What is Logistics Intelligence?

by | Apr 12, 2022

6 min read

Every business wants to offer fast delivery, constant product availability, and excellent customer service. However, economic and logistical limitations or unforeseen circumstances keep them from efficiently meeting customer demands. Fortunately, new technologies like artificial intelligence have taken off the pressure by enabling businesses to make fast decisions using real-time data.

Businesses are coming to this realization, as Transport Intelligence’s latest report found that the global eCommerce logistics market grew 19.9% in 2021.

If you’re looking to decrease your expenditures, start by optimizing your shipping costs. In this article, we’ll take a look at what logistics intelligence is and how logistics intelligence is helping companies make better business decisions to increase profitability.

Why Do Businesses Use Logistics Intelligence?

  • Demand Forecasting: Logistics intelligence helps companies predict future needs and reduce the risks of inventory shortage when there is peak demand. LI software enables managers to make efficient warehouse management decisions, resulting in improved allocation of resources and more opportunities for expansion.
  • Warehouse Automation: Logistics intelligence is helping automate warehousing operations from procurement to last mile delivery. For example, AI robots pick and move cargo through the warehouse and load and unload pallets. Similarly, machine learning uses algorithms to continuously learn from data and make better warehousing decisions related to inventory replenishment.
  • Customer Service: Companies are using logistics intelligence to reinvent the customer experience by automating end-to-end customer communication. Many logistics tools for eCommerce help companies track how long goods are taking to get to their customers to help them set realistic expectations.
  • ERP (Enterprise Resource Planning): Businesses use AI ERP software to plan supply chain and distribution logistics, and identify travel routes and warehouses that maximize efficiency. It also helps managers autonomously and effectively manage human resources, workflows, and labor performance.
  • Route Optimization: Businesses use AI logistics software to collect and analyze large amounts of data in real-time to accurately determine the best routes for drivers. Logistics intelligence also uses historic data to consistently optimize the route for the drive, and even identify the nearest place to rest, refuel, eat, or park.
  • Marketing and Sales: Businesses use AI-based logistics software to increase profitability and improve operational efficiency. For example, machine learning algorithms enable retailers to make sales forecasts in real-time, helping them hold stock in optimal quantities and reduce carrying costs.

How Does Artificial Intelligence (AI) Play a Role in Logistics Intelligence?

Logistics intelligence combines logistics with AI to automate processes, allowing companies to eliminate manual errors, save time, and cut operating costs. For example, Amazon’s automated warehouses, Starship’s last mile delivery robots, and Einride’s autonomous trucks are quickly replacing manual jobs that don’t require analytical and complex skills.

How Does Logistics Intelligence Work?

Logistics intelligence uses AI prediction technology to learn from data collected from each step of the supply chain. This data is consistently analyzed to identify patterns using Machine Learning (ML) algorithms.

AI logistics tools help businesses to better predict demand, manage assets and facilities, and optimize delivery routes. Robots are being used to perform manual tasks such as tracking, identifying, sorting, and moving cargo, improving the workforce’s productivity.

Recommended Strategies for Logistics Management

Here are 5 logistics management strategies that can help you plan, implement, and maintain the efficiency of warehousing and flow of goods and information in your business.

1. Track supply chain expenditure to reduce shipping costs.

A logistics automation tool gives you access to data about shipping costs, logistics operations, and freight from a central platform. It allows all stakeholders and decision-makers to get a quick overview of transportation costs, operations, and metrics.

Moreover, you’ll be able to use historic data to routinely review carrier costs, evaluate and optimize operations, and compare and contrast business decisions to identify ways to lower costs.

For example, you may notice that you’re not fully utilizing existing assets (such as facilities and trucks), or identifying costly and unsustainable routes.

Your logistics automation tool can help you keep track of assets, manage delivery and route schedules, and utilize the workforce based on demand. You’ll also be able to stay on top of transport management, logistics operations, and make informed logistics decisions.

2. Improve delivery accuracy and increase shipping speed.

Delivering your products to your customers is the lifeblood of your business. Your inventory management strategy should take into account issues that can affect your profits such as changing demand, overstocking, increasing competition, and inventory loss.

For example, inaccuracies in shipping (e.g. due to wrong delivery address) result in failed deliveries and increased fuel costs.

A centralized logistics management software stores customer information, product details, supply chain status, and delivery conditions in one place. As a result, if a change is made in the data, it is updated across all information touchpoints. This ensures that everyone including customers, delivery drivers, and warehouse managers always have access to updated order information.

3. Thoroughly track reverse logistics to increase customer lifetime value.

Reverse logistics (the journey of a returned package back to the warehouse) can negatively affect the profitability of a business as it is difficult to predict and includes hidden costs such as labor and disposal costs. Moreover, most companies bear this cost and offer free returns to keep customers happy.

Here are a few questions to ask yourself before you start tracking reverse logistics:

  • Which items are most often returned and what are the reasons behind the return?
  • What is the cost of processing returns per item (including labor, handling, transport, etc.)?
  • Can you resell the items at the original price?

A logistics tracking software can help you speed up returns and reduce returns management costs. It can also help you keep your customers updated about the status of their return. Optimizing your reverse logistics can help you gain customer trust and maintain brand reputation.

4. Utilize warehouse management systems.

A warehouse management system (WMS) enables you to reduce overall workload and increase productivity. It also gives you a quick overview of how much inventory you’re holding at a time and location.

The purpose of a WMS is to ensure that packages are accurately labeled, properly packed, stored, and shipped out of the warehouse. Moreover, it can handle order fulfillment operations from the warehouse to end customers.

Additionally, you can quickly calculate warehouse KPIs like inventory to sales ratio, space utilization, inventory turnover, and picking cycle time.

Warehouse management is essential for the smooth running of a company because it offers accuracy and efficiency to the supply chain.

5. Track freight and supply management data to save on costs.

There are benefits of tracking freight management data and specific freight management strategies. A Gartner study says that by 2023, 50% of global leading enterprises will have invested in a transportation solution with real-time visibility because businesses are realizing that evaluating your data is key.

Collecting data and processing it in one central platform enables all stakeholders to keep track of product status metrics. Accurate data gives comprehensive visibility into a business’s supply chain operations and improves decision-making.

Moreover, it is essential for shippers and eCommerce companies to take ownership of their data and not rely on carrier service providers for reports and order statuses. This helps managers get real-time information about logistics processes, enabling them to plan and streamline operations in an efficient manner.

Let Sifted Logistics Intelligence Take Your Business to the Next Level

Embracing big data and artificial intelligence can help companies improve their supply chain management. Logistics intelligence gives an advantage in making informed decisions and increasing profitability.

Sifted Logistics Intelligence tools give you complete visibility into your shipping data in one place. It simplifies logistics management and helps you optimize costs using AI-powered demand forecasting.

Ready to optimize your logistics operations? Get a free demo from Sifted!

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