QUANTIFYING THE IMPACT OF LOW-COST DIGITALISATION ON THE ECONOMIC PERFORMANCE OF LOGISTICS SMEs

Abstract

Low-cost digitalisation encompasses the use of low-cost (or free) hardware and software components that can be effortlessly integrated to create solutions. These (digital) solutions are usually simple, standalone, and support-oriented, thus keeping the total cost of deployment low. Because of its low cost, this type of digitalisation is an appealing alternative for small and medium enterprises (SMEs) willing to digitalise. This is because SMEs usually face financial limitations that affect their ability to digitalise; an issue that is further exacerbated by the uncertainty of the economic impact on their performance. Thus, making available low-cost digital solutions and economic figures of their impact are two key actions that may boost digitalisation in SMEs. In the literature, some studies have indeed addressed the economic impact of digitalisation on SMEs; however, logistics SMEs have received little attention. In fact, most of the studies in this field have focused on manufacturing only. Moreover, most of the studies that explore the economic impact of digitalisation on the logistics sector have made no distinction between SMEs and large companies, or between low-cost and non-low-cost technologies; hence, overshadowing the unique digitalisation needs of logistics SMEs. As a result of this and factors such as the high upfront costs, logistics SMEs digitalise at a slower pace than their larger counterparts, potentially missing out on important economic benefits. In response to these limitations, this thesis aims to put a dollar value on the impact of low-cost digitalisation on the performance of logistics SMEs. By doing so this thesis will not just bridge a gap in the literature but also contribute to tackling the slow digital adoption in this sector. For this purpose, this thesis determines the highest-priority digital solution area for UK logistics SMEs and uses it as a proxy for digitalisation. Furthermore, this thesis develops a novel approach to quantify the impact of this priority solution using rigorous analytical methods. Finally, this thesis demonstrates the economic impact of low-cost digitalisation through a series of case studies. This thesis shows that low-cost digitalisation unlocks important cost savings for logistics SMEs. This is so because low-cost digitalisation reduces uncertainty in operational decision-making and enables a timely reaction to unforeseen events that may affect operations. Moreover, this thesis shows that the resulting cost savings are not significantly affected by moderated drops in the accuracy and timeliness of the information of low-cost digital solutions; however, they may be affected by issues of reliability and system parametrisation. The findings of this research are useful for logistics SMEs, policymakers, and researchers alike. For logistics SMEs, the research findings are useful to quantify the economic impact of digitalisation in their unique industrial settings. For policymakers interested in facilitating digitalisation in logistics SMEs, the economic results of this thesis are a strong support to this initiative. Finally, for researchers, the findings open interesting avenues for further research in the interface between digitalisation, supply chain management, and information theory.