What does digital transformation in transportation and logistics actually look like? Our article breaks down the key trends, challenges, and real-world strategies that can really help you stay competitive.
Highlights:
- Outdated systems often lead to delays, missed deliveries, and poor customer experience.
- The competition heats up across every niche, so staying behind on tech isn’t an option.
- Global spending on digital transformation is set to reach $4 trillion by 2027.
Many logistics businesses definitely know their systems need an upgrade, but they aren’t sure where to start. Maybe it’s the fear of interrupting operations, maybe it’s the cost, or maybe they've already had a failed attempt.
We’ve helped companies like yours go through this exact shift. When we built James, a food delivery app, or Pampr, a grocery delivery service, we helped our clients streamline their operations, overcome legacy limitations, and deliver real-time insights for smarter decisions.
And now we’re here to help you do the same — but with a custom approach that will fit your business. Contact us to find out how to make logistics digital transformation work for your operations.
In this article, we are going to share our experience on what worked, what didn’t, and how to scale smart.
Does your logistics business need a digital transformation?
These days, non-digitized businesses face increasingly more sophisticated competition, and their survival prospects are becoming shakier by the day.
Here is what Dmytro Dobrytskyi, CEO of Mind Studios, has to say on this matter:
Running a logistics or transportation business today without digitalization is similar to using a paper map in a GPS world. Of course, technically, it is quite possible, but it is unnecessarily slow, error-prone, and frustrating. Believe my experience, the sooner you digitize, the sooner you will shift from survival mode to strategic growth.
If you started noticing some bottlenecks, lost opportunities, or slowdowns, chances are you might be overdue for a change. Let’s explore some of the challenges that logistics companies may face and how digital transformation can help solve them.
You’re losing to your competitors
The first sign that your business requires some kind of change is when you start lagging behind competitors in sales, losing old clients, or not getting new ones at the old pace.
Oftentimes, it’s a clear sign that your competitors already offer something more: smoother communication, faster service, or more transparency. Such an edge can be adopted by implementing digital tools that improve customer experience and streamline operations.
Manual processes cause errors and eat up your budget
When your business is small and there aren’t all that many customers, manual transaction processing might work for a while. But when your logistics business grows, the manual approach may become a major source of delays and human errors.
Mind Studios insight: There used to be a major drawback in automated systems, which was lower flexibility compared to manual processing. But that’s in the past. Modern processing systems employ AI and custom algorithms and, if necessary, machine learning to make the process seamless, even in the most varied situations.
Your team constantly chases down assets and order statuses
Asset and operation tracking inside your business has a direct effect on how quickly and efficiently you manage orders, which, in turn, affects your customers’ experience with your company. Instead of manual bookkeeping and asset management, you can implement an automation solution as part of your logistics digital transformation.
Similar to transaction processing, a proper centralized system for internal operations and warehouse management will help your business respond more swiftly to orders, manage feedback, and react to complaints.
Your clients can’t track deliveries in real time
Real-time tracking is a must these days for a successful logistics business, although there are several ways to go with this feature. You can:
- Track your fleet vehicles
- Track each package you deliver
The former is easier to accomplish than the latter, since you’ll only need a tracking app on your drivers’ work smartphones or a GPS location tag on your vehicles. The latter will require the use of Radio Frequency Identification (RFID) sensors and a system for tracking them. Depending on the type of your logistics business, you might benefit more from the second type of app, though, as you’ll be able to track missing or misplaced items faster.
Mind Studios’ recommendation: In an app of your own, you can have more than just tracking. Consider adding digital signatures and payment-upon-delivery for faster processing and enhanced user experience.
Communication gaps slow everything down
For a non-digitized business, collaboration and communication with digitized business partners and clients will pose some challenges. Manual sorting of inquiries and invoicing can take quite a bit of time, making your partners and clients impatient and negatively impacting their experience with your business.
People these days are used to instant replies, chatbots instead of emails, and digital invoices. And one of the major parts of digital transformation in the transportation and logistics industry is replacing old communication methods with modern ones.
