Digital transformation in Logistics: Current status and applied technology

Digital transformation is an inevitable part of the Logistics industry, helping to improve operational performance and increase efficiency in the supply chain. Currently, Logistics technology, techniques, and implementation methods have completely changed due to digital transformation around the world. So what is digital transformation in Logistics ? What is the current status of Logistics digital transformation in Vietnam? Let's find out with 1C Vietnam in the article below!

1. What is digital transformation in Logistics?

Digital transformation in the Logistics industry is the process of integrating modern technical technologies into activities in the supply and demand chain, to improve the entire thinking, vision, values, and operating processes of a Logistics company. . This process is carried out by applying 4.0 technologies such as: AI, IoT, Big data, ... in the process of purchasing, distributing, transporting, storing, warehousing, payment, and order processing. customer service,... with the purpose of improving operational efficiency, reducing costs and improving customer experience.

2. The role of digital transformation in the Logistics industry

Given the consequences of the Covid epidemic, the application of digital technology in the Logistics industry is a necessary requirement to reduce costs and improve performance. Below are some roles of digital transformation for the Logistics industry:

2.1 Increase operational efficiency

By applying modern technologies such as: operations - transportation management system, goods tracking and supervision, information retrieval system, process automation and information - data exchange , the Logistics field can improve the process of transporting, managing, and storing goods with information that is more accurate and faster. This helps minimize errors, increase flexibility and promptly respond to market requirements.

Digital transformation in the Logistics industry also creates favorable conditions for simplifying work processes and reducing business costs. Thanks to the integration of automation technologies, the Logistics industry can quickly capture market information, predict demand, risks and take effective measures to optimize resources.

2.2. Cut down the costs

Applying automation technology in the Logistics industry's work process helps eliminate ineffective steps, optimizing time and personnel costs. In addition, digital technology also allows monitoring and management of resources such as warehouses, transportation vehicles and human resources, ensuring that resources are used on time and for their intended purpose.

2.3. Increase service quality

Digital technology transformation helps increase accuracy in the goods management and transportation process. Businesses can track details from recording goods information, destinations, updating and sharing information with relevant parties, etc. Digital transformation in the Logistics industry helps reduce errors and increase reliability in the process of providing services to customers.

2.4. Increase transparency in shipping

The goal for digital transformation in the Logistics industry is to increase transparency in the goods transportation process. Business administrators have applied IoT (Internet of Things) solutions to Logistics operations to help effectively monitor the process of transporting products from warehouses to points of sale.

This transparency helps businesses receive very positive trust from customers. Besides, using IoT also helps optimize time for sales support agents because customers do not need to request delivery status updates from customer care.

3. Current status of digital transformation in Logistics in Vietnam

• World

It is expected that by 2026, the cost of digital transformation in the global Logistics industry will reach 94,972.3 million USD. With an estimated growth rate of 15.2% between 2018 and 2026. In 2021, it is estimated that spending on digital transformation in the Logistics sector in the US will be 14 billion USD, accounting for 28.98% of the market share of Global.

In China, the world's second largest economic market, it is expected to reach logistics spending of 13.7 billion USD by 2026, an estimated annual growth rate of about 10%. In Japan and Canada, growth rates of 7.7% and 8.5% are forecast. The European and German market is expected to grow at an annual growth rate of about 7.8%, while the Logistics industry market in Europe is forecast to reach 15.1 billion USD by 2027.

In the Asia-Pacific region, by 2026 the Logistics industry market is expected to reach about 2.5 billion USD, with countries such as Korea, Australia and India leading the way.

• Vietnam

According to a report by the Vietnam Logistics Business Association (VLA), in recent years the growth rate of Logistics in our country has achieved an impressive growth rate, a growth rate of about 14 % - 16%. The entire industry scale reaches about 40 - 42 billion USD per year.

