Globally, the logistics sector is growing at a rapid pace and undergoing huge transformation in its mode of operation and functioning. The growth in international supply chain has spawned a huge demand for logistics services. With increasing demand, entry of new players and expansion of operations by established companies, the market has become extremely competitive and demanding. Organizations no longer see a Logistics Service Provider (LSP) as merely a vendor but as a partner intrinsic to their growth. The complex world of the supply chain has translated to greater expectation of innovation and smart operations by LSPs.
The Philippines is growing at a rapid pace among ASEAN countries, generating greater demand for logistics services. The country has also seen rapid growth in its technology and ITES sector. But the impact has yet to percolate to the logistics sector. A serious study of the various aspects that affect investment in information technology in the logistics sector will enable logistics companies to understand why investing in IT makes sense.
The cost factor
Supply chains perceive logistics as a major cost center, and consequently look at ways and means to trim costs. Logistics companies, at least the majority of them, are virtually coerced to reduce their costs. This is a tough situation for LSPs as they grapple with ways to reduce overheads to survive and stay competitive. In a large chunk of LSPs, when it comes to cutting costs the first casualty is information technology, wrongly perceived as lower priority, much to the LSPs’ detriment.
The old method
Paper-based transactions, the traditional method of managing operations, are still being followed by many logistics companies. Apart from being outdated, the method severely affects the ability of a logistics company to operate efficiently, considering the sheer volume of cargo movement handled by LSPs today. It also does not allow for tracking consignments and getting mission-critical updates throughout the shipment process. The lack of visibility and cohesions result in botched-up delivery schedules and cost overruns.
IT in Logistics has become indispensible
Information technology has become an indispensible part of operations across industries; in supply chain, it plays the central role of planning, executing and controlling business operations. IT has become an indelible part of information accumulating, processing and analysis. The more systems are integrated with standardized flow of data, the more effective a logistics strategy to enhance visibility, flexibility, and scalability will be.
Information technology does not only optimize logistics operations but also reduces cost. With the aid of information technology, LSPs can bring about a whirl of change in supply chain management by adopting newer technology which can play a significant role in streamlining logistics operations and eliminate all complexities.
Choosing a tech solution
Choosing the right technology solution is crucial while considering the adoption of IT in logistics. An integrated, specifically designed solution can enable service providers to manage, monitor and efficiently streamline their operations end-to-end. The integrated IT solution should be scalable and flexible enough to cater to specific needs of the company.
The upside of an integrated IT solution is you get faster transactions, instant update, quick tracking and seamless connectivity with clients, partners and agencies. Other key benefits information technology delivers are increased efficiency, reliability and responsiveness with complete automation of processes. LSPs who have adopted Information technology have realized its significant contribution in enhancing customer service levels, lowering operational costs and enabling greater operational speed.
Amit Maheshwari brings over two decades of cumulative logistics industry knowledge, experience and technological expertise to the table. He is the CEO and founder of Softlink Global, a leading software products company, which he founded in India in 1992. Under his leadership, Softlink Global has grown to have a presence in every major city in India as well as overseas, including in the Philippines. A Bachelor’s degree holder in Electronic Engineering, his expertise spans Strategic Planning, Information Management, Financial Resource Management, Product Development and Marketing. For questions or comments, he may be reached at amit@softlinkglobal.com.