Additionally, a secure internal communication system will enhance your employees’ experience (when they get used to it).
You don’t need to wait until any of these problems pile up. Digital transformation in the transportation industry is not only for damage control, it’s about building a smarter and scalable future for your business. Book a free consultation with our tech team to explore how to upgrade your operations without flipping everything upside down.
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Main types of digital transformation in logistics
We call digital transformation a process, but it’s also a mindset, a set of principles to implement that will drive your organization forward for as long as it exists. It’s a process with no actual endpoint, so to speak.
This scares some business owners: a complete overhaul of known practices is always a challenge, and it's not guaranteed to be a success on the first try.
Well, we have good news for those contemplating the pros and cons of transportation and logistics digital transformation: while digital transformation is a lifelong principle, its implementation into your organization does have an end, albeit vague (it depends on how quickly your company and employees adapt to changes).
Moreover, there are several aspects to digital transformation, and you can pace yourself in prioritizing and implementing changes. Let us briefly describe each aspect.
Organizational transformation
Best fit for: Companies with teams that resist the adoption of new tools, or those that are stuck in "the way we've always done it" mode.
Arguably, the most important part of the transformation process is the change in the internal mindset. Organizational transformation is sometimes also referred to as cultural transformation, and it's exactly what it is.
To successfully execute digital transformation in your logistics company, you'll need to bring your workforce on board and implement digital solutions internally before you do it externally.
Mind Studios’ insight: Throughout our work with clients, we’ve seen companies that fail not because of tech but simply because their employees weren’t ready for it. So, before investing in software, consider investing in your people. You should train, involve them, and explain all the “why's”.
Changing the whole paradigm and the way you’ve been doing things might take time and effort. However, with the support and understanding of your employees, the success rate will go up considerably, and the transformation process will go much more smoothly as well.
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Process automation
Best fit for: Growing logistics/transportation companies that handle increasing order volumes or manage multiple internal workflows.
The second type of digital transformation in transportation & logistics is process automation. It means employing digital technologies for tasks previously managed manually. The list of possible digital technologies in logistics is quite long, we’ll only list the most major ones:
- Machine learning
- Robotic process automation
- Big data analytics
- APIs
The use of technology can reduce processing times, shorten cycles, and enhance business performance through data-driven decisions.
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Business model transformation
Best fit for: Companies trying to expand into new markets, offer new services, or digitize customer experiences.
When you want to do more than implement a number of digital solutions and your plan is a complete transformation in your logistics business, there’s this type. Business model transformation is a major change in the way you deliver value to customers and partners. This is where the changes to your communications go, among other things.
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Domain transformation
Best fit for: Established logistics businesses ready to scale and diversify into new industries/service categories.
Do you know how Amazon went from an online bookstore to what we know today? Or how Netflix changed its operations when streaming was only at its budding stage? This is domain transformation — the changes implemented to spread into adjacent niches and grow across domains. This will not just allow your business to grow at the moment, but also lay the groundwork for continuous growth opportunities in the future.
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Do you want to find out which transformation model will fit your needs? At Mind Studios, we have helped companies start small, automate one part of the workflow, and then scale up from there once their ROI becomes obvious. Contact us for a free consultation on this matter with our team.
How Mind Studios can help to scale logistics companies
Being on the market for quite some time, we've encountered all kinds of businesses and all kinds of projects. Digital transformation happened to be among the cases we solved for some of our transportation and logistics industry clients.
One of our recent and ongoing clients is an old company in the newspaper delivery business. Yes, you read that right — printed newspapers are still alive and in demand. However, the way they’re delivered sometimes leaves space for improvement.
The client came to us by recommendation from another of our clients, and in their business, certain internal processes begged for a piece of digitalization. Specifically, our client needed to optimize their spending on deliveries.
