While projected to reach $6 trillion by 2030, the global logistics market is not immune to economic, environmental, and geopolitical challenges. Tariff uncertainty, fluctuating costs, complex customer needs, and supply chain management issues leave little room for optimism—and highlight the demand for visibility and connectivity.
Following this rise in complexity, 3PL service providers find themselves in a tough spot and are actively exploring available technologies to address weak points. However, having the right technology in place is no longer enough—organizations need to implement the right systems. For that reason, integrated logistics enters the scene to create new synergies and secure the efficiency needed to tackle emerging challenges. But what is integrated logistics, how does it work, and how is it implemented?
This guide provides a detailed explanation of integrated logistics, including solutions and management practices.
- What are integrated logistics?
- Why do logistics service providers need integrated logistics?
- Benefits of integrated logistics
- Key components of integrated logistics
- An overview of integrated logistics support
- Scaling enterprise operations with integrated logistics solutions
- Challenges of integrated logistics
- How to implement integrated logistics the right way?
- FAQ
What are integrated logistics?
Integrated logistics is a practice or perspective that views all logistics processes as interconnected flows, linked through digital means for faster and more sustainable management.
To provide a more detailed description, major logistics and transportation leaders such as Maersk refer to a characterization by Mark S. Daskin, who defines it as a specific design of managerial, informational, and physical systems—the kind of design that helps goods “overcome time and space.”
Why do providers need integrated logistics?
There is a great demand for interconnectivity—because there are tools for enabling it. The more aware you are of what’s happening across your supply chain, the greater your competitive advantage. This is why the tolerance for blind spots and bottlenecks is at a record low.
91% of logistics companies state that their clients now expect smooth, uninterrupted logistics services from a single provider. This expectation is dictated by a new reality many companies across various industries are facing.
The need to enable synergy between different departments and units isn’t exclusive to the logistics world. This trend is common across a wide range of industries, from Healthcare to BFSI—primarily because data bottlenecks created by fragmented systems cause numerous operational setbacks and delays, which result in real financial losses. Even at the enterprise level, things aren’t what they used to be just a few years ago.
Previously, enterprises collaborated with multiple service providers and vendors, creating separate partnerships for specific needs. However, as needs grew more complex, requiring cooperation between several vendors and units, this development exposed the need for a partner ecosystem.
To have a partner ecosystem is to have an environment of partners and vendors who work toward achieving the same goal and leverage their resources, knowledge, technologies, and insights to do so. This is the next level of cooperation between businesses and vendors, collaborating to navigate new challenges and offer new solutions.
At its core, integrated logistics provides the same advantage—a sophisticated approach to complex issues and a way to address the complicated needs of modern organizations and businesses.
Benefits of integrated logistics
In 2023, 84% of customers stated they would never return to a service provider after just one bad delivery experience. In 2025, logistics service providers are still looking for ways to meet customer expectations and prevent poor delivery instances, while balancing cost savings and securing long-lasting advantages amidst mounting challenges and growing uncertainty.
This is where integrated logistics becomes a game-changer, allowing organizations to optimize their service and drive long-term value. But what makes such a positive change possible?
The key lies in the very essence of this logistics business model—it builds synergy and collaboration between all departments, allowing all elements to operate as a single entity.
Within an integrated logistics framework, clients work with only one entity and brand, without scattering their focus, budget, and time across several third parties (each party coming with unpredictable disruptions or schedule management issues).
By upgrading to the integrated transport logistics and operations model, enterprises gain a significant number of benefits that keep them prepared for market evolution and shifts in customer expectations, while also enriching their strategy and planning with extra visibility.
Cost efficiency
- Reducing expenses by optimizing and automating operations, eliminating setbacks, and unnecessary processes.
- Strengthening the bottom line through shipment consolidation, optimizing inventory management expenses.
- Identifying faster transportation roots for minimizing the risk of delivery delays and preserving fuel.
Accelerated delivery
- Enabling faster order processing and order fulfillment by injecting real-time data and communication into unit interactions.
- Keeping stakeholders updated on delivery status through sophisticated coordination.
- Selecting optimal location, shipping carrier, and method via intelligent automation.
Greater visibility
- Creating full cross-chain transparency with centralized dashboards that deliver detailed insights on orders, shipments, and inventory status.
- Empowering users with information and directions they need for their role-specific tasks with role-based tools.
- Providing more information for effective decision-making with detailed KPI analysis and specific data for certain items and/or locations.
Enhanced collaboration
- Improving data exchange between units and partners with advanced collaborative spaces.
- Reducing communication barriers and delays by establishing shared spaces for instant updates.
