Logistics Terms Digital Logistics vs. Traditional Logistics: What’s the Difference?

The logistics industry is a core axis of corporate operations, playing a crucial role in determining the stability and efficiency of the supply chain.

However, for a long time, the logistics industry has been a sector where digital transformation has progressed relatively slowly compared to other industries. This was due to structural factors such as complex stakeholder structures, high reliance on manual labor, and difficulties in integrating systems.

However, starting in the mid-2010s, the spread of digital transformation across industries led to a more active adoption of digital technologies in the logistics sector. In particular, the explosive growth of global e-commerce, the advanced demands of customers, and the supply chain disruptions caused by the COVID-19 pandemic have elevated digital logistics from a mere trend to an essential element for securing corporate competitiveness.

Understanding the clear differences between traditional logistics and digital logistics provides a practical answer to why companies today need to pursue logistics digitalization.

1. Traditional Logistics

Traditional logistics refers to a logistics operation system where information and workflows are primarily carried out manually or in an unstructured manner. Typically, orders are received through non-structured channels such as phone calls, faxes, and emails, and deploying and transportation requests are processed accordingly. The status of transportation relies on confirmation calls from a person in charge or documents written by hand, while inventory status is managed based on manual inspections by warehouse staff or simple ERP input.
This method has been used in the industry for a long time, but it has limitations such as difficulty in sharing real-time information, tracking complex causes of errors, and low visibility across the entire supply chain.

2. Digital Logistics

Digital logistics refers to a logistics system that applies IT technology throughout the entire logistics process and operates based on data.

Order information is automatically collected through system integration between ERP, OMS, and others, while the Warehouse Management System (WMS) and Transportation Management System (TMS) handle real-time inventory and dispatch operations. IoT sensors enable tracking of cargo and inventory locations and statuses, and AI algorithms perform demand forecasting, inventory optimization, and analysis of delivery delay probabilities. Additionally, as global logistics information is integrated, real-time visibility and control is available across the entire supply chains. Digital logistics holds significant strategic value as it functions not only as an efficiency enhancer for logistics operations but also as a core element of supply chain management (SCM). Real-time information-based operations that connect the entire processes of procurement, production, and distribution improve the agility and responsiveness of the entire SCM.

3. Structural Differences in Operational Methods

Functionally, the two methods show the following differences.

4. Decision-making Methods and Cost Structure Differences

In addition, there is a clear difference in decision-making methods.

5. The Evolutionary Direction of Digital Logistics

The future of digital logistics is moving beyond mere automation to a forecast-based intelligent operational phase. In particular, the advancement of AI technology has significantly enhanced the preemptive response capabilities in logistics operations. In the past, it was only possible to analyze and cope with causes only after issues such as shipping delays, stock shortages, and transportation risks occurred. However, with AI-based analysis, it is now possible to predict various factors such as sudden demand surges, natural disasters, port congestion, and average delay rates by route in advance, and avoid these risks in advance. This goes beyond simply improving operational efficiency and serves as a strategic tool to ensure the stability of the supply chain itself. Furthermore, AI-based simulations are evolving to the point where they can propose optimal transportation routes, cost-effective delivery strategies, and alternative scenarios in case of unusual situations.

In conclusion, traditional logistics has relied on long-standing experience and intuition, but its limitations are now clear amid increasingly complex global supply chains and rising customer expectations. Digital logistics, on the other hand, leverages technology to enhance operational efficiency and visibility, enabling logistics strategies centered on prediction and response.

Especially, AI-based forecasting and risk management capabilities play a crucial role in stably operating the entire supply chain, which is directly linked to the survival of a company.

Digital logistics is no longer a choice, but a necessary condition for building a sustainable supply chain, and it will operate as a key factor that determines the competitiveness of all industries in the future.

Q&A. Traditional Logistics vs Digital Logistics

Which one receives orders primarily by phone and email, and relies on manual inventory checks by staffs?

Traditional logistics

Traditional logistics refers to a logistics operation system where most information and workflows are carried out manually or in an unstructured manner. It is a work method that varies significantly depending on the capabilities of PICs.

Which one can perform real-time inventory tracking, automated goods issue, and transportation prediction based on AI and IoT?

Digital Logistics

Digital logistics refers to a logistics system that applies IT technology throughout the entire logistics process and operates based on data. Digital logistics goes beyond simply improving the efficiency of logistics operations and functions as a core element in supply chain management.