Logistics is an industry that relies on speed, efficiency, and accuracy. The faster, better, and more precise a carrier’s truck and utilization is, the greater the financial gain. Increasing utilization will make the trips more efficient, therefore reduce prices across the value chain generating better margins for carriers, and reduced costs for shippers.
Achieving the highest possible levels of speed and efficiency is hindered by an inherent problem: paperwork. As PYMNTS.com points out in The Logistics of Paying Warehouses Electronically, “Paper throws a wrench in accounts receivable and accounts payable processes for many companies. Logistics, however, often face a few extra challenges when companies like warehouses and trucking firms accept payments. Those transactions often occur on the fly, placing the burden of real-time invoicing and payment on businesses that lack the systems to support such real-time transactions.” In light of the need for speed and meticulous process, a digital transformation is crucial.
The Benefits of digitizing payments:
Digital payments reduce the time, resources, and administration costs required to process and reconcile payments, enabling the whole value chain to run smoothly and efficiently. Mexico is an example where digitizing and centralizing payments have reduced the cost to distribute wages, pensions, and social welfare by 3.3 percent—or nearly US $1.27 billion (BetterThanCash Alliance writing in Why Digital Payments?).
In addition, digital payments improve the quality of payments by minimizing the risk of incorrect or delayed payments. This helps in building and maintaining successful relationships and trust between business partners.
On the other hand, employees would have more time to focus on key and strategic assignments rather than doing tedious manual work while sorting through stacks of paperwork.
Audit and Control
Digital payments are processed through secured, transparent, and traceable gateways which provides way more security over the payments resulting in much lower risk of fraud and theft. This also assures timely and accurate payments to carriers which minimize potential errors.
Financial Management and Decision Making
Using digital payments not only reduces errors, but it also improves real-time visibility and reporting which allows making the right data-driven decisions at the right time.
Insight on Challenges that organizations might face:
Company-wide Strategies and Mindset
Not all companies treat automation and digital transformation as part of company-wide objectives. The need for an automation mindset should be embedded in an entities culture. Efficiency and productivity are key success factors for all businesses looking for a healthy bottom line and higher ROI, but the highest levels of productivity are not possible without automation and digital transformation.
At Trella, we always ask ourselves “Is it the most efficient/scalable way to get this done?” Most of the time the answer to that question is automation. We are trying to build and capitalize on that.
Technology makes things easier, while automation helps companies and businesses achieve their goals by facilitating their processes.
Some organizations lack the flexibility to adapt to new developments. The struggle of centralization versus localization in an organizations culture creates either a quick or sluggish process. That results in the lack of the agility to adapt to new technologies.
“The digital transformation is a substantial initiative and may require changes in more than your employees’ daily routines. This may mean changing roles, changing departments, or an overhaul of your organizational structure”. Jabil (a global manufacturing partner combining expertise in engineering, design & supply chain for the world’s biggest brands). We recognize that automation requires effort in its initial phases, but promises great return in time and money in the long run.
Budget and Resource Hurdles
Digital transformation may require investments in the company, people, and sometimes stakeholders. Some organizations could possibly face budget limitations that can restrict digital transformation plans. It is however a crucial element in determining long-term goals in efficiency and cost-cutting. Organizations do have to study the estimated ROI of digitizing as it is critical for developing project plans while considering the company’s affordability to avoid any cash flow or financial issues.
Digitizing institutions and industries is vital for lasting results. It utilizes quick and dependable technology to ease processes and create secure and transparent platforms for data. The dependence on technology and automation is growing across businesses, and it is the medium for an organizations future.
With a mindset of continuous improvement and innovation, companies should discover tactics and locate approaches to overcome the challenges, adapt to the changing trends, and reap the rewards.
Omar El Sheikh | Head Of Finance at Trella