Logistics companies may be guilty of doing digitalization wrong

Logistics companies may be guilty of doing digitalization wrong (Photo: Shutterstock)

The age of e-commerce and the “Amazon effect” on supply chains have resulted in the need for expediting shipment delivery. The evolving consumer delivery expectations have led businesses to scramble for digitalization, adopting strategies that can improve logistics efficiencies.

However, companies often rush into their digitalization processes without a clear strategy of what they want to accomplish. On the other end of the spectrum are enterprises that have run legacy systems for several decades, making it harder for them to adopt digitalization.

“Many businesses that sell products have cobbled together legacy systems, and it’s slowing them down, as they haven’t figured out how to increase speed and efficiency. With a nimble integration strategy within their supply chain, they can start defining a digital transformation strategy with measurable KPIs and start holding themselves accountable,” said Jeremy Rudolph, channel sales manager at Celigo, a business process automation firm. 

Rudolph explained that companies have to assess their needs and decide their KPIs based on those needs. Though digital transformation seems to be the obvious way to go, it is also critical for companies to ascertain the workforce’s adoption and comfort levels with any new technology-based process. 

“If I have to survey my team, I’d be doing a deep-dive analysis on how much time my team spends logged into the system. If the levels are low, I will look at what causes that. Is it due to them not knowing how to use them or because they don’t need those systems?” said Rudolph. “Being able to ask such questions and making KPIs relevant to the business is key.”

One of the challenges with high-growth companies adopting digitalization is what Rudolph called the “SaaS spaghetti.” Such companies buy multiple software applications to increase the efficiencies of their workforces early on to allow scaling. But inevitably businesses end up facing numerous issues with applications they had purchased or subscribed to for multiple reasons. 

For instance, some applications might not be built for scale or are not integrated with the company’s systems. Sometimes applications are too integrated within the system that it becomes complicated to make changes, as every update requires significant changes to the system. 

Some companies suffer from a “legacy complex” in which legacy systems slow down enterprises but are so entwined with operations that it is difficult to phase them out completely. These systems slow operations down as they are over-reliant on manual labor. During times of COVID-19 and the impending “new normal,” it would serve companies well to look at automating such processes. 

“Legacy complex businesses choose the manual option rather than using modern technology to integrate. In the enterprise, I’ve noticed many systems are cobbled together over many years and have many manual processes associated with them. This tends to be the result of different leaders buying different on-premise or SaaS applications for their business units over time,” said Rudolph. 

Companies lose out on cross-functionalities when the applications they use are not correctly aligned within the system. Rudolph contended that executive leaders put goals in place within large organizations, but their teams are often distracted by a lack of cross-functional alignment. 

“Once a leadership team is cross-functionally aligned on a digital transformation strategy and incentivized to maintain this, they begin to evaluate an integration platform as a service (iPaaS),” said Rudolph. “This allows them to integrate across the value chain within their entire business. Implementations turn into weeks instead of years, the people who need the data to make decisions and predictions have it, without all the exceptions in between.”

Companies that are nimble in the value chain will ultimately become nimble within the supply chain. Rudolph explained that to achieve true digital transformation, companies will have to work toward cross-functional alignment. This will make them faster and more efficient and help position themselves to succeed over their competitors. 


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