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e-logistics or electronic logistics is a new age technology that’s redefining the eCommerce and supply chain and logistics ecosystem worldwide. E-commerce has started a new trend in the Indian logistics industry in how buyers and sellers make transactions online. With demand for online transactions rising, there was the demand for innovating technology solutions in logistics for automation, digitisation and efficiency.
Not surprisingly, most businesses today are shaping their own logistics management strategies to align to these trends including e-Logistics. On that note, let us take a closer look at the meaning of eLogistics, how it is different from traditional logistics systems, and how it is impacting supply chain management in India.
What is e-logistics?
e-Logistics (also known as eCommerce logistics) refers to the use of the internet and digital technology to manage goods transportation and distribution. As more businesses adopt digital tools to boost logistics and supply chain management operations, the definition of e-Logistics in India has expanded to include tech-led solutions for managing inventory, warehouse and storage, pickup and delivery, and customer experiences and expectations.
The meaning of eCommerce logistics, put simply, refers to taking the entire traditional logistics operations online and performing all activities digitally by using information technology.
Meaning of logistics management:
Logistics management refers to the entire process of managing the movement of goods and information, from its place of origin to rightful destination and customer/end-user, in a timely, organised manner. There are several advantages of efficient logistics management to the SCM process that ensures efficiency in goods transportation and enhancing customer experiences.
How is e-logistics different from traditional logistics systems?
If you have availed basic courier services in India a decade back, you will know that documentation and manual follow-ups was standard procedure. From filling in forms, to making payments via cheque or cash, and making calls to the courier company to track the status of goods was the regular activities.
In a B2C scenario, you would have called a local grocer and placed a grocery order (e.g., 5 packs of cornflakes) and waited for the grocer to send it to you. You would have to wait for an hour or two (or more) for the grocer to send you the goods. At times the delivery would be late, quantity ordered for would not match (i.e., out of stock items), and cash-based payments would be a hassle.
These are all examples of traditional logistics, in which the entire process is carried out manually using conventional modes of communication (i.e., telephone). There is very little information available to customer, and equally less means for the seller to provide updates. This was a primary challenge of traditional logistics (namely lack of communication/update) and this can be eliminated with eLogistics.
Unlike traditional logistics, in internet-enabled logistics (e-logistics) every participant in the logistics ecosystem is on the same page. Documentation and payments are digitised, communication is made after every necessary milestone (e.g., purchase order confirmation, out for delivery message, tracking status update etc.), data once uploaded gets auto populated, leading to greater transparency across the logistics chain.
Quite naturally, the entire process of how logistics and supply chain is managed also changes with e-Logistics – a fact that eCommerce companies were quick to acknowledge and adopt.
Difference between traditional logistics and e-logistics?
|Traditional logistics||e-Logistics (internet-based)|
|Use of manual effort and basic communication channels to receive orders and the order fulfilment process||Internet based, requiring minimal manual efforts, automated processes to receive orders and execute order fulfilment|
|Time consuming paper-based process, requiring documentation, data entry multiple times, telephonic or email follow-ups for tracking package status||Digital process, with one-time data upload (data gets auto populated across all integrated software), automated status tracking updates, with reduced manual effort|
|Higher chances of making errors or missing details, unclear visibility on timelines, quantity available, exact cost etc.||Lesser errors, with visibility on product availability (use of SKU, tracking ID), timelines, cost etc. (i.e., hidden costs, taxes, delivery charges are stated upfront)|
|Less frequent updates and exchange of data between stakeholders||Frequent updates (email/SMS and web notifications) for information on package|
|Conventional payment systems (e.g., cheques, cash, overdraft, NEFT), requiring additional time for payment confirmation||Online secure payments (e.g., UPI, NEFT, wallets, net banking, card based etc.), instantly verified and confirmed|
|Manual handling of documents including challans, invoices, etc.||End-to-end digital process keeping the process paperless (also contactless in several activities)|
|Suitable for B2B sector for bulk orders||Suitable for B2B and B2C eCommerce logistics for direct delivery to individuals|
|Focus is on cost-efficiency for the entire supply chain||Focus is on timely delivery (agility), flexible tracking, and customer experience|
|Not driven by new age technology, with reliance mainly on telephone, fax systems, MIS (Management Information System), and email||Driven by new age logistics technology trends including IoT, RFID, GPS tracking, barcode scan, robotics, big data analysis, digital twin etc.|
How e-logistics works? Understanding the eLogistics process
As can be understood, e-logistics has been pivotal in contributing to the growth of eCommerce business in India. It has made it easy for businesses to seamlessly exchange information, share data, track status, identify bottlenecks, analyse performance, improve customer experiences and more. What seems like a simple order placement and delivery experience to a customer has a much complex mechanism working in the backend.
