Digitized Logistics Essential Toward Final Stretch of the Year

The first half of the year has been so complex and challenging for every company in various industries around the world, but logistics and several product distribution firms have been severely impacted in this case, which increases the main challenge of maintaining their operating levels and profitability in order to achieve an optimal flow in their businesses.

Among the challenges has been inflation, the effects of which cause a chain reaction for production companies and, of course, logistics firms. Just to mention one point, in August, Mexico’s Consumer Price Index increased again, to 8.70 percent after registering an annual change of 8.15 percent in July. This is the highest level of inflation since December 2000.

Inflation generates direct effects on the supply chain, since it results in an increase in the prices of goods and services and raises the costs of products, supplies and raw materials.

But what is the true importance of the supply chain in all corporate processes? It is simple, in the fact that it allows an exchange of information and teamwork between the different sectors that are part of the process of production, sales and even distribution of a product. In other words, it provides the necessary synergy for entities to act in a structured manner.

The National Producer Price Index in July postedr a monthly increase of 0.13 percent, and 10.08 percent annually, in the prices of inputs, including oil. This generates increases in other derived products, such as fuel prices, forcing companies to optimize routes and batch delivery times.

It is a reality that logistics, which relates to everything and feels the effects that the economic panorama presents, cannot be stopped. The transport of goods and the exports of products are fundamental for the country's economy.

In fact, in terms of exports, Mexico is a world power. In addition to being the world’s leading exporting country  for beer, tomatoes, chilies, peppers, red fruits, avocados and tequila, among other products, it is the second-largest agricultural exporter to the US. In 2021, agricultural exports to the neighboring country to the north reached US$25.5 billion, 39 percent more than in 2020.

That is why companies in this sector cannot afford to stop. On the contrary, in the second half of 2022, they need to make use of technology that drives their processes and maintains competitiveness in the sector.

At Netsoft, we have seen significant results in those companies that use business software to have a complete view of all distribution and financial processes to create more effective strategies. In fact, ERPs generate up to a 20 to 45 percent increase in 360º business visibility that leads to more informed decision-making.

In terms of warehouse control, it is important to use technology to streamline processes and know in detail the availability of merchandise. In a complex environment, no one can afford to incur inaccuracies and errors that result in undelivered orders, requests for products that are not in stock, and a compromised relationship with suppliers and customers.

With a dashboard that offers process clarity and visibility, companies can streamline product orchestration and early decision-making to maintain a high level of end-customer satisfaction through easy interactions and successful product delivery.

It is also possible that, through process optimization, all levels of the organization feel they are part of the team, contributing improvements and visualizing the real effects of entering data and reliable information, for which digitization will be more successful.

Given the above, to increase team productivity by automating processes is probable. For example, according to what we have seen in some of our clients, there are companies that have been up to 50 percent more productive in areas such as accounting, which generates greater control of income and expenses, improves gross margin performance and encourages operations to keep flowing.

Among other benefits, cloud-based ERP technology allows for up to 65 percent reduction in pending orders and a 55 percent reduction in the time spent closing accounting books, which translates to up to 30 percent lower inventory costs.

Finally, this part of the process is critical to success: remove, as far as possible, pending orders, since they are a factor that directly affects, once again, the supply chain, even impacting the user experience, a company’s reputation and even business continuity.
I am in favor of distribution and logistics companies being part of the sectors that move the country, which is why it seems essential to me that their processes are increasingly digital in order to operate at a cutting-edge level that, at the same time, is reflected in the dynamic economy that the country needs.