- Allowing for faster response to disruptions and shifts in operations with faster communication.
Advanced forecasting accuracy
- Enriching forecasting analysis with new and relevant financial data, market insights, sales details, and historical inventory data.
- Making more accurate evaluations of future demand and calculating supply accordingly.
- Avoiding stockouts and other stocking issues with a greater view of upcoming changes and improved understanding of patterns.
Evolved efficiency
- Automating data entries and other repetitive manual tasks to save time for departments.
- Introducing process standardization for better efficiency management and accelerating order-to-delivery routines.
- Empowering teams to skip redundant steps and proceed straight to value-rich tasks that drive long-term positive outcomes.
Increased sales rate
- Unlocking new levels of cooperation and mutually beneficial interactions between sales units and supply chain management teams.
- Handling the process of managing and delivering goods to an integrated logistics service provider for laser focus on sales strategies.
- Expanding the number of buyers and shipment locations via cooperation with an integrated logistics service provider.
New business opportunities
- Accelerating opportunity discovery and realization for retail businesses due to enhanced visibility.
- Engaging new target audiences with demand for a particular type of goods.
- Obtaining a competitive edge by establishing a presence faster than competitors.
Improved resilience
- Securing better preparedness for sudden disruptions with an agile and responsive integrated logistics model.
- Enhancing business’ awareness of specific situations via faster information exchange and communication.
- Augmenting risk management and response to force majeures with the help of advanced visibility and data-powered problem-solving.
All of the benefits mentioned above make it clear: integrated logistics is more than just a new approach to supply chain management or operations. It is a business model focused on enabling clients and partners to prioritize profit-increasing activities, while 3PL service providers handle goods transportation and distribution.
Therefore, switching to such a model is no longer a trend for logistics companies and service providers—it is a necessity for evolving and adapting their performance to meet customer needs.
- 82% of organizations improved their delivery timelines by accelerating collaboration
- 80% of logistics leaders see customer experience as the new battleground
- $840 billion is the expected total value of the omnichannel distribution by 2025
However, how can they make this transition? And what components and tools are required?
Key components of integrated logistics
Any innovation or change starts with adopting the right mindset before implementing the technology. The most common resistance issues or challenges arise from decision-makers’ lack of readiness to commit or understand the full extent of the transformation. Because of this, it’s important to outline the key elements of integrated logistics.
To build a system that delivers a stellar experience for workers and clients, business owners and stakeholders need to keep the following core elements in mind:
Transportation
Providing verified and reliable routes via air, water, and land to ensure timely goods delivery. The diversity of routes, the availability of alternatives, and methods of cargo transportation are crucial to securing 100% fulfillment.
Infrastructure
Ensuring the availability of all necessary assets across the supply chain and accommodating the general logistics network for a multimodal approach. Integrated logistics service providers should have several performance scenarios in mind and be ready to switch to them when necessary.
Information technology structure
Equipping the supply chain with tools and software products that form the baseline for a robust and secure network, enabling workers to exchange insights and provide timely information about disruptions.
Partnership and collaboration
Maintaining close communication with suppliers to gather feedback, address needs, resolve common logistics-related issues, and manage expectations regarding 3PL companies. In an integrated transport logistics model, the right partner synergy makes it possible to optimize costs and reduce time spent on issue resolution.
Storage
Ensuring logistics service providers have sufficient storage space (warehouses and production centers) to handle and manage customer goods. Infrastructure updates are not just recommended—they are necessary to maintain high-quality standards.
Technology and digitization
Replacing paperwork with digital assets wherever possible to accelerate operations, reduce repetitive tasks, and free employees for more relevant work. Digitization also improves supply chain coordination through real-time analysis and forecasting.
Support and communication
Client support and communication are integral to the success of an integrated logistics model. Requests, queries, and suggestions must be handled by a proactive and qualified support team focused on solving problems rather than offering superficial answers. Understanding the ideal logistics partner from the customer’s point of view also provides valuable insight into the company’s strengths and weaknesses.
An overview of integrated logistics support
According to Maersk, there is no such thing as an integrated logistics solution. At least, none of such products are available on the market. Instead, such solutions are made by combining innovative technologies and forward-thinking mindsets to address individual needs of the organization.
Integrated logistics solution is often a custom digital solution placed at the critical junctures of an integrated logistics support system. As a result, to understand the diversity of integrated logistics tools and products, you must understand what integrated logistics support is made of.
Integrated logistics support (ILS) is a term for a management system that is designed to secure the long-term performance of the entire enterprise. It's a non-stop process aimed at preserving functionality within each relevant sector.
