How Data Analytics Transforms Logistics

Calford Wong, Writer
Calford Wong, Writer

How Data Analytics Transforms Logistics

With the advancement of data analytics, companies that adopt the latest analytics tools shave millions off their costs while enjoying greater profit margins. The logistics industry has much to benefit from enhanced analytics thanks due to its complex processes.  

For years, the supply chain and logistics industry has been widely driven by quantitative and statistical models. Through these models, logistics companies have been able to improve the experiences of their clients, adding significant value to their brand and revenues. Additionally, the development of data analytics over recent years has helped revolutionise the logistics industry through its many applications. So, how has data analytics helped the logistics industry thrive?


Benefits of Data Analytics in Logistics

A business produces vast amounts of data every day, and if used correctly can generate millions in revenue. In the supply chain and logistics industry, analytics is crucial in turning business data into helpful information for optimization and growth. Some of the many benefits of data analytics include:

  • Forecasting potential customer demands to better manage inventory shortages and other emergencies, without jeopardising operational cost.
  • Enhancing inventory management systems to track product availability better.
  • Optimising routes for faster deliveries and reduced operational costs.
    According to UPS, the “no-left-turn-policy” it implemented to help optimise their drivers’ journeys has helped the company save 10 million gallons of fuel, reduce its carbon dioxide emission by 20,000 tons, and deliver 350,000 more parcels annually.
  • Improving staff management through data analytics has ensured that logistics companies have enough resources during peak periods, which prevents staff overtime and exhaustion.


How Data Analytics Is Transforming the Logistics Industry

One of the key challenges facing the logistics industry is the last-mile delivery. The final part of the supply chain reportedly consumes up to 28% of the total deliver cost. Matthias Winkenbach, the director of MIT’s Megacity Logistics Lab, has explained in detail how implementing data analytics can help eliminate these challenges. According to Winkenbach, many companies are sitting on tons of data without any idea how to use it, much less understand it.

The Megacity Logistics Lab revealed that the productivity of last-mile delivery routes has been limited by the vast amount of data needed to be sifted through. “…it tends to be simple data like transactions, delivery records, and customer information, primarily stored in-house,” says Winkenbach. “By combining it properly, you can generate a lot of insight into how demand is structured, how your customers behave, and how you can adapt your delivery systems to better serve customer needs.”

This useful information has led to the development of tracking and monitoring tools on smartphones, IoT sensors and scanners, and GPS-enabled devices which give clients a better view of their parcel’s delivery routes at any point in time, as well as the added benefit of peace of mind. Data-collecting tools have already made tracking of deliveries more organised through informed route planning and by identifying delivery time patterns.



Apart from optimising routes and paving the way for the development of tracking tools, data analytics has also revolutionised warehousing through automation. The logistics sector is now on its way to becoming fully automated in the next couple of years; all thanks to the speed, accuracy, and process efficiency that automated analytics provides.

Having seen the promising results produced by Uber and Tesla’s autonomous vehicles, many companies are now employing robots in their warehouses and factories to quicken the delivery of parcels. One good example is the e-Commerce giant Amazon which The company has also tested its drone delivery services for customers living within a few kilometers or less than 30 minutes away from an Amazon distribution center.


Key Takeaway

In the last few years, Big Data and data analytics have dramatically transformed the way the supply chain and logistics industry operates. The crucial information collected and analysed through data analytics has not only made the supply chain more transparent, but it has also automated logistics processes and optimised driving routes for faster delivery services. There is no doubt that data analytics has offered many companies the competitive advantage that they need to provide better services to their customers.




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