Digitizing Your Logistics: 3 Steps for Your Small Business

Today more than ever, highly optimized logistics are imperative. For small and medium-sized businesses, a digitized logistical system can be a strong advantage in a competitive marketplace.

According to McKinsey & Company, “a survey of more than 250 global shippers and logistics providers reveals that technology investments are set to increase, with numerous companies already piloting advanced use cases.”

With increased supply chain costs post-COVID and a growing eCommerce industry, embracing digital logistics is even more essential. Initially, the process can feel overwhelming as you wonder, “What does it mean to integrate digital logistics? How will it help my bottom line? Where do I even begin?” In this article, we’ll answer these questions and offer proven strategies for a successful digitization of your eCommerce logistics.

What is digitization in logistics?

Digitizing logistics integrates automation, workflows, and synergies in technology to optimize and improve how you manage the movement of goods along the supply chain and through delivery.

It encompasses common aspects like manual and repetitive processes, as well as areas that used to rely solely on human expertise, like route optimization, analytics, and data analysis. With AI, Internet of Things (IoT), rule-based actions, and blockchain technology, you can automate and innovate your inventory, transportation, warehouse management, supply chain forecasting and analytics, supply chain optimization, and much more. That may look like:

Automatic scanning into and out of warehouses with barcodes and RFID linked to WMS, as well as inventory management to reduce manual entry points
Automatic rerouting and route optimization based on real-time weather and traffic events
Transportation management linked or integrated into warehouse management so dock-in and transportation events are automatically tracked and logged as part of inventory
Supply chain forecasting with automatic reorder points and throughput analytics to help decision-makers optimize
Customer notifications and real-time shipping tracking as part of an automated process
Automatic comparison and selection of the best-fit (i.e., cost versus delivery time) carrier for the product based on pre-negotiated rates

Digitizing logistics upgrades your inventory and logistics with algorithms, AI, and workflows, allowing you to automate many of the processes you do by hand to provide faster, lower-cost, and higher-quality results.

What are the benefits of digitizing logistical operations?

From customer orders and warehousing to shipping and DTC delivery, digitization can strengthen observability and streamline services, which will ultimately boost your bottom line. Let’s break down how digitization can help:

Customer Relationships: A digital interface for customers and customer service staff gives users automatic alerts on shipping status so they can always see up-to-date information for orders and returns. That transparency supports a more enjoyable customer experience, which builds long-term relationships and trust.
Warehouse Efficiency: Efficiencies like digitally managed pick and pack, batch printing, integrated labeling, and automatic inventory updates based on scanning products enable your warehouse to work more efficiently while reducing operational costs.
Transportation Performance: Gain clearer visibility into transportation so it’s easier to optimize routes, identify gaps, and remove redundancies.
Data Analytics: Decision-making, visualizations, predictions, and forecasting are all incorporated into logistics software. Many options also offer AI to help you do more with your data.
Reduced Shipping and Fulfillment Costs: Traditional logistics lack depthful insights into warehousing and fulfillment costs. With digitization though, you can see delivery areas and optimize warehouse and pick locations to cut costs and fulfillment time.
Streamline Inventory Management: Digitizing logistics trims the fat of your receiving processes, order fulfillment workflows, and storage and stocking practices. Meanwhile, digital warehousing lets you map storage and product locations and refine your pick routes. You can also create cycle counts easily, optimize inbound inventory, and better understand how stock moves through and is stored in your warehousing.
Flexibility: Uncover real-time insights into inventory flow so you can set pauses for restocking, repurchase more quickly if inventory is moving faster than usual, or redirect stock to a different warehouse to meet demand elsewhere. Although much of this can happen automatically, most eCommerce sellers still prefer manual approval with automated suggestions or flags for repurchase points.
Automation: AI and workflows enable you to automate many tasks, including purchase order submission, data entry, inbound inventory, and much more. For example, using barcodes, you can scan cases and pallets into inventory and automatically update them in the warehouse. Or, set up a workflow to submit a purchase order based on inventory sales and lead times to save time on monitoring that data.

Digitizing logistics offers significant opportunities to automate manual tasks while gaining deeper insights into data, which you can then use for further automations and optimization.

How do you digitize a supply chain?

Now, we’ll explain how to digitize your eCommerce logistics. There are three main steps in this process: assess business needs, choose the right solution, and then implement.

Conduct a needs assessment

The first step is to identify pain points and determine where digital solutions will have the greatest impact.

For small and medium-sized companies, pain points often include unexpected shipping costs, rate increases, little to no inventory visibility, and challenges keeping up with eCommerce transactions. Honing in on pain points in your current logistical processes allows you to narrow down which digital solutions will be the best fit for your business.

Identify Objectives: Determine the specific goals you want to achieve by digitizing your logistics, such as improving inventory accuracy, reducing operational costs, or enhancing order fulfillment speed.
Analyze Current Processes: Evaluate your current warehouse procedures to uncover inefficiencies, bottlenecks, and areas for improvement. You’ll also want to look at your current vendors, how you use their data, and how you integrate their software into your systems.
Define Requirements: Create a detailed list of requirements for logistics software, including desired features, scalability, integration needs, and budget constraints.

In addition to pain points, you need to figure out your desired balance between automation and human expertise.

