The impetus to accelerate digitization is growing in the transport and logistics industry. In light of today’s digital expectations, becoming data-driven is vital. However, the 2023 Voice of Our Clients (VOC) research reveals that organizational readiness and access to high-quality data and IT talent remain hurdles that transport and logistics companies must strive to overcome.
This year, CGI leaders conducted 1,764 interviews across 21 industries, including 72 in transport and logistics. In this blog, I reflect on the most striking results from those conversations with transport and logistics executives, 57% of whom are part of the C-suite.
More and more organizations derive value from digitization
The good news is that the percentage of companies producing expected results from their digitization strategy has risen again, from 25% last year to 30% this year. This steady increase indicates that transport and logistics executives are embedding digitization strategies and technologies into their organizations as a critical step to navigating new market realities, including a growing number of large platform players for supply chain visibility or demand-supply matching, a rise in “as-a-service” models such as MaaS (mobility-as-a-service), ongoing global trade and supply chain disruptions and an urgent need to address climate change. Furthermore, the percentage of executives extending their digital strategy to include their ecosystem partners (customers/suppliers/competitors) continues to rise—from 39% in 2022 to 41% this year.
Digitization and sustainability go hand-in-hand. This year, 75% of executives cite sustainability as highly core to creating future value, second only to the manufacturing sector (82%). In our conversations with European transport and logistics executives, they view the new Corporate Sustainability Reporting Directive (CSRD) as a key driver to speed up digitization underpinned by a strong data-driven foundation.
Data is foundational for success
In most VOC conversations with transport and logistics executives, data's importance, role and uses is a central theme. While some organizations have begun their journey to become data-driven, there is still a lot of ground to cover. For instance, only 15% of executives rate their current level of maturity for using data and digitization as high. We see this small group as those that have transitioned to a data-driven enterprise. However, other organizations—including some that report achieving expected results from their digitization strategy—indicate that they need to take significant steps to improve data strategies.
Of the planned improvements, data quality (85%) and data governance and management (82%) are cited as the top priorities to implement in the next 3 years. Executives view these priorities as the basic requirements to successfully transform into a data-driven organization. Automation and digital twins will accelerate once these foundational elements are in place.
In a recent white paper on data sharing, my colleague Natasja van der Keijl and I discussed these prerequisites that this year's VOC findings underscore once again.
Artificial intelligence is on the radar
Closely related to data is a growing focus on artificial intelligence (AI). Half of the executives we interviewed indicate they are investigating how to use AI in their business process, a big jump from 31% last year. That said, only 3% say they are in the "done" stage of AI implementation—a tiny increase from 2% last year. In 2019, I authored a blog (in Dutch) that summarized the importance for transport and logistics organizations to embrace advanced analytics (focusing more on predictive and prescriptive), integrating learning capacity within the planning, and how organizations can achieve this.
Lack of business-IT alignment intensifies
The number of executives indicating a lack of business-IT alignment is increasing. This includes aspects such as how well business and IT understand each other and IT's ability to identify the right solutions for business issues. Only 37% say their business and IT operations are highly aligned (a score of 8 or higher on a scale of 1-10), 10 percentage points lower than 2022. A notable 43% say their business and IT teams are not aligned (a score of 1-2).
This finding is not entirely surprising, as digital leaders (those producing expected results from their digital strategies) are far ahead in this area (71% of digital leaders score themselves 8 or higher) compared to digital aspirants (those building or launching their digital strategies). In addition to achieving closer alignment between business and IT operations, digital leaders also modernize and migrate more applications to the cloud. They are also ahead in the simple automation of business processes. The figure below lists some of the key attributes of digital leaders in transport and logistics.
|Digital leaders||Digital aspirants|
|Align IT and business operations to support strategy||71%||29%|
|Modernize a larger part of their applications||54%||21%|
|Migrate more applications to the cloud||40%||28%|
|Have a less proprietary technology stack||8%||21%|
Attributes of digital leaders (source: 2023 CGI Voice of Our Clients - Transport & Logistics)
Finding and retaining the right people needs a stronger focus
To further complicate matters, executives say that finding, attracting and retaining IT talent to enable digitization is becoming increasingly difficult. This year, 52% of executives noted this challenge, significantly higher than the 39% from last year. This challenge is felt more acutely by organizations less advanced in their digitization, indicating that the existing talent pool prefers to work with industry leaders that are ahead of the pack.
The need to accelerate digitization is a top priority
To summarize, the 2023 VOC findings indicate an increasing need for transport and logistics organizations to accelerate digitization. Industry executives are aware that not only do they need the right skills and competencies to support this journey, but also strong and continuous interaction between business and IT operations.
Digitization within transport and logistics is no longer a choice. It is necessary to continue to create as much value as possible for customers, stay ahead of the competition, and reinvent as needed for more sustainable operations. At the same time, it is evident that successful digitization doesn't just require a winning strategy; it also needs the right people, technologies and mindset to get the work done.