How does digital transformation influence freight procurement?
The last few years have marked the beginning of a digital transformation of several industries and the otherwise static freight procurement world has been no exception. If there is one thing that the emergence of digital technologies has proved beyond doubt then it’s that the procurement or supply chain industry lends itself very well to these technologies.
To remain at the forefront of the latest developments and leverage them to the fullest extent, supply chain professionals must familiarize themselves with several concepts. This wave of technology is going to be the biggest disrupter of traditional practices in the procurement industry. Above all, it will give rise to new models of operations and reveal several unexplored opportunities along the way.
What is digital transformation all about? How does it impact freight procurement?
While digital transformation, digitisation, digitalisation, etc. have emerged as buzz words in recent times they’re not well understood. The fact that these words are used interchangeably by many seldom illustrates the confusion around these concepts.
Inevitably, the first step to leverage these advancements is to fully understand what these terms entail. Let’s look at the differences between these terms and further explore how ‘digital transformation’ is changing supply chain management.
- Digitisation: It is the conversion from analog to digital. Eg. You can digitise data.
- Digitalisation: It refers to the process of adopting digital technology to carry out a task. It could thus also refer to the impact the adoption of that technology has on the business. In brief, processes can be digitalised.
- Digital transformation: It refers to extending the use of digital technology to all aspects of the business to gain new efficiencies, drive process improvements, save costs, etc. As the term suggests, it’s transforming the way things are done with the help of digital solutions. It entails adopting new ways of doing things and is not restricted to just a single process or function.
While the way processes are carried out in the freight industry has remained unchanged for quite some time, digitalisation has managed to stir some change. Further, it has proved its value and opened the doors for ‘digital transformation’ of businesses which has enabled better cost reduction, increased efficiency and ultimately, business model transformation.
How does digital transformation reflect in supply chain management?
As organisations can access actionable data and information and more efficient practices, the pace at which they’re embracing digital transformation is increasing. The easy-to-adopt nature of digital technology has made it possible to adopt and integrate new solutions with existing workflows within no time.
Here are some instances where digital technologies have influenced supply chain management:
- Cloud-based SaaS LRM solutions
Cloud-based Software-as-a-Service (SaaS) solutions have been a complete game-changer for companies as they are easy to deploy and upgrade, offer operational agility and facilitate easy collaboration between multiple teams. These systems are quickly replacing traditional applications and helping companies achieve greater efficiency.
Logistics Resource Management (LRM) platforms have successfully transformed the way freight rates are procured, shipments are tracked and more. As a supply chain professional, you don’t need to make several calls or exchange countless emails with your freight forwarder to procure rates anymore. These LRM solutions allow you to automate the whole process right from creating enquires to procuring the best possible rates through automated negotiations.
These solutions have also eliminated the need for you to manually visit carrier websites to track your shipments. Today you can simply key in your shipment details on a shipment tracking platform and it will auto-notify you about the movement of all your shipments on a single dashboard.
Moreover, with the help of these systems you can simplify big data analytics. Every single interaction on the platform gets recorded and the system can instantly generate actionable insights with the data points it collects.
This is what digital transformation looks like, it manages to pave a fresh, more efficient way of doing things.
- Blockchain technology
Blockchain technology is the solution for organisations looking to improve end-to-end visibility and carry out secured transactions for their international cargo.
Blockchain structures data in a way that allows you to create and share a digital journal in which all forms of transactions are recorded. It enables multiple stakeholders to add information securely but crucially, the data that gets stored cannot be altered.
The technology has the potential to break down the age-old silos of traditional supply chains as it enables you to not only track the product origin but also each component that contributes to the supply chain.
The emergence of blockchains is a window of opportunity to gain visibility over physical flows and secure supply chains.
Robotics Process Automation (RPA) is yet another emerging technology that can significantly increase automation levels in transportation planning, inventory management, supply-demand planning, purchase order management, invoice processing and more. Though use cases in procurement are still in the initial stage, the industry can anticipate significant developments in this area in the years to come.
By using software robots, this technology performs redundant and labour-intensive work and helps you free up your team so that they can focus on more important tasks. Well researched adoption of RPA thus enables you to reduce costs, minimise scope for errors and eliminates problems such as late payments, duplicate payments, etc.
Develop a digital vision and culture
Do not chase technology mindlessly, just for the sake of it, as it may and in all likelihood will fail to work. A value-realisation plan is a must when you consider adopting technologies that facilitate the digital transformation of your business.
Research-well, schedule demos- lots of them and gain an in-depth understanding of what the market has to offer and what you need. By developing a digital culture and vision for your organisation, you can encourage your team to adopt prisms that enable the best possible use of technology.
If you would like to learn more about how GoComet Logistics Resource Management platform can help you digitally transform your freight procurement, reach out to us here today!