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Cost-Cutting Benefits of Automating Your Logistics

Many businesses are implementing or considering implementing automation in their daily operations. The logistics industry is not an exception either.

According to a recent survey by Marketsandmarkets,

“The logistics automation market is projected to reach a valuation of USD 80.64 billion.”

This survey is compelling proof that logistics automation will witness an upsurge and will thrive in the coming days. Besides, McKinsey Global Institute says that the logistics industry has the third-highest potential for automation.

The above stats are not overwhelming but just a reflection of the actual market potential of automation. In this blog, let’s have a detailed overview on how Logistics Automation plays a key role in reducing operational and transportational cost. Before delving into the topic, let’s discuss the challenges with manual logistics operations.

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Challenges with Manual Logistics Operations

From the list of endless challenges, here are the common challenges that logistics industries face with their operations:

1. Huge Resource Results in Increased Operational Cost

With resource-intensive logistics operations, it takes a large amount of time and labor to carry-out repetitive and redundant tasks. Due to this, there will be no time to focus on growth. Otherwise, it involves a greater workforce to make time for growth-focused activities. Correspondingly, involving a greater workforce will result in increased operational costs.

2. Poor Structure Leads to Decline in Revenue

Logistics industry operates in a shattered process as it involves huge number of stake holders and middlemen involved. This process of decentralization makes it difficult for the logistics businesses to control the manual operations effectively. It increases the chances of higher errors in operations, wasted resources, poor supply chain coordination, and so on. This automatically results in a decline of revenue.

3. Higher Shipping Expenses Due to Inefficiency

Due to improper manual planning process, there are chances of inefficient route planning which leads to increased fuel consumption and extended delivery time. And manual methods for measuring and weighing shipments might have the chances of overestimation or underestimation. Also, manually entering information like shipping details, addresses, and other information might lead to errors on entry like incorrect shipments, delays, and additional shipping costs.

4. Inadequate tracking visibility leads to significant losses

Without proper tracking visibility, more human resources are required to manually track shipments, manage customer inquiries, and resolve issues. This will increase the administrative expenses of the company. Besides, with manual logistics operations, identifying and addressing issues that affect delivery schedules, such as traffic, weather, or operational disruptions becomes tedious. This has more chances of missed delays which increases the chance of losing potential customers.

Now, do you think it is about ineffective manual process is hindering logistics operations growth? Nah! The actual problem is not implementing automation for logistics. Hereby, let’s have a look at cost-saving benefits of automation.

What is Logistics Automation?

Logistics automation is a tool that helps logistics companies to streamline their efficiency by automating repetitive, routine, and tedious tasks. With this, logistics automation tool helps logistics organizations to focus on important tasks oriented to the growth of the company.

Examples of logistics automation include tasks like route optimization, real-time tracking, automated invoice processing, inventory management automation, and so on.

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Benefits of Implementing Logistics Process Automation

1. Faster and Accurate Document Processing

Automating document processing helps to enhance the speed and accuracy of consequent processes. The faster the document processing gets over, sooner the shipment process will be initiated and reaches the destination on time. Also, it eliminates the excessive human resources involved in this process. By this way, it reduces the labor cost as well.

‍2. Real-Time Tracking and Visibility

‍Automated real-time tracking helps to monitor the shipment details, provide instant updates on location and status, and better inventory management. With advanced options like dynamic route optimization based on current traffic conditions and delays, logistics companies can avoid congested routes and unexpected detours. This helps to save the cost of excessive fuel consumption and improves delivery efficiency.

3. Better Customer Service

Automation tool for logistics is crafted with features to handle customer service operations like handling inquiries, and processing returns. This prompt action helps to solve the issue then & there and provides overall delighted customer experience. Also with automation, logistics companies can provide a personalized experience to customers by analyzing the data of their past inquiries and preferences. For any business including logistics, providing a personalized experience to customers makes them feel special, valued, and increases customer loyalty as well. This automatically paves a way to retain existing customers.

4. Improved Operational Efficiency & Inventory Management

‍Logistics automation plays a major role in streamlining the way the logistics businesses operate. It substantially reduces operational Costs and helps to make best use out of existing resources instead of needing to hire new employees. It also helps to automate the manual strains of handling inventory-oriented tasks like order processing, route planning, and efficient stock management. With this, logistics companies can effectively prevent the scenarios of stockouts or overstock which obviously result in lost sales on higher storage costs.

An Example Use Case for Logistics automation

Scenario

A prominent logistics company handles numerous invoices monthly that are received from various sources like suppliers, carriers, and service providers. Its manual invoice processing system involves massive Paperworks and data entry that was significantly leading to errors, delays, along with higher operational costs

Solution

1. OCR Technology

Implementing OCR technology to automatically scan and digitize paper and PDF invoices. The OCR process extracts key information, including invoice numbers, dates, financial data, and items.

Making use of AI for handling varied invoice formats and improving data extraction accuracy. AI algorithms help to derive historical data and enhance data recognition process over time.

2. Three-Way Matching

Integrating automated three-way matching to automatically match invoices with Purchase Order (PO) and goods receipts. The system checks for deviations in quantities, prices, and terms.

The system flags if there are any mismatches or deviations with invoice.
Then, it generates alerts for review and resolution. This process ensures only accurate invoices are processed for payment.

3. Digital Approval

Digital approval is a workflow process where invoices are sent to the different users who may be set by the rules and thresholds with reference to the stakeholders defined. Approvers will receive a notification for review before they send the approved invoices.

Besides, they can also specify the degree of approval and the level of access with respect to their duties within the organization. It means that the payments can be authorized only by the right people.

Take a look on a CASE STUDY for a similar use case mentioned above.

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End Note

The future of logistics has started evolving with automation. Even though it is not possible to replace human works completely, there are lots of advancements that are continuously making progress in logistics with the help of automation. Hence, we cannot ignore the benefits of automation entirely. Day-day, there are many smart features that are being introduced to ease the logistics operations of small, medium, and large businesses.

So, if you are in search of the best way to save transportational and operational costs, then opt for an ideal Logistics Automation Solution. Every logistics business deserves to implement automation solutions to keep themselves updated with changing trends and outpace competition. Schedule a Demo with us to know more about this impactful logistics automation solution!