- Engineering services
ILS includes corrective, predictive, and preventive planning, reliability, and maintainability engineering. It oversees the entire system's performance within the enterprise lifecycle, taking into account disruptions and areas for improvement. The integrated logistics support gathers technical performance data and evaluates each component individually to see how well it functions in synergy with others. - Employee services
Employee onboarding and training are crucial to a well-performing integrated logistics system. Among numerous ILS tasks, education and qualification, as well as engaging employees across the globe, are considered to be as much of a priority as equipment maintenance and lifecycle management. - Practical services
Support and maintenance, accounting for spare parts, and equipment testing are the major part of the integrated logistics support plans. Usually, ILS includes obsolescence management to replace equipment and vehicles, mitigate risks and hazards, and preserve the high quality of service. - Security
With great digital power comes great responsibility. Securing all logistics data within one entity is always preferable to sharing it with numerous third-party organizations, but integrated service providers need to worry about more than protecting employee health or preventing product fraud. They need to implement cybersecurity measures that protect their customers' financial and business data, prevent data leaks, and maintain digital hygiene during information exchange.
Scaling enterprise operations with integrated logistics solutions
Due to the highly complex nature of integrated logistics systems, ready-made logistics solutions are currently non-existent.
Instead, custom-developed integrated logistics solutions are based on technologies that have been proven to revolutionize supply chain management and address disruptions.
AI and machine learning
The integration of AI into warehouse and supply chain management software minimizes the risk of human error, fostering a more reliable and seamless workflow. In 2024, infusing distribution operations with AI led to the following improvements:
- Inventory management was accelerated up to 20-30%
- Logistics costs were reduced by 5-20%
- Procurement was accelerated by 5-15%
A study by the Politecnico di Milano and Amazon also revealed the impact of AI on forecasting processes, the emergence of new skills, and even the creation of new jobs. According to the study, companies that adopted AI to improve their demand forecasting saw a 95% increase in forecasting accuracy, and nearly 80% of AI adopters reassigned their employees to new high-value roles focused on planning and data analysis. In addition, 40% of companies saw considerable improvement in their teams’ digital skills.
These numbers prove the point many professionals have been making for a while: AI is changing the way operations are handled. It introduces new routines and flows; it builds an entirely new approach to information. However, contrary to everyone’s fears, it’s not taking jobs away—it’s changing them as well, making room for agile thinking, creativity, and strategy. The latter are highly important in the data-intense and challenge-heavy landscape.
Despite these advantages and promising prospects, only 10% of logistics companies had fully adopted GenAI by 2025. Nevertheless, those that succeeded in incorporating GenAI into their operations and processes managed to unlock powerful benefits of integrated logistics. For example, AI-powered route optimization was proven to cut costs by 15%, while introducing GenAI into warehouse operations—such as picking and shelving—allowed organizations to ramp up their order processing and handle approximately 30% more orders overall.
Big data analytics
As 90% of logistics executives are setting their sights on long-term objectives, big data analytics is becoming a vital tool for addressing disruptions and painting a realistic big picture. Additionally, Gartner views big data as a supporting pillar for the future supply chain organization, helping chief supply chain officers (CSCOs) overcome CEO pressure, vague innovation ROI, and general economic volatility. However, only 19% of CSCOs have implemented big-picture planning in their supply chain management operations. Despite this, an evolving approach to data remains key to overcoming barriers and focusing on lasting outcomes.
At its core, big data analytics examines large volumes of data to discover hidden patterns and trends.
In the context of logistics, this means analyzing data from various sources, such as shipment tracking, warehouse operations, customer feedback, and market trends. With this solution, logistics companies can gain a deeper understanding of customer behavior and introduce more customer-centered strategies to better meet expectations.
Moreover, advanced analytics plays a crucial role in demand forecasting. By analyzing historical shipment data and market trends, logistics companies can anticipate fluctuations in demand and adjust their operations accordingly. This proactive approach allows for better resource allocation and cost optimization, ultimately increasing efficiency and competitiveness.
Cloud logistics
One of the primary benefits of cloud logistics is the scalability and flexibility it offers. By developing cloud-native SaaS logistics solutions, organizations can easily scale their operations as needed without the constraints of on-premise systems.
For instance, cloud-based warehouse management software has proven to be much more efficient, offering higher control standards.
Beyond scalability, cloud logistics provides real-time data access, enabling better coordination and decision-making across teams. With live data from multiple stakeholders in the logistics process, organizations can quickly identify and address potential risks and issues, ultimately improving efficiency and reducing errors and delays.
