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Logistics and shipping companies witness a sea change to adapt to ecommerce needs

Chander Agarwal
4th Feb 2019
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The e-retail industry is fueling customer expectations, which are now dynamically changing. Whether it is an individual or a business, customers now expect a lot more than just the basic ‘right delivery at the right place in the right condition’.

Supply chain management forms the backbone of any business, and logistics is one of the most integral components of the same. There is a lot more to logistics than just getting things transported from point A to point Z. The process involves several intermediary components and steps including design, planning, control, monitoring and implementation, which helps derive customer value. In recent times, the logistics industry has become fragmented, volatile and unpredictable, and its role in the global landscape has been varying from being just an operational aspect of the value chain to an increasingly strategic one. This shift underscores the need to shift towards an adaptable and effective roadmap reflecting the emerging Industry 4.0 and e-commerce, changing market, and customer dynamics.

The emergence of Industry 4.0

The advancements in technology are transforming businesses across all industries and sectors. The emergence of the fourth industrial revolution or ‘Industry 4.0’ has led to an advanced interconnection and automation of all facets of manufacturing and distribution through digitisation and implementation of interventions like the internet of things, blockchain, big data, cloud computing, etc, across all value chains. As logistics is the fulcrum of the value chain, there is the need to reshape the industry to create a smart digital supply chain. By incorporating new-age digital tools, the efficiency can be increased multifold and also save significantly on costs.

This is because, with more generation of data, there will be an ease of predictability that would help the logistics industry be ready to cater to the probable market and end-consumer demands. Furthermore, this would help in the improvement of planning and managing inventory as well as warehouse fulfilment through automation. Even for the last-mile connectivity, there are many benefits of technology, including real-time tracking and instant notifications, drone delivery, etc. Therefore, there is a need for rapid incorporation of technological advancements to optimise operations and maximise efficiency in the logistical supply chain landscape.

The rise of e-commerce and changing customer expectations

With increasing digital penetration and a rise in the ownership of smartphones, there has been an explosive growth of ecommerce. The global ecommerce industry is projected to grow at an annual CAGR of eight percent to reach a market value of $2700 billion by 2023. The growth has been so phenomenal that ecommerce has emerged as one of the main growth drivers of any nation’s economy in recent times. E-retail is an integral component of ecommerce and has been remarkably transforming the retail landscape. The e-retail industry is fueling customer expectations, which are now dynamically changing. Whether it is an individual or a business, customers now expect a lot more than just the basic ‘right delivery at the right place in the right condition’. They want the delivery services to be customised to a quicker and more flexible alternative without having to spend more.

The unprecedented rise of e-retail, supplemented by increased customer expectations, has inevitably put the logistics sector under the immense pressure to deliver better end-to-end solutions at lower costs. Since an integration of data analytics, smart warehousing solutions and social supply chains is the need of the hour, the express segment of logistics has been gaining momentum, increasingly becoming an indispensable part of the e-retail industry for order fulfilment. In fact, many e-retail giants like Amazon have begun establishing their own captive logistics units for the fulfilment needs. This has laid even more emphasis on the need for logistics industry players to reinvent their ways and processes in order to provide express services for enhanced customer experience.

From ‘integrated’ to ‘dynamic’

Logistics companies are now having to make a decision between localisation and integrated globalisation. This challenge is more prevalent in developing countries that are struggling with unstable politics and economies, insufficient infrastructure, a shift in trade patterns, and limited application of technological disruptions. While the traditional approach used to be a ‘one-size-fits-all’, the volatile nature of the emerging markets has developed the need for multiple supply chains, each customised to the specific demands, and flexible enough to adapt to robust changes.

This has led to the need for a paradigm shift from ‘integrated’ to ‘dynamic’ when it comes to the operational aspect of the industry. This refers to the creation of a flexible and responsive ecosystem of the right people, processes and technology. Designing and implementation of such an ecosystem of decentralised operations would allow more effective handling of geographic, taxation and technological discrepancies. Therefore, this shift to a dynamic and decentralised network would help the logistics industry gain considerable advantages in both its growth trajectory as well as its contribution to the holistic value chain.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

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