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How Big Data & Analytics Are Changing the Logistics Sector

by Mona Lebied•

Since its inception half a decade ago, Big Data has revolutionised everything from football to transportation, and logistics is one of the fields where big data brings an incredible potential. The complex and dynamic nature of logistics makes it the perfect use-case for big data application, and it is changing the way a lot of organisations operate. It has changed the way we collect, process and analyses data, and its disruption is so essential that some even call it the electricity of the 21st century , a new kind of power that is transforming businesses, governments and private life.

Information Processing, the Rise of Analytics Platforms

Big data is characterised by the 3V’s “ volume, velocity and variety. The volume is rather self-explanatory: big data wouldn’t be big if it weren’t for the huge amount of data collected. The velocity stands for the speed at which data gets generated, while the variety refers to the diversity of sources where data is retrieved from. All this is what is really disrupts the logistics sector, which had been for a long time driven by statistics and performance indicators, now operating with more real-time analytics.

The rise of the cloud platform storage made it much easier to store these huge amounts of data for very little costs, which also played a role in the advent of analytics. But all of this potential remains untapped, if the data just stays stored, unstructured and unprocessed. This is why information-processing systems stepped in, with more power and capabilities than basic spreadsheets: ERPs, CRM, BI software… They help in collecting, storing and simplifying data analysis for the average user. In logistics, more and more businesses are equipping themselves with business intelligence software helping them managing their logistics analytics or manufacturing capabilities. Their development is continuous, and progress in artificial intelligence is only going to make them more accurate at predicting what is to come and suggesting changes to optimise processes.

How Exactly Big Data Impacts In The Logistics Sector?

Optimization and efficiency improvement through greater intelligence

More and more companies implement a data-driven mindset within their decision-makers: a study by the Council of Supply Chain Management Professionals shows that 93% of shippers and 98% of third-party logistics firms feel like data-driven decision-making is crucial to supply chain activities. 71% of them believe that big data improves quality and performance. These figures show how important it becomes for everyone in the sector, from retail to supply chain.

Other benefits of using big data are the resource consumption optimisation and the improvement of operational efficiency:

  1. Forecast: having insights on how customer demand will evolve helps to plan and anticipate shifts, inventory shortages, and reduces costs.
  2. Inventory Management: related to storing and forecasting, the inventory management is enhanced. RF tags and computer chips make it possible to keep track of inventory and prevent unpredicted stockouts.
  3. Route optimisation: thanks to real-time GPS data, weather data, road maintenance data and fleet and personnel schedules integrated into a system looking at historical trends, the most optimised routes and time are selected for delivery. An exemplary illustration is how UPS implemented a no-left-turn policy , which according to the company, saved them annually 10 million gallons of fuel, delivers 350,000 more packages and emits 20,000 tons less of carbon dioxide.
  4. Labor management: thanks to analytics, staff management is made easy, which is a huge asset for the supply chain where a lot of workforces is needed on a continual basis. Ensuring enough resources are available in anticipated rush periods avoids overtime and exhaustion.

An improved customer satisfaction

The shift in customer experience initiated by e-commerce has put the ball in the customer’s court, and drastically changed the relationship between them within the retail industry. The multiplication of players in a single domain has generated a competition that spoils the customer to attract and keep him/her: very low shipping costs, flexible return policies, regular discounts, etc. Big data was of great help in the management of these policies.

Another aspect where big data helped retailers with, is the increased knowledge about the customers themselves: website analytics enable to track the audience background (age, gender, location, interests, etc.) and their behaviour. That allows for better targeting and segmentation, more effective marketing campaigns, as you get a better understanding of your customers that are in return more loyal. Analyzing consumer patterns gives you room for improvement and optimisation of retail strategies.

Automation of warehouses

Automation is everywhere in today’s business world, increasing speed, accuracy and efficiency of processes in functions like marketing, recruitment or finances. It frees up a lot of time for your teams to focus on less repetitive and time-consuming tasks, to use their added-value on work that really matters.

Likewise, the logistics sector is affected, and soon enough it will be entirely automated. A precursor in the matter is, of course, Amazon, the e-commerce giant that invests in pioneering technologies and that is permanently disrupting the retailing and online retailing landscape “ and now attacking new markets like grocery stores. In the Amazon warehouses, the little orange KIVA robots grab the items from the shelves and bring them to the employee that packs them. Amazon has also tried drone delivery for people living less than 30 minutes away from an Amazon centre.

Seeing how Uber and other Tesla companies are starting to test-run self-driving cars, imagining that the whole supply chain could be automated is just one step away. It does not mean that robots will take everything over, as there will always be the need of the reassuring human interaction, but automation is definitely going to thrive in the coming years and decades.

Big Data Transforming Logistics For The Better

The arrival and spread of big data usage dramatically changed the way businesses use to work with their analytics. Companies can anticipate slow and busy periods, potential future supply shortage and act accordingly. The supply chain is more transparent, but also automated, deliveries are optimised, and inefficiencies reduced. All these insights help in making better strategic decisions that provide a real competitive advantage.

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Mona is a passionate writer about data analytics, innovative business reporting techniques, but also SEO tips'n'tricks. She is working as an online marketer, in the bustling startup landscape of Berlin, Germany. Find more about datapine.

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