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Big Data in Logistics: How to Make Data-Driven Decisions

A chart of how to make data-driven decisions

There are several ways to approach logistics, but doing it with a data-driven strategy is, without a doubt, one of the best options. This is because the reliability and effectiveness of such strategies are much higher than other options you have available. So, let's take a look at big data in logistics: how to make data-driven decisions.

Know what you want to achieve

If you want to make data-driven decisions, you need to know what you want to achieve first. Note that your goals will need to be measurable in order to properly track and implement relevant measures. For example, you can set a goal for yourself to increase the number of your customers and reduce your operating expenses by a certain amount. Both metrics are relatively easy to track, and you will be able to gauge the way your actions impact them using big data itself. By having clearly defined goals, you will also be able to more effectively use the data you have available. Simply collecting data is, at the end of the day, completely useless for anything more than bookkeeping.

A representation of big data use
The use of Big Data is only limited by your own approach to it!

Have the right tools to make data-driven decisions

It is impossible to make data-driven decisions without the right tools to support the process. A good example would be collecting data in the first place. And since cloud computing has been quickly garnering more and more support due to increased utility and accessibility, it is important that the software you use for data collection can integrate well with the cloud, too. Of course, you also have the option of using software such as, Zapier, and others that allow you to seamlessly connect your data to the cloud and make better use of it. Other popular cloud softwares include Dextrus, Dataddo, Apache Storm/Hadoop, Cloudera, and Lumify. Most have a free version, with better functionality and less limits offered by premium versions of the softwares, too.

Collection and organization of data

Simply put, your goal will be to collect data about every aspect of your business. This may seem daunting, but it is still perfectly viable, especially once things get started properly and your software does most of the work automatically. Here are some metrics helpful for a logistics-focused business:

A data server with networking cables connected.
Using cloud-based solutions is also much cheaper since you don't need as much hardware.
  • Warehouse inventory

  • Number of regular customers

  • Your operating costs

  • Gross profit margins

  • Return on investment

  • Delivery route data (time, distance crossed, routes taken, etc.)

Of course, these are only the bare-bone basics. Still, they will allow you to make a decent analysis chart of your business's profitability and success on the market. This data will also be usable in more in-depth planning and determining opportunities where you can improve your business.

More helpful data to look into

A very useful thing to keep in mind is that you don't need to focus only on your operating and profit data. For example, you should definitely take advantage of big data to analyze and track your online activities, too. Tracking the success of your SEO strategies, online marketing, and even your customer satisfaction data will all pay great dividends. A competitive logistics company also needs to keep track of the successes and failures of its competition. It is possible to collect exact data on how your competition is doing both online and in real life. Analyzing it might reveal surprising opportunities for you to improve your own business. After all, focusing on your own strategies works, but far more progress can be made incorporating new or competing approaches to your existing strategy! Let the experiences (success or failure) of competitors save you time.

The right approach to identifying opportunities

We mentioned before that you could use the data we recommended you collect in order to improve your business. You will do so by identifying the areas of your business that are doing poorly. For example, you might notice, by cross-analyzing your own data and the data of your competitors, that others complete the same delivery route faster than you do. This means there's definite something that can be done to improve. There are typically four areas of improvement where you can see the most utility from big data: warehousing, route optimization, forecasting, and business expansion.

Data analysis software and results.
Big Data analysis is much easier than you might expect.

Improvements to warehousing

The improvements yo your warehousing are the easiest to achieve because big data provides you with everything you need. After all, the reason problems with warehousing pop up is because things like misplaced inventory, badly-labeled inventory, or even human error concerning ordering goods can occur. Big data minimizes the chances of this by automating most of the processing, and you can even use the data to determine the most optimal distribution of your goods across your warehouses.

Greater route optimization

As the experts from can attest, picking out the best route is all about data. You need to test out several different routes, compare their effectiveness, calculate the shortest possible routes that can be traveled the fastest, and then pick out the best one. Note, too, that important points of data collection are road congestion and accident frequency, since some routes are all around much busier and/or riskier than others. It may be best to discord those routes, even if they seem marginally faster on paper.

Forecasting and trend-watching

Forecasting and paying attention to trends is a field where big data excels. You'll be able to notice shifts in market interest almost immediately, and then make data-driven decisions on what products you should focus on and even how better to make your business more appealing to customers. You'll have a solid supply chain strategy in place in no time!

Realizing business expansion

The final piece of making data-driven decisions is expansion. After all, business expansion is all about picking the right moment when momentum is on your side. If your business is doing well and you have enough money saved up, it is best to hit while the iron is hot as long (as you've got a solid expansion strategy, of course).

The future of the industry

As you can tell from our guide to big data in logistics, the way forward for the industry is certainly one that is highly intertwined with data. The convenience, versatility, and reliability of big data make it an indispensable asset to any freight operation looking to manage risk, reduce inefficiency and increase profitability.


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