Upon performing analysis and discussion, we came to the conclusion that an optimal solution would be a product that could:
- Calculate the optimal route time- and distance-wise by taking into account usual traffic and possible traffic jams at the specific time of the day for delivery (via API)
- Automatically register odometer numbers on each vehicle at the start and end of the shift
- Provide data access to a supervisor
- Report to the supervisor if there is a significant difference between the forecasted distance and the actual distance
This system helps business owners to make the delivery process more transparent and efficient, lifts certain tedious tasks off the drivers, and enhances trust between employees and employers.
Among other examples of our logistics and transportation industry projects are:
- A solution for a warehouse rental to expand into digital spaces via a system similar to Airbnb but for warehouses.
- An app for an international cargo transportation company using IoT for delivery tracking.
- A dispatch module for a supply chain monitoring system in the meat industry.
Tech trends powering logistics businesses
Here are the technologies to consider when you decide to go through logistics and transportation digital transformation:
Cloud computing
Keeping your data in the cloud is cost-effective, often more secure, and, for the logistics industry, it allows profitable and simple access to real-time data.
Blockchain
Blockchain is probably the most heard about technology in the industry, as it allows faster and more secure integration of multiple systems into one platform. Some specialists call blockchain the evolution of cloud computing.
Internet of Things (IoT)
Employing barcode scanners and RFID sensors for asset and warehouse management will shorten supply cycles; using wearable health-related IoT solutions for employees will lower the number of accidents and help keep your workforce fully operational (and probably in a better mental state).
Drones and autonomous/smart vehicles
These tech solutions can perform a range of actions, from small-distance delivery (inside a warehouse or locally to customers) to surveillance and control over warehouse stock. For example, there’s a known case where drones equipped with barcode scanners collected data on items in the warehouse.
Big Data
Big Data brings high-level analytics and insights into your operations, can help predict and meet demand, adjust your supply chain, and overall enhance your business performance.
Machine learning and artificial intelligence
Most companies that have been on the market for a while have data silos — data repositories controlled by a certain department or unit. Such data is usually hard to access across units, despite it not being confidential.
By employing AI and machine learning, it’s possible to get rid of such silos, thus building more transparent operations. AI/ML, with the help of Big Data, can also efficiently build predictive models for operation efficiency.
At Mind Studios, our tech team specializes in:
- Training and adding custom machine learning models into your apps to support such features as route optimization, forecasting, or predictive maintenance.
- Integrating proprietary/third-party ML models into your systems to improve decision-making and automation.
- Integrating OpenAI APIs or services (such as GPT or Whisper) for smart natural language processing, conversational AI, as well as voice-to-text.
- Building AI-generated content systems for improved documentation, report generation, or personalized communication.
- In-depth research and optimization using open-source AI frameworks.
Computer vision
A subset of artificial intelligence and machine learning, computer vision is a technology that allows computers to adequately analyze and assess objects through photos and videos shot with a camera. Use case in logistics — virtual assessment of vehicle damage.
Natural Language Processing (NLP)
NLP is becoming widely used in eCommerce and other consumer-facing businesses as a tool for optimizing customer support via chatbots, but that’s not its only application. A logistics and transportation business can employ NLP for its invoicing and financial processes. As another part of the AI revolution, NLP-powered systems can reduce the number of errors in financial documentation.
Digital twin
The love child of Big Data, AI/ML, and cloud computing/blockchain technology, a digital twin is basically a digital copy of your business used for simulations of possible scenarios. It can be used to assess risks, build strategy, and make data-backed decisions faster.
Planning digital transformation for your logistics business
Like any other big business undertaking, digital transformation in transportation or logistics needs a plan before it’s started. In this section, we’ll try to outline the major stages in a possible roadmap to digital transformation. We have a separate article where you can read a bit more on how to create a digital transformation strategy.
So, what does a digital transformation strategy involve?
#1 Research
Research is when you make the foundation for future transformation. You need to understand your customers, your competition, the state of the market, and what solutions are applicable to your industry.
At Mind Studios, we start every transformation journey with research that helps us better understand your specific segment, strength, gaps, and tech barriers. Then, we create a detailed digital transformation roadmap that sets you up for long-term scalability and faster ROI.