In particular, the COVID-19 epidemic has caused major changes in the consumer industry, changing operating and commercial methods, and strongly promoting the development of online logistics (e-Logistics). ). According to research results from global strategic consulting firm McKinsey, it previously took about 5 years for the digital transformation process to be successfully applied to businesses and consumers. However, under the impact of the COVID-19 pandemic, this process has been accelerated to just 8 weeks.

Currently, in Vietnam there are more than 3,000 businesses with large and small scales and different capital allocations participating in the Logistics market. Of these businesses, about 89% of Vietnamese companies are small and medium sized, 10% are joint venture companies and only 1% are companies with 100% foreign capital.

However, only a small part of large enterprises such as DHL, FedEx, Viettel Post Vietnam Post can meet the requirements and conditions of the digital transformation process in the Logistics industry.

4. Technologies in digital transformation of the Logistics industry

4.1. e-AWB

E-AWB (also known by its full name Electronic Air Waybill) is a digital version of the electronic air waybill. This modern technology is considered one of the effective methods for digital transformation in the Logistics industry. E-AWB standardizes and helps replace traditional paper air waybills with the use of smart technology.

With E-AWB technology, monitoring and processing cargo data becomes much simpler and faster. E-AWB helps improve transparency, information security, and optimize costs and time during the delivery process. This is a measure that many Logistic businesses have successfully applied during the digital transformation process.

It is expected that in the future, 80% of Logistic businesses will use E-AWB technology. This allows promoting the digital transformation of the logistics industry to the use of electronic bills of lading, helping to quickly increase efficiency and effectiveness in Logistics business activities.

4.2. AI and machine learning

For digital transformation in the Logistics industry, AI and machine learning play an extremely important role. This technology supports logistics businesses in analyzing and using relevant data accurately, thereby identifying and resolving possible technical problems, helping to improve operational performance. dynamic.

AI is responsible for collecting data, while machine learning plays a role in detecting unusual data patterns and the risk of errors. In addition, machine learning is also capable of collecting information samples related to inventory levels, supplier quality, production plans, demand forecasts, transportation management,... AI applications and machine learning in business helps businesses reduce risks, improve operational efficiency and save freight costs.

4.3. Blockchain Deployment

Blockchain is an outstanding modern technology that businesses cannot ignore during the digital transformation process in the Logistics industry, possessing features of transparency, high security and special decentralization capabilities.

With transparency, Blockchain automatically downloads and fills in accurate and fast data information for every document, from lists to shipping notes and bills of lading. This feature allows customers to track details of the entire delivery process, motivating customers to make decisions about choosing a reputable shipping unit. Blockchain technology also helps auditors track and monitor the goods distribution process or find timely solutions when problems occur.

With the feature of recording all changes in documents and automatically storing them on the system, Blockchain allows decentralizing information and granting access rights to each member, effectively supporting the process of monitoring goods transportation. At the same time, make sure not to lose, damage or change documents inappropriately.

4.4. Cloud technology

Integrating cloud computing technology is an effective measure in the digital transformation process in Logistics. This modern technology helps logistics businesses increase operational efficiency and optimize the operating process. Using cloud technology, businesses can strictly manage detailed operating processes in their production and business activities.

In addition, this technology also allows businesses to track the location of freight vehicles in real time, plan space in logistics, and manage and track shipped orders. Self-driving vehicles and automated forklifts are also gradually becoming popular in the Logistics industry.

The use of automatic conveyor systems and automatic vehicles with the help of robotic arms helps increase efficiency in the process of loading, unloading, transporting and storing goods. Many businesses are gradually investing in these types of advanced automated vehicles and equipment to optimize the cost of hiring personnel and drivers, while still ensuring the best work performance.

Logistics is the "key" service industry of our country's economy and an important foundation for the trade development process. Digital transformation in Logistics is an inevitable process that Logistics businesses need to grasp to compete in the new era. During that process, 1C Vietnam can accompany businesses by providing core digital transformation support technologies in logistics, helping to reduce operating costs and increase productivity. For support and advice on suitable digital transformation solutions, please contact 1C Vietnam today