Logistics and transportation management systems
In integrated logistics, logistics management systems are the foundation of all operations. These essential tools play an important role in aggregating critical information and organizing it for smoother, seamless workflows, and cooperation between various units.
- Transportation management system (TMS)
This software solution simplifies and optimizes logistics operations by managing the transportation of goods across different modes and carriers. A modern transportation management system plays a vital role in streamlining logistics operations through its robust set of capabilities.
A modern transportation management system is often enhanced with intelligent automation capabilities, which allows it to reduce fuel costs, keep delivery timely and unaffected by unforeseen factors (traffic jams, changes in weather, car accidents), and generally monitor carrier performance. Additionally, TMS can assist with carrier selections as they automatically gather, compare, and visualize data, letting dispatchers and managers control data, performance, and costs and assess the quality of service.
Route optimization
Utilizing advanced algorithms and data analysis to determine the most efficient routes, ensuring timely deliveries and reducing fuel costs.
Carrier selection
Automating the carrier selection process by comparing rates, service levels, and performance metrics, unlocking better cost and quality control.
Real-time visibility
Making transportation process clearer and more transparent, updating shipments status and other critical, time-sensitive information.
- Order management system (OMS)
An order management system oversees the order’s lifecycle, from the very moment of order entry. This system enables end-to-end visibility between customers and logistics service providers as it allows customers to monitor their order status and check up with the delivery process.
Availability verification
Establishing the availability of necessary product via viewing product catalogue.
Order placement
Enabling the customer to order the item via the channel of choice (mobile app, website, at the store, in a call).
Order verification
Validating the customer’s order and collecting necessary shipping data (name, address, contacts, location).
Order matching
Choosing the product ordered by the client.
Order fulfillment
Delivering the product to the client either through the method selected by the customer or the one provided by the organization.
Support
Providing the customer with additional services and options (scheduling a consultation, installation assistance, or item return).
- Warehouse management system (WMS)
A warehouse management system maintains warehouse performance and operations with end-to-end control of every step. It provides a real-time view of the items’ journey and movement through facilities, up to the moment they are shipped.
Item logging
Securing accurate item tracking with item scanning and logging upon receiving.
Inventory management
Facilitating item storage and providing real-time updates on every item's status, availability, and location.
Order processing
Picking and packing items in accordance with the order while consolidating all relevant information from different sales channels.
Shipping
Managing shipments, selecting optimal shipping methods and carriers for faster delivery, and better customer experience.
Labor management
Augmenting team efficiency with efficient task scheduling and KPI tracking.
Reporting
Leveraging sophisticated data analytics for generating detailed and informative reports that can be used for accurate demand forecasting and next-level strategies.
Digital supply chain twins
The digital twin technology has fully come out of age and now enriches logistics processes with descriptive, predictive and diagnostic value. Expected to increase their value and surpass the $26 billion mark, digital twins are implemented by such major players as DHL and CNH Industrial, offering a more detailed perspective on their assets (packages, containers, materials, equipment) and revealing new opportunities to optimize performance.
While the digital twins technology is quite complex, enabled through the combination of cloud computing, AI, APIs and high-precision sensors, the unique and detailed insights it can deliver increases its demand across logistics service providers. In integrated logistics, creating digital copies of trucks, individual products and even containers allows to dissect potential flaws or visualize the journey of the product/cargo/vehicle with maximum accuracy. With full visibility enabled and real-time information fed into the network, logistics leaders can map their strategies with greater certainty, provide departments with robust collaborative data, and make well-researched business decisions.
Blockchain technology
Blockchain has been a powerful asset in removing data silos from supply chain management and introducing new transparency to product journeys. Companies like Maersk and Walmart have been investing in platforms and solutions designed to make such transparency available to their partners and customers and generally create a new future of supply chain management.
However, it’s worth mentioning that while the benefits of blockchain make it a very attractive choice for integrated logistics solutions, the current adoption rate for the technology remains slow. To accommodate the capabilities, companies need to build an ecosystem and invest in a technological overhaul across their enterprises, departments, and data storage.
Additionally, harnessing blockchain technology for logistics needs extensive onboarding for less savvy partners and employees. Therefore, the potential of blockchain must be weighed cautiously against the potential of setbacks and risks of organizational resistance in the enterprise.
