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How Automation is Changing the Logistics Industry

Posted by Mihlfeld & Associates on Oct 3, 2018 7:50:00 AM

The Advance of Automation in Business

It was recently estimated that technology is at a period of growth where technological advancements will have doubled in the next ten years from where we are now. The dawn of Big Data, Artificial Intelligence, and Automation has revolutionized the way we, as consumers and producers, interact with and approach the economic environment.

Technological advancements play a pivotal role in all decisions and actions from the individual level to the corporate level.

In the realm of business, the digital revolution can be compared to the industrial revolution in a couple ways. First, roles once considered vital to the production and distribution of products took a back seat or became entirely irrelevant (for example: manual textile and cloth workers). Second, previously obscure or nonexistent roles became integral to the business cycle (engineer, iron worker, sewing machine operator).

Coincidentally enough, one of the most revolutionary achievements of the industrial revolution was the steam engine – a machine dedicated to the transportation of products.

The industrial revolution was marked by large numbers of tasks previously accomplished manually becoming automated. Thus, many jobs died and many jobs were born.

This same process of automating manual jobs is much more punctuated in the digital revolution than it was in the industrial. The ability of companies to pull ahead of competition through the use of modern technology is much more punctuated.

Businesses are in an unprecedented labor shift. The disruptive advance of technology in businesses is an incredible advantage to the business that embraces the shift. Conversely, businesses that oppose technological shifts place themselves at a disadvantage.

The question remains: Is your business making the right decisions in embracing technological advancement and implementing automation in your business model?

The Role of Automation in Logistics

All businesses need to embrace automation technology. Currently, the average business dedicated to producing and distributing a product allocates 10% of its revenue to logistics, which includes every step from packaging to delivery. This number is on the rise.

As prices rise and the world of business goes digital, it is vital that decision makers embrace the most efficient and cost effective software for their business.

The dawn of driverless trucks, blackout warehouses (totally automated warehouses), and advanced TMSs make logistics an exciting and forward-thinking industry to be in. Consumer driven data collection influences business decisions unlike ever before, allowing companies to predict consumer behaviors and meet those demands more quickly.

The Logistics industry not only has tickets to the big game of technological advancement, but they are front row seats.

Technology previously only available to organizations in the fortune 500 club is now commonplace in even the smallest startups. Additionally, more product is being shipped out than ever before.

Process automation allows businesses to focus on what the customer wants and spend less time focusing on the minutia that so often absorbs the time and energy of the business owner. By automating processes within your business, you are no longer preoccupied by the trivial matters, which allows you to focus on what truly matters.

Business owners must take into consideration the specifics of what their adopted technologies will accomplish in the company and develop long-term goals for how to implement the software and process automation company-wide.

Challenges of Automation

Making any sort of change to your company’s business model is a challenge and requires many decisions that affect the company from the top down. There are a couple of challenges when implementing process automation into your business, as such it is important to ask the right questions in order to make the right decisions.

  1. What processes can be automated

Identifying processes ripe for automation is key to the success of automation implementation. It is counterproductive to seek automation for processes that are unable to be automated. Generally, any job which relies on routine, repetition, and operates on a set of rules is able to be automated in one way or another.

  1. What processes cannot be automated

Tasks which rely on interpersonal communication or social skill are generally better left to people. In positions like sales and human resources a personal touch is always preferred over automatic processes. No one ever enjoyed talking to a robot on the phone.

  1. Identifying the technology to accomplish the task

Possibly the greatest challenge in automation is deciding on the technology to accomplish the task. Not all software is created equal. Once piece of automation software will excel in one area while another piece of software will excel in another area.

What problems are you wishing to address? Is there a piece of software on the market capable of finding a solution to your problem? It may be necessary to allocate your resources to creating your own proprietary software. In that case you can do those specific tasks in-house instead of outsourcing. Your company’s time and money are valuable, make the best use of both.


The Age of TMS

One of the most time-saving pieces of technology available to shippers and brokers is a TMS (Transportation Management System). Up until recently, most TMSs were outdated and a pain to use.

The majority of TMS’s were developed 20 years ago with minimal maintenance/updates since then. Companies continued using them because the year-over-year savings was undeniable. Most companies now report cutting transportation spend by more than 8% by using a proprietary TMS.

However, we are in a new era of logistics. In the past 2 years, many companies have begun developing their own TMS and 3rd party logistics firms are creating and selling new TMSs as an added value to the customer. These are sleek and intuitive systems which not only make it easy to schedule and track shipments but also make the process easy and painless to the user.

Innovation and adoption of new software are key factors in the continued success of a company. As stated before, technology is at a rate of advancement that allows even the smallest business to take advantage of these new technologies. The company that lags behind technologically lags behind as a business.


What now?

The Industrial Revolution brought about a new age of business. It changed how businesses were structured, decided which jobs were important and which ones were not, revolutionized how products were manufactured and how they were distributed, and it did away with old technologies and introduced new tools.

The digital revolution is doing the exact same thing almost 250 years later.

Can implementation be long and complex? Yes. Will some jobs be done away with and replaced with others? Yes. Will processes of product creation and distribution be radically changed? Yes. Will the economy benefit from these changes? Absolutely! Will, “that’s the way we’ve always done it.” be a valid excuse to not adopt modern processes? Absolutely not. The global economy favors the business that accepts change.

Updated: 2/11/2019

Topics: Automation, TMS

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Mihlfeld & Associates is a Logistics & Technology Co. 

We specialize in custom solutions for transportation management, software, cost reduction, invoice processing, and  much more. When meeting with prospects, we often get questions about fuel surcharges and how they are calculated. Hopefully you find this informative.

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