Digital has reshaped the landscape in every industry, and transportation and distribution is no exception. Whether you manage a fleet of vehicles, operate a call center or service vending machines, digital technologies keep you in the race.

Customer expectations have increased. As the likes of Amazon offer new solutions for last-mile delivery, customers grow increasingly accustomed to getting their goods next day, if not same day. And that has consequences for your commercial clients — they’re now just as demanding for quick delivery.

Digital enables transportation and distribution organizations to meet these expectations by driving efficiencies across the whole supply chain — from order to fulfilment.

But digital transformation is a long journey, and research we commissioned from Forrester Consulting shows transportation and distribution companies still have some way to go. Just 10% of business leaders in the sector say they have “fully implemented” digital strategies, compared to 25% across all sectors. And only 6% of transportation and distribution businesses say the maturity of their digital strategy is “excellent”, compared with 9% across all sectors1.

In this document, we’ll explore how digital solutions, like cloud, mobile and the internet of things (IoT), fit into the major strategic priorities of transportation and distribution companies. From there, we’ll look at why it’s critical that these initiatives are supported by robust and agile networks, and what steps you can take to ensure you’re ready for the digital age.

The digital future for transportation and distribution.

Digital transformation drives efficiencies across the whole supply chain.

Leaders in transportation and distribution say their top three reasons for digital investments are to win new customers, reduce costs and drive revenue growth1.

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Digital transformation powers your business — transportation and distribution

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Deliver on customer expectations

Customer expectations are higher than ever — and digital lets you meet them. Digital provides consumers with the fast, easy, more personalized self-service options they want. They can schedule a delivery online or from their mobile. They can track the progress of their order in near real-time. They can pay at vending machines with their mobiles. And they get better service from contact center staff with all the information they need at their fingertips.

The latest fleet management solutions can improve delivery times and reduce errors. Using IoT devices, you can collect near real-time data and track the exact location of your cargo and drivers. With that information, you can route deliveries more efficiently. You can even monitor the condition of the goods you transport. That means you’ll make deliveries at the right time, in the right place— and exceed customer expectations.

75%of leaders in transportation and distribution say better customer experience is a “critical” or “high” priority1.

Why digital matters to your business.

How can you win new customers, increase revenue, control costs and mitigate risk? Digital

provides the answers for companies in all segments of your sector.

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Improve workforce productivity

The leading organizations in your sector are turning to the latest digital solutions to supply greater operational efficiencies at every stage in the supply chain. 29% of transportation and distribution companies have already implemented IoT solutions; 52% plan to implement them. And their main objective in doing so (76% of respondents) is to facilitate collaboration between employees, partners, suppliers and customers. IoT and mobile solutions reduce the friction in every business process1.

Digital is revolutionizing inventory management. In the warehouse, digital analytics enable you to pick and pack orders efficiently. Warehouse management systems identify where stock should be stored. And they direct pickers to take the oldest produce first — and that’s not just important for perishable goods. Improved monitoring means you can reduce picking errors, meaning your customers get exactly what they’ve ordered.

If you operate vending machines, digital enables you to monitor stock levels and condition. That means field workers can see exactly what products need to be replenished and where, and can cut out wasted routine checks. Your marketing teams gain an invaluable near real-time insight into which products are most popular. And customers don’t face the frustration of the products they want not being available.

Digital can even help you face one of the biggest issues facing your sector — a shortage of drivers — by allowing you to route deliveries more efficiently. And in the future, digital technology may enable driverless deliveries to become a reality.

To deliver the latest innovations, many transportation and distribution companies will need to implement major transformations of legacy systems. Companies in your sector are already acting. 52% of business leaders say they’ve already implemented cloud, and a further 39% plan to implement it1.

Secure your cargo

Much of the digital transformation in transportation and distribution is being driven by regulation and the need for oversight. All segments of transportation and distribution are being affected, but perhaps none more so than road haulage. A number of headline-making accidents have resulted in greater enforcement by the US Department of Transportation of the rules governing the length of time drivers can be on the road. Transportation companies need a way to record drivers’ hours accurately, and to access this data easily when needed. Digital is providing the solution.

You can now monitor drivers’ performance, where they are and how fast they’re driving using IoT devices. You can even film what’s going on inside and outside the car using dashboard cameras. That means that if there is an accident, you can see who or what was at fault — and your liability could be reduced if you can show your driver reacted to conditions on the road. And the cloud means that you can easily scale up your storage needs to accommodate all the data you’re collecting, and you can access it quickly, anytime, anywhere.

