Digital market entrants have disrupted a range of global industries, from Airbnb in the hotel industry to Amazon in retail. According to a new report, nine out of ten logistics companies say that they believe that their industry will be affected by digitalisation, of which more than half expect it to be completely transformed. Despite its importance, the majority of respondents acknowledge that they currently lack the know-how for implementation of digital technologies and models.
Digitalisation has, in a number of industries, resulted in considerable disruption. The travel industry in Germany, for instance, has seen the number of travel agencies decline by one third over ten years, while online booking sites, such as Expedia and Booking.com have, in that time, boomed – Expedia’s revenues, for instance, increased by more than 100% over a seven-year period.
Disruption from new technologies, as well as simplification through online business models, is also expected to affect a range of other industries, including logistics. In a new report by Roland Berger, the authors surveyed industry executives about the effects they expect digitalisation will have on their industry, as well as key risks and opportunities. The survey involved around 270 respondents from across the logistics industry.
The vast majority of respondents expect digitalisation to have a considerable impact on their industry. 36% of respondents say that technologies will partly transform the way in which they do business, while 59% expects their industry to be completely transformed by digitalisation. Around 4% of respondents did not know, while 1% expects no change at all from digitalisation.
The biggest changes expected are related to market transparency and collaboration between participants in different (new) market that open up through the development of new digital propositions and business models.
Respondents were asked to consider different ways in which digitalisation is expected to threaten their business model. The biggest risk*, in so far as it was scored 1 by the most respondents (112), is data security breaches. 67 respondents ranked it 2, while 59 ranked it 3. The issue was cited a problem across all industries and sectors responding.
Increased complexity of competition came in second, cited a 1 by 60 respondents, and a 2 by 99 respondents. Increased price transparency was cited a 1 by 60 respondents and a 2 by 90 respondents. Increased quality transparency was considered a big risk by 29 respondents.
The current business model becoming irrelevant was cited as a big risk by 36 respondents, while a further 57 said it was a moderate risk. A large number of respondents (92) said it was no risk at all.
Respondents were also asked to consider obstacles that may arise when cooperating with different market segments. The loss of sensitive data was cited as the biggest risk when cooperating with competitors, cited by 89% of respondents, while 60% worry about such a loss through cooperation with non-logistics companies. The loss of competitive advantage was cited by 86% of respondents in relation to cooperation with competitors and 59% in relation to cooperation with non-logistics companies.
Bad technical interfaces were cited as an issue by 18% in relation to cooperation with a competitor, 24% in relation to non-logistics companies and 59% in relation to authorities. In terms of partner unreliability, non-logistics companies were cited as the biggest risk, by 31% of respondents. No added value of cooperation was cited by 26% of respondents for working with competitors, 47% for working with non-logistics companies and 81% for authorities.
Respondents were also asked to rank the challenges they face with digital implementation. A 1 representing a ‘very big challenge’ while a 4 representing ‘no challenge’. A lack of knowhow was the cited as a very big challenge by 77 respondents, while a 2 by 130 respondents – both were most commonly reported by larger companies. A lack of shareholder support took second spot, with 44 citing the issue as a 1 and 117 as a 2. A lack of strategic decision making was cited by 46 respondents as a very big challenge, while 106 cited as a 2.
Small companies, the report notes, were predominantly affected by a lack of resources – cited by 43 respondents as a very big challenge and 64 as a moderate challenge. A lack of support from management/employees was cited by 41 respondents as a very big challenge and by 64 as a 2.
* A score of 1 represents a big risk, while a 4 represents no risk.