations while ensuring the maximum value is extracted from them.
Today’s logistics industry looks entirely different than it did 10 years ago. So, what will it look like in another 10 years? It seems that the Logistics industry trends, such as those outlined above, are going to continue to impact the industry well into the future. However, the success of trend-shaping nascent technologies requires that they are integrated with existing solutions and infrastructure.
Logistics operations must be capable of enabling processes like ingesting EDI load tenders, along with determining how future technology can be leveraged to increase margins. Businesses can then create a next-generation stack that leverages their previous technology investments while incubating big data, IoT, and omnichannel solutions, thus positioning them for the future.
Furthermore, the events of 2020, 2021, and 2022 have disrupted the entire supply chain including the logistics industry. The logistics landscape is riddled with uncertainty and disruption, but it is also ripe for digital transformation and new opportunities.
Companies that succeed in this environment and beyond will embrace a combination of the top logistics industry trends, becoming better equipped and resilient to supply chain shocks. As your company navigates through 2023, consider how the current emerging trends in logistics may impact your business.
The author, Mr. Nazir Ahmed Shaikh, is a freelance writer, columnist, blogger and motivational speaker. He writes articles on diversified topics. Mr. Shaikh can be contacted at nazir_shaikh86@hotmail.com.