Let us understand the concept with an example of eLogistics process:
- Customer places an order online for 5 boxes of cornflakes (e.g., from an online grocery store)
- Customer makes the payment (using any available online payment mode) and awaits order confirmation
- In the backend, as a part of the order fulfilment process, the software checks product availability (type, quantity), validates payment, checks on delivery timelines, and sends the customer an order confirmation update (note: this entire process takes only 2-3 seconds)
- Customer also receives an email/SMS confirmation with details of order ID and tracking ID
- Order contains an order ID, QR code, and other details for scanning and tracking
- In the store delivery and distribution centre, the order is received
- Agent checks the requirement and fetches the goods from shelves, packs it with suitable packaging material, labels it, and updates status for delivery partner
- Delivery partner is assigned (automated) for pickup
- Partner collects the scheduled parcel (verifying order ID and tracking number), checks address on maps (integrated from backend), delivers the product to the customer (last-mile delivery), and updates the status on the software as ‘delivered’ via a smartphone
- Customer receives the parcel and delivery confirmation notification (note: customer can check the status throughout using tracking ID)
This was a simple example of how eCommerce logistics work in India on a day-to-day basis. In truth, there are multiple other components involved including online procurement, materials handling, warehousing, storage, packaging, shipment (often carried out through third-party logistics service providers), last-mile delivery, and reverse logistics.
Opportunities and challenges of e-Logistics in India
It is fair to say that eCommerce logistics comes with its own opportunities and challenges, especially in a country like India (and other developing nations) where digital technology adoption is not 100%. Taking the entire logistics and supply chain operation online has not been easy, especially as it involves intensive stakeholder training, investment in software and tools, and widescale infrastructure development.
It is true that logistics companies in India like Gati, Delhivery, DTDC, BlueDart, among others have made logistics information system key to their operations, and eCommerce giants like Amazon, Flipkart, Myntra, and Nykaa, have made it effortless to shop online, but the challenges have not subsided when viewed in the larger context.
Let us look at some of the commonly encountered opportunities and challenges in logistics information system with e-Logistics.
- Access a wider pool of online sellers (domestic and global) and multi-modal delivery options
- Provide cost-efficiency to both buyers and sellers (i.e., transparency in price comparison, no hidden fees)
- Leverage customer experience and customer service in logistics as a competitive advantage for business
- Get real-time data and business insights for building growth strategies and overcoming bottlenecks
- Train and educate stakeholders to adopt logistics information systems
- Identify processes that can be streamlined and optimised for efficiency
- Build powerful online security infrastructure for payment transactions and data (card/payment details, customer contact data, etc.)
- Manage unpredictable demand affected by seasonal needs, competition, and general shopping trends (e.g., manage inventory, get real-time web analytics data, optimise reordering etc.)
- Follow often complicated domestic and international trade and shipping laws (i.e., taxes, custom duties etc.)
- Need to build trust in customers and constantly deliver beyond expectations
- Lack of overall infrastructure support (e.g., road conditions, internet access, GPS tracking mechanism) and cost
E-logistics in India and its role in eCommerce supply chain
As can be understood, e-Logistics plays a vital role in how eCommerce companies operate in India and worldwide. With the demand for efficient logistics services in India on the rise, it’s not surprising that the scope of logistics industry now includes innovation in and adoption of digital technology solutions in logistics operations.
Today, speed in delivery and customer support, are key competitive advantages that eCommerce businesses enjoy over traditional store-based businesses. e-Logistics play a pivotal role here by organising all data in a centralised database, making it accessible to relevant stakeholders when required.
With electronic logistics, customers can login to their online accounts and check the status of their package easily by using their tracking ID or order status; they can also provide specific delivery instructions (by adding specific shipping address) and select slots for package delivery; based on the nature of package, delivery can even be end-to-end contactless.
It also makes inventory and warehouse management more efficient by providing real-time data on stock and its movement. For example, by using the EOQ formula to calculate optimal reorder amount, overstock, deadstock, stock being returned, expiring stock, can be avoided. With the use of relevant software there is also greater transparency and access to data that makes it convenient for businesses to design strategies and forecast based on insights.
Not surprisingly, the meaning of logistics management today covers more than just the receiving, storage, and transportation of goods. With eLogistics, it also means the digital management of good and information transportation efficiently from the place of origin to destination (and reverse) to enhance customer satisfaction and boost sales.
(This article was originally published in Feb, 2023 and updated in June 2023 for relevancy)