#2 Analysis of your business
At this point, you’ll have to identify which of the possible solutions will benefit your business specifically. This decision will need to be based on a thorough analysis of your current processes and business performance (external and internal) as well as on your goals. This is where you’ll decide on metrics and milestones.
Here, we review your current software and workflows, identify inefficiencies, and map out opportunities. Our tech team analyzes both tech and business layers to ensure that the selected solutions 100% match your operational reality and not just trends.
#3 Thorough planning
A strong strategy without a plan is just a theory. You need a fully documented roadmap with each stage explained. Since digital transformation in a logistics company is a highly complex, prolonged, and most likely expensive process, it’s better to undergo it in stages.
For reference, you can download our Actionable Roadmap for Digital Transformation in Logistics and Transportation.
#4 Budgeting
Being a lengthy process, digital transformation is also costly. It’s also not always successful on the first try. Granted, with the help of an experienced team, the chances of success are higher, but it’s still important to consider the possibility of the process taking a significant amount of both time and money.
Take your detailed digital transformation in the logistics roadmap and plan the budget for each stage, including possible setbacks due to experiment failures. See if the budget looks like something your business can handle without cutting money from other important operations. If it is not, then consider what to prioritize to increase profits faster to be able to proceed.
#5 Digital transformation mindset
This point should probably go first, but we thought it would have more of an impact last :)
What is the mindset for digital transformation in the transportation and logistics, you might ask? First and foremost, it’s flexibility and readiness to adapt to ever-changing circumstances.
The global market in general and the logistics market specifically are undergoing rapid transformation as a whole. Being part of this means being ready to adapt at any moment. Make yourself comfortable with fast changes and prepare (psychologically, at least) to sometimes fail.
Instead of despairing, be ready to get back up and try again. And who knows, maybe your old but revitalized logistics business might just become the next Amazon.
How to measure the success of digital transformation
Success today may become failure tomorrow if you’re not careful enough. That’s why businesses have had KPIs since time immemorial. The important thing for KPIs is that they’re clear and measurable, with numbers showing changes. What KPIs are there for digital transformation in transportation and logistics?
| ROI | Distinguish between your general ROI, which includes your old operations, and the ROI brought from investment into digital logistics solutions. |
|---|---|
| Customer experience metrics | This includes new customers, customer drop, and the cost of customer acquisition. |
| Cost-benefit analysis | The difference between your investment in digital transformation solutions and the revenue generated after their implementation will help you understand which ones are worth maintaining. |
| Employee performance | If your digital transformation efforts are successful, your employees will show an increase in productivity and satisfaction. |
| Number of successfully digitized processes | As digital transformation is a gradual process, you’ll have to monitor its progress for a while. |
| Solution adoption | Be it internal (warehouse management) or external (delivery tracking app), you’ll know if intended users like it or not by running analytics. |
| Time spent on processes | Digital transformation in logistics aims to shorten cycles and reduce processing times, so comparing the before and after is a sure way to measure success. |
| Your usual business metrics | You had KPIs before launching digital transformation, and some (if not all) of them are probably among your goals for improvement through digital transformation. |
Mind Studios’ recommendation: KPIs should be set at the very beginning of digital transformation and observed throughout the whole journey. This is necessary to pluck out ineffective solutions before they eat at your budget.
Conclusion
Digital transformation is changing transportation and logistics. It is increasingly evident that old companies need to abandon their reluctance to change and embrace innovation — to scale up, to grow, to stay ahead of the curve.
From small to medium to large, businesses all over the world launch new digital initiatives, and a chunk of that will undoubtedly be in the logistics sector.
Mind Studios is well-versed in both building logistics digital solutions and performing digital transformation, so chances are, we can help dispel your doubts and find the most cost-effective way to improve your business operations.
If you're in doubt about whether your business should invest in digital transformation, overall or for some part of your organization, share your ideas and doubts with our business development consultants during a free 45-minute call.
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