According to business research firm Gartner, the global logistics software market is growing at a faster rate with each passing year.
From 2012 to 2013, for example, the supply chain management (SCM) software market grew by 7.3% to $8.96 billion. In 2014, it grew by 10.8% to $9.92 billion. By the end of 2017, the SCM software market is expected to be worth over $13 billion—an 11% jump from 2016.
This growth shows no signs of stopping. Gartner expects that the SCM software market will be worth more than $19 billion by 2021. That’s an average annual growth of 11.5% over the next four years.
Silicon Valley takes an interest
The increasing role of software in logistics has drawn more investment from Silicon Valley venture capital firms like Andreessen Horowitz and New Enterprise Associates. As a result, more than 90% of global investments in logistics start-ups are made in the U.S. and Asia, with only 5% are made in Europe.
Streamlining the industry
The growth of the software market is just one part of the overall trend toward automation in the logistics industry.
Logistics software now handles organizational tasks that were once planned with pen and paper. In warehouses, human pickers are being replaced by robots. On the road, human drivers will soon be replaced by autonomous vehicles.
It’s easy to see why these changes are taking place. Software doesn’t make data entry errors. Robots don’t get tired and slow down after working in a warehouse for a few hours. Autonomous vehicles don’t stop at a coffee shop for a snack when they should be working.
Software and automation will continue to make the logistics industry more efficient as a whole. There will be fewer miscommunications, fewer deadlines missed, fewer mistakes that slow things down and cost people money.
Knowledge is power
In addition to improving efficiency, logistics software provides businesses with more insight about their operations. For example, GPS tracking technology collects information about a driver’s behavior. Businesses can use this information to determine whether a particular gas saving technique is working or not.
GPS tracking data is also useful for evaluating employee performance. Before, drivers had a lot of freedom once they were on the road and out of sight. They might be taking unsanctioned breaks or even running personal errands when they’re supposed to be working. You can’t see them, so how do you know?
Such waste was incredibly expensive. It forced logistics companies to pay more for fuel and wages. But now, companies can use tracking tools to confirm that their drivers are sticking to their routes and staying on schedule. You can squeeze more value out of every gallon of gas pumped and hour logged.
The beauty of GPS technology is that you don’t even need to look at tracking data for it to have an effect on your drivers. When drivers know they’re being watching, they’re automatically more productive.
Customers no longer in the dark
Before the logistics software boom, customers were in the dark. They had to wait for their orders to arrive. In most cases, they wouldn’t even know if there was going to be a delay until the arrival date had already passed.
GPS tracking data doesn’t just benefit businesses. This data can be shared with customers, so they can see where their orders are in real-time. If there’s going to be a delay, they usually know about it immediately. Tracking software takes the mystery out of shipping.
From blue collar to high tech
The rise of logistics software is changing the educational demographics of workers in the industry. Manual labor is less needed, while tech skills are becoming an absolute necessity. Those without a college degree are finding it harder to get a job.
Logistics software also allows businesses to save money by using fewer employees to run their operations. For example, Route4Me, the route optimization program, provides companies with more efficient routes so that businesses don’t need to hire as many drivers to service their customers. That gives them more funds to dedicate to other areas of their organization.