The Role of Big Data and Data-Driven Decisions in Logistics

Big data and data-driven decisions in logistics have a considerable impact on the entire industry. We have seen substantial changes in logistics due to the recent pandemic. Companies all around the world toiled to keep their businesses running and to deliver quality service to their customers. Even today, some sectors in logistics struggle with finding employees, managing the increasing costs of operations, and adapting to the changes in the market. Big data is crucial because it allows managers to make data-driven decisions and improve their processes. Let’s see how you can use big data in logistics and help the business to flourish.

What is big data in logistics, and why is it useful?

Big data includes large volumes of information regarding a specific topic. It comes from various online resources and industry sources, and you can analyse it using powerful monitoring tools, to improve various business processes. The data-driven decisions in logistics are helpful because they can:

• Reduce the communication gap between manufacturers and suppliers
• Increase efficiency of operations
• Boost productivity through performance monitoring

These are just some examples of how big data can affect the logistics industry. Many strategies exist to accomplish these goals, so let’s see what they are. At the end of this article, you should understand enough about the importance of big data and how you can use it to make better business decisions.

Demand forecasting

As we mentioned, the recent pandemic has seriously affected the demand on the market. Some companies had a drop in demand, while others had a significant increase and couldn’t deliver. Shifts in the market and the change in customer behavior affect the demand.

This is where big data can be instrumental. You can analyse it to create a demand forecast for the next period. This will help you to understand the level of demand, and re-stock inventory levels, ensure you are always at your capacity and have enough staff to meet the demands.

To do this, you first need to collect and analyse historical data. It will show you customer behavior and demand fluctuations in the past. You should analyse that data to identify patterns and define the most common drivers of demand. The next step would be to create a model to predict future demand based on previous experiences.

It is also important to compare the success of the model with the actual demand to see if it is accurate. If necessary, update the model to reflect necessary changes and increase accuracy.

Optimise delivery routes

Another vital step where big data can be useful is route optimisation. Let’s imagine you have a fleet of 50 trucks that make deliveries every day. Trucks cover around 300 miles per day. A heavy-duty truck consumes a gallon every six miles, which comes to approximately 50 gallons per day. With the current prices, you will spend around $150 on each truck every day. That is daily spending of $7500 on gasoline only. Now, imagine that you optimise routes and reduce the mileage by 10%. You could save a tremendous amount of money. This is just one example of how route optimisation can help to improve the business.

If you decide to invest in route optimisation, you are also investing in your company’s future. With that in mind, use analytics to research the necessary data and look for any potential strategy to improve this process.

Improve inventory management

Inventory management is another sector that plays a crucial role in the logistics industry. A failure to accurately manage your inventory will create gaps in communication and increase the delivery time. Here is where you can use big data and data-driven logistics decisions and make relevant changes.

As we have mentioned, it is necessary to analyse historical data to understand how the demand affects your inventory levels. Inaccurate data can lead to waste accumulation, increased expenses, and seriously affect the delivery deadlines.

Real-time tracking

GPS, RFID, and similar tracking technologies allow you to collect real-time data. This will give you enough visibility to improve various processes in the logistics industry. You can know the location of the shipment, and its status, track traffic jams to optimise routes, and much more. This real-time tracking substantially affects last-mile delivery and, as such, plays a big role in any logistics company.

Companies use this strategy to reduce many risks, such as damaged or lost goods, undelivered packages, delivery delays, and much more. Just make sure to define all the metrics you want to track and pick a platform that will fit your needs and budget. There are many transportation and logistics technology trends to watch, and the most important trends to watch this year are connected with real-time tracking.

Monitor performance

The best way to improve any business is to monitor the performance of various processes and make them better. When it comes to the logistics industry, there are several areas where you could look for opportunities for improvement.

Monitoring transportation processes is important for transportation cost reduction and on-time delivery. Warehouse performance optimisation will lower warehousing costs and help with inventory management. You can also monitor supplier performance to ensure on-time deliveries, lower costs, reliability, and much more.

You can also monitor customer service. This is a big part of the process because you want to know the customer feedback. That is the best way to improve the quality of service and build a group of loyal customers.

Finally, you can also monitor the sustainability of your business. All logistics companies should strive to reduce their carbon footprint and encourage using eco-friendly materials, reducing waste accumulation. That is all necessary to build a positive brand image and impact the social community in your area.

How to use big data and data-driven decisions in logistics

The logistics industry is one of the most critical sectors in the world. Logistics companies are connected to all other industries, and without them, a majority of services would not be able to survive. It is crucial that all companies rely on big data and data-driven decisions in logistics and improve their processes and customer service.

With such importance placed on successful logistics operations within the supply chain, The Institute of Supply Chain Management (IoSCM) we offer a range of professional qualifications in Logistics and Transport, each carefully designed to match modern businesses’ needs and upskill professionals at all stages of their Logistics Careers.

Our Logistics and Transport Industry expert Tutors are unrivalled worldwide, with years of experience in the industry, so they are ideally placed to guide you through every stage of your online distance learning programme and prepare you for the next steps in your career. Speak with a member of our team today to find out how we can help you. Call 0800 1422 522.