in Platforms and Marketplaces
As logistics companies upgrade core systems and storage mechanisms and open up new forms of connectivity options, the reality of submitting rates to a marketplace or having an externally facing quotation portal becomes more of a reality. Platforms will continue to gain attention and capture market share from the traditional service providers. Platforms are discussed in Margand and Heuck, Chapter 16, and in Sullivan, Wong, and Tang, Chapter 23. These marketplaces not only can scale and connect suppliers and buyers with the click of a mouse bypassing the traditional sales cycle, but they also offer instant quotes and the ability to book immediately as opposed to the traditional email‐and‐wait model (Riedl and Chan 2019). Marketplaces are gaining attention especially as they enable a low‐cost solution to direct selling entrants, like steamship lines Maersk and CMA, who now can open their digital sales channels and accelerate disintermediation.
Ironically, research has found that using the performance metric of return on assets (RoA), publicly traded companies in the United States have declined by at least 75% since 1965 (Hagel et al. 2016). This means that despite all the technological improvements that have happened in the past 50 years, companies still are not doing a great job of utilizing technology. Perhaps this could be explained by the lack of focus and the sheer complexity of a large organization. To start a digitalization journey, logistics companies need to invest in talent who have some understanding of logistics, the processes involved, and the integration bottlenecks between core systems that technology could potentially address.
Zoom Out/Zoom In Approach
Assuming that a company can get these foundations in place, leadership teams can then brainstorm on what they know or have learned about their companies' ability to adapt and look to hone their strategy on achieving more in an unpredictable world (Hagel and Brown 2018). The zoom out/zoom in approach to successfully navigating the waters of digital transformation explains how a company can explore not only the short‐term stakeholder‐driven targets but also the longer‐term survival needs of the company (Hagel and Brown 2018). Here are a few takeaways that can be applied:
Zoom Out
1 Take leadership to an outside event or company to open their eyes and give them a glance at the future.
2 Bring in outside parties to consult and advise as they will have a fresh outlook on the company's position on what it will need to be successful in the next 10–20 years.
3 Look at how the customer base is evolving and identify unmet needs. Work backward to figure out what internal resources could be leveraged to add the most value.
4 Define what the IT department's purpose and goals are in hopes of providing a unique value proposition that will protect the company from competitors.
Zoom In
1 Examine areas where business meets technology that would be crucial to the success of the zoom out initiative and earmark resources to grow this.
2 Pick one near‐term initiative that would bolster the company's core value proposition. Ideally, this would be in an area that would have a measurable ROI from improving operational efficiency or selling.
3 Eliminate poor‐performing initiatives to free up resources to fund the above two points.
Executives will inherently tend to stray from above zoom out initiatives as urgent issues arise in the micro‐ and macroeconomic environments that they live in (Hagel and Brown 2018). Figure 1.4 presents a set of digitalization goals based on a zoom out/zoom in approach.
This approach is just one of many strategies that could enable a company to understand all of the emerging technologies and then start their digitalization journey that will involve a change in customer experience, the acceleration of how they achieve their digital goals, and the best way to allocate their resources (McKinsey&Company 2018).
The Time Is Now
Change is not coming; it is already here. Electrification opened up a vast amount of new possibilities but was only made possible by fossil fuels that power it, smart innovative businesses that monetize it and drive adoption, engineers that tinker and enhance it, and lastly supportive governments that invest in the infrastructure to support it. 4IR technologies, such as AI, are opening up newfound opportunities and need many of the same inputs to make their potential a reality (Lee 2018). As noted above, there is a flood of startups and financial investors pouring into the supply chain and logistics market. Trade and shipment data is abundant in the databases of the logistics and shipping companies, as well as the governments who collect information when doing customs clearance. While traditionally governments are more reactive, efficiency gains driven by transportation that lead to more industrial outputs are being supported. The key element that the logistics industry may be missing is the talent to tie all these pieces together.
Figure 1.4 Digitalization goals.
The 4IR is not meant to be flipping of a switch but more the tinkering and thoughtful collaboration of a network of companies, individuals, and industries that collaborate to create a new vision for the future. By creating and spreading innovative ways to coordinate the global movement of goods, logistics companies can reduce costs and reduce waste that will help to create a more sustainable way of life for all those involved. Due to customer demand, competitive risk, and socioeconomic factors, logistics companies have no choice but to embrace digital transformation. By taking steps to audit and optimize a company or even a department within a company in terms of its technological capabilities, talent pool, and processes susceptible to automation, individuals can help to future‐proof the sustainability of their company.
Conclusion
Global economic stability and GDP growth have delayed the automation of white‐collar jobs to a lesser extent than blue‐collar jobs. Companies that had healthy balance sheets and content shareholders were less likely to have capital expenditures on expensive automated solutions as social ramifications were daunting and productivity gains and immediate ROI were not abundantly clear. More competition from new entrants and startups enabled by new systems integration solutions, as well as increasingly cheaper and more powerful cloud computing and processing speeds, will lower the barrier for hub economy companies to consider investing in the logistics industry. Profit per job derived from human input will decrease with higher labor costs, and increased transparency by marketplaces will continue to accelerate consolidation in the logistics market.
Talent shortages for documentation work will continue to be an issue in the logistics industry, and the industry will see the sun set on the era of information and pricing arbitrage. Investment in automating tasks whether through an API or RPA will outweigh the cost savings derived from outsourcing rote tasks to a lower‐cost location. Increased costs due to human error are currently negated by the complexity and number of variables dealing with different geographies, commodities, and customer types; however, technology is allowing for a wider view across multiple systems. While the operations of many logistics providers have remained unchanged for decades, there is an abundance of opportunities for improving efficiency through the use of technology, but company culture, organizational prioritization, and a strategy for change management need to be addressed first. Logistics companies will be forced down the digital transformation path, and those who start on it sooner will have a better chance to survive.
Key Takeaways
Technology has changed drastically since the start of the Third Industrial Revolution