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Top 4 Ways to Optimize Logistics Operations in 2024

Top 4 Ways to Optimize Logistics Operations in 2024Top 4 Ways to Optimize Logistics Operations in 2024

In the past few years, almost every supply chain has transformed into global networks with offshore suppliers and logistics service providers. Usually, the products that are purchased on Amazon need to cross a few oceans and a few hundred road miles to get to the doorstep of the consumer. This journey requires a complex and sophisticated network of logistics operations.

For the past few years, the main focus of logistics managers has been to reduce costs and make the logistics routes leaner. However, this made the network vulnerable to major disruptions.

The pandemic and the current geopolitical situation of the world have forced supply chain and logistics leaders to step up their game (See Figure 1) and re-strategize.

Figure 1. Change in ocean carrier capacity to cater to the demand surge

Source: McKinsey

This article explores 4 ways to optimize logistics operations to help logistics leaders overcome the current and future industry challenges. 

1. Focus on shared visibility

Supply chains are becoming more collaborative and turning into shared ecosystems as resilience and visibility become increasingly important. Sharing logistics data across these ecosystems can be beneficial for decision-making and planning. 

All logistics and other business partners can be added to / removed from this ecosystem where information such as:

  • Real-time shipment data (for example; cargo location)
  • Shipment schedules
  • Inventory levels
  • Logistics routes

is shared to encourage visibility across the supply chain

For example, the recent initiative on supply chain and logistics data sharing is being launched in the USA, where major companies will collaborate on a data-sharing portal to improve the current sea logistics issues, including bottlenecks and port congestions, and improve the movement of goods.

Improving supplier and other business partner relationships is also important to enable transparent data sharing across the supply chain. Check out our comprehensive article on how to improve supplier relationship management.

To read about supply chain visibility, check out our comprehensive article.

2. Leverage digital solutions

Digital solutions are revolutionizing the logistics sector by making it more efficient, resilient, and sustainable.

Leverage automation

  • The logistics automation market will reach around $90 billion by 2024. 
  • Warehouse automation is implemented through robots that automate error-prone and repetitive tasks such as inventory scanning, sorting goods, cleaning, real-time inventory data sharing, etc.
  • AI also has immense implications for logistics automation. Learn more here.
  • Autonomous vehicles are also of great benefit to the logistics sector, and more companies are now investing in this technology to automate their transportation operations. 

Implement a transport management system

Using an integrated transport management system (TMS) can help improve logistics efficiency. TMS is a software that can enable companies to:

  • Compare third-party logistics service providers in terms of rates and services and suggest the most cost-effective routes of delivery
  • Link order and warehouse management systems for faster order consolidation
  • Track shipments and deliveries in real-time
  • Create optimized distribution routes to reduce lead times

DHL offers a similar system based on advanced analytics to optimize transportation networks:

To learn more about how technologies such as AI can improve logistics operations, check out our comprehensive article.

3. Leverage pool distribution

Pool distribution refers to sending the shipment to one pool distribution center and then distributing it to the final destination in a particular region. 

The benefits of incorporating a pool distribution system are:

  • Reduced costs since a single truckload is used rather than multiple.
  • Reduced lead time because there are no transfers in the channel.
  • Higher efficiency since only one shipment is managed rather than multiple
  • Less handling costs since the shipment doesn’t change many hands and goes directly to the pool center.

The following figure demonstrates how pool distribution works:

Source: Zipline logistics

4. Improve sustainability

International agreements such as the Paris Agreement have set decarbonization targets for the logistics sector since it’s one of the largest contributors to greenhouse gas (GHG) emissions. Improving sustainability has become an important part of logistics optimization.

Find sustainable routes

A route optimization software uses data analytics to devise optimal routes for shipments in terms of sustainability, cost-effectiveness, and agility.

See how re-routing can help reduce emissions in the sea freight sector.

Improve driver behavior

Studies show that driving behavior has a significant impact on fuel consumption. Providing sufficient training to the logistics fleet about efficiency and safe driving can be beneficial in reducing fuel costs, GHG emissions, and the risk of accidents.

Using IoT and telematics can provide data on the driving behavior of truck drivers and can help suggest ways of improvement.

Green logistics is now becoming more of a competitive advantage as supply chain leaders seek more sustainable distribution partners.

Forbes explains 3 ways to improve logistics sustainability:

  1. Harness data analytics for end-to-end supply chain traceability and visibility.
  2. Leverage pop-up warehouses which can be set up close to the customer to reduce last-mile-delivery emissions
  3. Use alternative fuels such as solar or wind energy. Additionally, if the fleet consists of diesel-powered trucks, try switching to gasoline trucks since they have lower carbon emissions.

Further reading

If you have any questions, feel free to contact us:

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Cem Dilmegani
Principal Analyst
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Shehmir Javaid
Shehmir Javaid is an industry analyst in AIMultiple. He has a background in logistics and supply chain technology research. He completed his MSc in logistics and operations management and Bachelor's in international business administration From Cardiff University UK.

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