IoT and the Edge

IoT, Platforms and Analytics: 3 Driving Forces for Logistics BPO Services

logistics BPO IoT
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Today, enterprises are outsourcing their logistics business process services primarily to lower operating costs and transportation costs, which is not an atypical benefit sought after when outsourcing any business function. Beyond the main driver of cost savings, enterprises are challenged to manage customer expectations by improving product delivery and order visibility, managing risk and compliance, and continuously meeting SLA’s.

Based on 2018 IDC data, almost 20% of logistics BPO buyers also indicate they are challenged by process standardization and automation. With the advent of emerging technologies from software automation to analytics to blockchain, enterprises are beginning to see the value of these technologies to drive efficiencies and innovation within their enterprise.

Solid Demand for IoT, Platforms and Analytics for Logistics BPO Services

Enterprises who are already outsourcing their logistics BPO services indicate they are furthest along with implementing IoT, platforms/software and analytics and plan to dedicate most of their investments to IoT in the next 3-5 years. IoT is being leveraged to manage multiple functions from monitoring the status of inventory or flow of materials, for product track and trace to monitoring the status of assets and resources.

In alignment with buyers’ main goal of outsourcing their logistics BPO services to reduce costs, buyers have implemented analytics mostly for transportation cost analysis and warehouse operating cost analysis. More specialized types of analytics, including perfect order rate analysis or maverick spend analysis, are less important to buyers.

Robotics and software automation/cognitive are two technologies where buyers indicate they are more in a “planning phase” for logistics BPO services as compared to other technologies. However, these areas have been indicated as key areas of investment in the upcoming years. 2018 IDC data shows while some enterprises have adopted blockchain logistics services, 25% of enterprises show they are not currently planning for it or planning to invest heavily in the next 3-5 years. Instances of blockchain for logistics have begun to emerge or at least be discussed in areas such as anti-counterfeiting, document/contract management, track and trace, and supply chain finance.

Logistics BPO IoT

Source: IDC Logistics BPO Demand Side Survey, 2018, N=407

Desire for a Single Platform Solution

The attractiveness of logistics platforms is their technological advancements with the use cloud/SaaS, automation, and analytics, particularly in an industry that has been slower to adopt technology platforms. The emergence of logistics platforms and start-ups over the past few years has begun to address this gap by leveraging cloud-/software as a service (SaaS)-based technologies backed by business intelligence and crowdsourced models to connect end users directly with logistics services. Many of these platforms act as an open marketplace connecting B2C and B2B firms for specific logistics services, whether it’s for local deliveries, storage needs, or domestic and international freight-forwarding services, which has essentially decentralized many of the logistics functions.

In thinking of the capabilities and functions provided by such platforms, logistics BPO buyers would want to integrate certain types of platforms into a single solution to deliver efficiencies for logistics business process outsourcing services. Specifically, a combination of freight forwarding and fleet management for trucking is most desirable, while the integration of a local parcel/express delivery platform with other platforms is least desirable.

IDC believes that buyers would also benefit from a platform that provides automated freight quoting and shipping, the ability to track loads, drive behaviors, the status of vehicles, and the management of human resources and finance functions like invoice generation and payroll management.

Recommendations for Service Providers

Cloud platforms are the future for logistics BPO and BPO in general, and are the most critical technology for logistics business process outsourcing (BPO) providers to have to be successful in today’s market.  Cloud platforms and Business Process as a Service (BPaaS) solutions will enable streamlined deployment of processes with plug and play solutions in a highly standardized/automated environment backed by intelligent automation and analytics – all of which encompasses the needs of buyers today, as previously stated.

Providers should invest in vertically integrated (which manage both process and cloud-enabled IT and applications) and specialized BPaaS solutions (where one provider manages the process and a second provider manages cloud-enabled IT services in the form of SaaS) and consider partnerships or alliances with new logistics platforms/startups that may have their own SaaS solutions or specialize in an area (new or growing) critical to their suite of capabilities.

Learn how to make the SaaS and cloud-enabled technology solution purchasing process successful for your organization; download IDC’s “SaaS and Cloud-Enabled Solution Selection Checklist” now for a step-by-step guide through the entire purchasing process.

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