Challenges of integrated logistics
Despite the benefits of integrated logistics, transitioning to such a model is not without its difficulties. 92% of CSCOs admitted that the results from their technology investments didn’t meet expectations, citing several reasons:
- Integration complexity
Supply chain fragmentation remains a global issue, making it difficult for organizations to enjoy the benefits of integrated logistics. Before they can proceed with advanced logistics integration, they need to address disconnected systems, establish a vendor ecosystem, and organize their data to prevent bottlenecks and silos. At least 47% of adopters were unaware of this issue. - Data issues
Collaboration with multiple vendors often involves working with different data formats and systems. Therefore, when an enterprise attempts to implement an integrated logistics solution without preparing the data first, it leads to numerous errors, complications, and frustrations. Additionally, connecting systems with different data structures requires updates to data security policies and guidelines to ensure that no sensitive information is exposed - Disconnect between technology and expectations
It’s not uncommon for organizations to encounter blind spots between innovation and their desired goals. In some cases, adopters pursue innovation competitively, trying to secure its benefits before their rivals do—however, this often results in confusion and failed attempts to align the technology’s capabilities with business objectives. - Insufficient business cases
The challenge of connecting tools to end goals stems from the lack of compelling success stories that clearly outline the roadmap, timeframes, and potential pitfalls. When incorporating new technologies (for example, AI-powered logistics integration), many enterprises become trailblazers, navigating unforeseen obstacles. As a result, not many investors feel confident enough to take the leap or complete the journey. - Limited vendor capabilities
Another challenge in introducing innovation is finding the right vendor. Despite the active promotion of new services and next-gen software development capabilities, not all vendors possess the necessary tools or expertise. - Lack of skills
The arrival of new tools and platforms can often be met with resistance from employees who are accustomed to traditional routines and concerned about lacking the necessary skills. This risk is particularly high when organizations fail to prepare their teams in advance by providing onboarding and training, communicating the importance of the change, and encouraging skill development.
While these challenges raise valid concerns, new issues are part and parcel of evolving your operations and technology toolkit. To glean the full value, you must understand both your enterprise and the technology you intend to use. Accordingly, the key to effective change management and logistics integration is asking the right questions, communicating, and measuring each step of the way
How to implement integrated logistics the right way?
Successful logistics operations are based on precision, accuracy, and dedication to providing an intuitive and safe journey of goods and products regardless of destination. The benefits of integrated logistics provide a solid competitive edge to logistics service providers. From optimizing operations and improving the bottom line, innovative solutions within an IL model can revolutionize inventory management, enable safer and easier transportation, reduce costs—and secure high levels of customer satisfaction.
However, securing the benefits of integrated logistics requires responsible and strategic decision-making from logistics service providers.
Considering the challenges mentioned above, how can executives succeed with enterprise logistics integration and avoid complications that obstruct growth and delay progress?
- Commit to end-to-end integration
Integrated logistics solutions perform best when placed within an interconnected supply chain, where every system operates within a single space. Accordingly, businesses need to create such an environment before implementing a solution by synergizing their order management system, warehouse management system, and transportation management system into a single platform for smooth data exchange, communication, and greater visibility. - Introduce improvements
There is no place for a “technology first, improvement second” approach in innovation adoption. Businesses should address existing functionality setbacks and obstacles, ensuring their practices, security guidelines, and approach to technology are up to date with the latest standards. Doing so allows decision-makers to gain a detailed understanding of their internal processes, refresh their knowledge of strengths and weaknesses, and identify areas for improvement. - Track and measure performance
Working with new technologies, such as AI, complicates ROI calculation due to the sheer number of changes these technologies introduce. However, decision-makers can take control of their expectations and track progress by establishing key KPIs they expect to improve and monitoring them throughout the entire course of logistics integration (e.g., transportation costs, inventory turnover, number of items delivered on time). - Explore technology
Understanding innovation and expanding technological acumen play a large role in successful integrated logistics adoption. Adopters need to explore every available option, evaluate its capabilities, and determine how well it aligns with their goals. While competitive pressure can interfere and cloud judgment, it’s important to remember that every tool has its area of application—and choosing the right tool for the right goal is what truly makes a difference. - Consult with professionals
Knowing what your enterprise needs is half the battle. The other half is finding professionals with the right combination of skills and industry knowledge. Considering that 45% of logistics companies face a shortage of AI skills necessary to deliver results, this challenge remains significant. For that reason, working with vetted technology consultancies that can provide talent and build centers of excellence offers a reliable path from decision-making dead ends to next-level enterprise logistics integration.
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If you want to harness the power of innovation and unlock the full value of integrated logistics for your enterprise, let’s chat! Having successfully concluded on the diverse range of transformation projects for businesses operating in the logistics sector, we will help you optimize and accelerate all core parts of your logistics ecosystem by developing a tailored product that matches your goals.
Together with our cloud architects, UI/UX designers, analysts, and engineers, you’ll ideate a concept of your innovative solution and then build it, putting best industry practices, your exclusive needs, and years-long resilience into its core.
