We are in the middle of a digital revolution that dwarfs the industrial revolution, you’ve heard many times. But how far along is the logistics industry really? Three concepts, unfortunately used interchangeably, define this digital journey. One concept builds upon the other, in this sequence:
Digitization → Digitalization → Digital Transformation.
We are already done with digitization, that was act of converting the analog world into digital computers. Today, I think my kids’ lives are more digital than real-world, analog. All businesses are digital in some form. Some industry icons slipped into the abyss of irrelevance like Eastman Kodak and Blockbuster as a result of digitization.
Digitalization, currently in full swing, is the process of getting the data back out of the computers, mobile phones and intelligent things into the Cloud. Uber and Airbnb are examples of companies mining this data and creating tons of value. Similarly, cloud native transportation management systems can unleash significantly efficiency gains by automating information-, cargo- and cash-flows, end-to-end, from origin to destination. Digitalization 2.0 lets our friends at Google, Facebook and NSA apply machine learning, at scale, to analyze and predict every move in our digital lives. That part I’m less enthusiastic about. However, machine learning will also help expedite flows of information, cargo and cash in global supply chains.
Digital Transformation, is the mega disruptor, the storm on the horizon the effect that will shake up things. Ocean carriers are scrambling to prepare for this phase. Manufacturers are already re-saddling to become service providers owning the equipment that calls home when it’s time for replacement or repair. Through consolidation at global scale, Amazon has the potential to dramatically increase global transportation efficiency, becoming the one place where all supply- and demand chains are run and managed. Transformation is more about business than technology. Disruptors will benefit and incumbents will need to seek new opportunities.