abstract particle image - Logistics future Phygital

Rethinking Logistics: The Future is Phygital

Christen Martines | November 9, 2023

Vishwas Mishra, SCMR.com, November 3, 2023

Traditionally, industry stalwarts such as Royal Mail and DHL owned and maintained physical assets like warehouses and fleets of trucks. However, digitization has led to the popularity of asset-light logistics, driven by software firms.

The ascendancy of “just in case” (JIC) features within supply chain management systems is another notable shift and represents a significant departure from the conventional “just in time” (JIT) approach that has been a cornerstone of logistics and manufacturing for many years. Alongside this, companies are placing greater emphasis on diversifying their supply sources rather than relying on a single, cost-optimized supplier to hedge against the risks of supply chain disruptions.

Meeting these dual transformative trends and their associated challenges requires the integration of physical and digital supply chains that blend physical and digital strategies to enhance efficiency, cost flexibility, and sustainability.

Integrating physical and digital supply chains

The transformations within supply chains have laid bare the limitations of traditional asset-heavy services with little to no digital capabilities. Phygital is a hybrid operating model integrating physical assets like warehouses, vehicles, and distribution centers with cutting-edge digital software systems. This hybrid approach enables providers to sync various elements within their physical and digital operations, facilitating the delivery of services that have been previously difficult or even impossible to provide while meeting rigorous customer standards. These encompass advanced data analytics for tracking and sharing, the efficient use of fulfilment centers, and the integration of third-party service partners.

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