You can also use IoT solutions to help maintain the physical security of the goods in your possession. In the warehouse, you can see how often cages containing high-value merchandise are accessed and spot suspicious behavior. You can protect goods in transit using anti-tamper technology. And you can see how long a driver is on the road, the length of each stop, whether any deviations were made from the planned route and how many times the trailer door was opened. Asset tracking devices are also securing cargo being transported by rail, air and sea.

On the railroads, positive train control is improving safety. In the future, we could also see drivers alerted to faulty crossing barriers via their smartphones.

84% of leaders in transport and distribution say that information security is a “critical” or “high” priority for 20151.

“87% of leaders in transportation and distribution say that revenue growth is a “critical” or “high” priority. 58% say cost reduction is a “critical” or “high” priority1.

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The unsung hero of digital: the network.Digital depends on the networkYour fleet management and warehouse management solutions rely on a robust network to deliver the efficiencies you need. Servicing your connected vending machines depends on the network — a driver who stops at a service station and receives a warm cola is a lost customer. And the IoT devices you’ve purchased to track your assets and secure your cargo against physical theft are ineffective without a robust and secure network.

You need an agile networkMost transportation and distribution companies know that, while the network is critical to the success of their digital transformations, their existing infrastructure isn’t up to the challenge. Three-quarters (75%) of leaders in these sectors say that their legacy infrastructure is a bottleneck. And they’re already acting to address this. Just over two-fifths (42%) say they’re expanding their network capacity to support digital; another 42% plan to do so soon1.

But just adding more bandwidth isn’t a sustainable option. In the digital age, networks need to be flexible enough to handle peaks and reduction in demand. They need the agility to block malicious traffic and keep critical systems running to maintain service levels. And they need to be intelligent enough to operate without the need for constant manual reconfiguration.

The good news is that there are technologies emerging, such as software defined networks (SDN) and network function virtualization (NFV), that can do just that. Transportation and distribution leaders in this sector are already aware of the benefits these technologies promise — two-thirds (67%) say SDN offers significant benefits1.

Every one of the digital initiatives that deliver value in your sector depends on the network.

Leaders in your sector recognize the importance of the network to support their business goals — almost 65% say that network forms part of their competitive advantage1.

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Culture change is a mustDigital transformation requires more than putting in place new cloud, analytics and networking solutions. It means pushing through cultural change. To support the business, IT needs to understand the business. 65% of leaders in transportation and distribution agree that the enterprise network should go beyond connectivity and align infrastructure with the needs of lines of business1.

But IT faces challenges in supporting the business. 30% of leaders in the sector say business and IT alignment is currently an issue or has been an issue. A third (33%) say it’s a problem that key staff are focused on other activities. Half of them (50%) complain there’s insufficient IT budget; and half (50%) say they have difficulty attracting staff with the necessary skills1.

So what’s the answer? Business leaders already know what needs to be done: 68% say IT staff should spend time working in the business, and 84% say IT projects need clear business-focused KPIs. 63% say that CIOs should chair a council on digital innovation, with representatives from IT and the business1.

Close business and IT alignment is key.

65of leaders in transportation and distribution say the network is an integral part of delivery on the promise of cloud1.

of leaders in transportation and distribution say the enterprise network is critical to any big data strategy1.

of leaders in transportation and distribution say that poor network quality translates into poor user experience1.

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74%

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Some of these changes will take time, but there are things you can do today that will have an immediate effect. Leading organizations in your sector are already making progress with their digital transformations.

For example, we’ve teamed with one major sourcing and distribution company as it merges four companies into one and carries out a complete refresh of its technology. We’re helping it manage its legacy systems and supporting its enterprise-side IT solution in a secure cloud infrastructure.

We’ve also helped a major US distributor reduce idle time, miles driven and idle costs. It can now access information on vehicle location easily, enabling it to route collections and deliveries more efficiently. It can even give its drivers precise information on where trailers are located in huge farm fields.

We’ve worked with another large organization to introduce GPS services so that it can locate drivers and get them back on the road in the event of a breakdown. And its drivers are alerted to faults with their vehicles, helping to improve safety on the road.

One of the world’s largest express delivery companies recently chose us to implement its global telecommunications network. We’re providing the network, telephony and conferencing services that are helping its employees collaborate and deliver a seamless service to its global customer base. We’re helping the company transform its infrastructure to improve service across the whole supply chain — from order, through tracking, to delivery.

Digital transformation is a long-term journey. If you want to stay ahead, you need to act now.

Accelerate your digital journey.

We help transportation and distribution companies transform their networks.

Verizon Networkfleet has provided fleet management solutions since 1999.

Data analytics have a big impact on supply chain and logistics.

Our full report explores the big picture of digital transformation and the future of the network.

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References1 — A commissioned study conducted by Forrester Consulting on behalf of Verizon, February 2015.

Digital transformation powers your business — transportation and distribution