Logistical technology can collect, create, and aggregate data to help employees perform tasks like optimization and management in areas like warehousing, data analytics, pick and pack, shipping and route optimization, inventory reorganization, supply chain refinements, etc. Digitizing logistics often entails implementing AI across much of your supply chain, which increases both speed and efficiency. That being said, you still want some degree of human oversight. Additionally, you’ll need people to handle personable aspects like communication, working with carriers, and developing long-term strategies.

Choose the right platform

Once you’ve outlined your eCommerce store needs, you can begin to look for tools to accommodate them. Research software that offers solutions you identify as valuable.

Digitizing normally involves switching to a platform, with most eCommerce stores building a tech stack of about five to six programs, including ERP, TMS, IMS, and WMS. You can improve efficiency by streamlining your tooling and choosing larger platforms with greater functionality. For example, iDrive offers TWMS (transportation and warehouse management software) that creates efficiencies in data integration while helping you make better use of data by providing a complete picture of your full supply chain and delivery on one platform.

At this stage, you’ll want to:

Research Vendors: Investigate different providers and solutions that align with your defined requirements and industry needs. It’s recommended to short-list your top three.
Evaluate Features: Compare the features of each system, such as inventory management, order processing, labor management, reporting capabilities, and integration options. Will it scale with your business? Also, make sure you assess the platform’s customer support and user experience.
Request Demos: Schedule demonstrations with shortlisted vendors to understand how their systems work and assess user-friendliness and functionality.
Check References: Contact other businesses that have partnered with each logistics provider to learn about their experiences and the system’s performance.

Integration functionality is key, as any solution you choose has to work well with your existing stack. Make sure your new digitization tooling integrates all necessary data or even replaces some of your platforms. For example, if you have an existing solution that manages and purchases shipping labels, you could merge it into a single platform with your warehouse management and transportation management by switching to iDrive TWMS, reducing the number of tools you pay for.

Implement the digital solution

Introducing a new platform doesn’t happen overnight. You need to create an implementation plan, work with the provider, and establish robust change management to ensure the incorporation goes smoothly.

Develop a Project Plan: Craft a detailed project plan that outlines the implementation timeline, milestones, resource allocation, roles, and responsibilities. It’s important to bring in employees from each affected area of your company for this. Ask them to identify their departments’ pain points, brainstorm solutions, discuss how they hope to use the digital platform, and explain the big picture.
Form a Project Team: Assemble a team of key stakeholders, including IT staff, warehouse managers, and representatives from other relevant departments to oversee the implementation process. If your team is smaller, this will be simpler. Additionally, many vendors will assist with incorporation and may even offer integration services, so connect with your provider and take advantage of the services they offer.
Set a Budget: Establish a budget for the implementation that covers software costs, hardware upgrades, training, and any additional resources required.
Customize the Software: Work with the vendor to develop any custom integrations or API connections you need. This ensures your software melds seamlessly with existing systems like ERP and accounting software. (Ideally, as many of those connections as possible already exist to reduce costs.)
Complete Data Migration: Prepare and test data for your migration. Once testing is successful, complete the full data migration, ensuring all historical information and current inventory records transfer accurately.
Train Staff: Provide your staff with training in the new programs, giving special attention to processes, how to load information into the system, and data handling. System navigation, procedural changes, data entry, and troubleshooting are all important. However, training should also be relevant to how individuals use the software. For instance, pick-and-pack employees need to be aware of picking processes, route optimization, how to navigate the interface, and how to scan goods into and out of the system.
Monitor Performance: Set KPIs and evaluate software performance against those indicators. Follow up on specific pain points to make sure they’ve been resolved. In most cases, you’ll want to implement feedback collection as well to verify from your personnel that improvement is ongoing.

Tools for digitizing your logistics

With thousands of digitization tools on the market, you have to conduct a needs assessment, look at which software best fits your needs, and short-list options from that research. If you feel overwhelmed, the following tools are a great place to start.

iDrive TWMS

iDrive delivers a complete fulfillment and shipping solution that helps you centralize your logistics. It combines TWMS, inventory management, warehousing, and connection with rich expertise and 3PL warehousing networks in one platform. iDrive also provides expertly negotiated rates with carriers such as FedEx, Amazon Shipping Solutions, UPS, USPS, and more to ensure you’re always selecting the best shipping rates.

BlueYonder

BlueYonder helps sellers navigate complex supply chains with their AI-powered multi-tier supply chain platform.

Kuebix

Kuebix, now owned by Freightwise, is a transportation management system that automatically audits carrier invoices against confirmed rates and then creates claims for mismatches.

Rose Rocket

Rose Rocket is a transportation management system and trucking software that boasts flexible software that fits with your unique business model.

MercuryGate

MercuryGate is a transportation management system for 3PLs, freight forwarders, and retailers alike. It helps merchants manage claims, global sourcing, final mile, and more.

Next steps – Future-proof your business by digitizing your logistics

Change is hard, and digitizing your eCommerce logistics processes may (understandably) seem daunting. However, when you consider the massive benefits to your day-to-day operations and the invaluable support for your business, digitization is the obvious choice. Whether your main priority is to improve customer relations, utilize data more effectively, boost your bottom line, or some other goal, there’s a digital platform on the market that’s right for you.

Want to learn more about iDrive’s all-in-one logistical solution? Get in touch today.

‍