Guide to Automated Document Processing in Logistics and Supply Chain

Posted by:
Jay Madheswaran
October 14, 2022


Document processing is a critical part of logistics and supply chain management. Traditionally, logistics document processing is done manually, making it an error-prone and time-consuming process. 

However, with recent technological advancements, it is now possible to automate supply chain document processing using OCR tools, automation, and artificial intelligence.

In this article, let’s get an insight into logistics document processing and look at how you can benefit from intelligent document processing.  

What is Document Processing in the Logistics Industry?

Logistics and supply chain processes involve a lot of documentation. From paper to digital documents, a lot of data is captured, shared, and maintained by logistics companies and involved parties. Efficient data processing leads to a smooth flow of information as shipments move around the world.

In order to understand the importance of document processing, let’s imagine an order placed online goes missing. Now, it can be tracked up to its last recorded location based on the document entries. 

If maintained properly, this documentation can also be used for an insurance claim. So we see documentation plays a critical role in the logistics industry.

Types of Documents in the Logistics Industry

There are a variety of documents that are used in logistics and supply chain management, such as

  • Purchase orders are used to communicate an order for goods or services from one company to another. 

  • Packing lists to detail the contents of a shipment, including the quantity and type of items.

  • Bills of lading serve as a receipt for goods being shipped and also list the conditions of transport.

  • Shipping labels provide essential information about a shipment, such as the destination, weight, and tracking number.

  • Commercial Invoice required during export and import of goods. It helps with the customs clearance process and may also be used for foreign exchange.

  • Export/Import Customs Declaration is used to report goods being sent out of or brought into a country.

  • Dangerous Goods Declaration is used to identify any hazardous materials that are being shipped.

  • Certificate of Origin certifies that the products in a shipment originating from a certain country. 

Each document type plays an important role in ensuring that shipments are processed smoothly and efficiently. By processing each document properly, logistics companies can better manage their operations.

How Does Document Processing Work in the Logistics and Supply Chain Industry?

Documents such as purchase orders, invoices, and bills play a vital role in the smooth functioning of the logistics and supply chain industry. They can track and manage the movement of goods and materials through the system.

Document processing involves the entire cycle of creating, managing, and using these documents.

The document processing workflow typically starts with the creation of a document template. 

The template is then filled out with the relevant information for each transaction. It may include the item number, description, quantity, shipping address, payment amount, and tax details. 

Once the document is complete, it may be maintained physically or converted into a digital format to be stored in a database or other electronic repository.

The details are retrieved from the database and used to generate shipping labels, packing slips, tracking orders, confirm deliveries, and settle disputes. 

Steps for Document Processing in Logistics and Supply Chain

Logistics document processing through legacy systems involves the following steps:

  • Read and comprehend physical or digital documents
  • Locate the critical data and update the data entry software 
  • Recheck data for accuracy
  • Send relevant information to stakeholders
  • Maintain record for future reference

The process can be tiresome and time-consuming when handling thousands of shipments per day. But document processing is a vital part of ensuring your business runs smoothly. 

Therefore, you must ensure that data is accurately entered into your systems. You can make better decisions and optimize your business operations with accurate and up-to-date information. 

Businesses can improve efficiency and reduce costs by automating the logistics document processing as many tasks as possible.

What is Document Processing Automation?

Document processing automation in the logistics and supply chain industry refers to using technology to streamline the creation, management, and distribution. 

It involves leading technologies like OCR (Optical Character Recognition), Artificial Intelligence (AI), Electronic Data Interchange (EDI), barcoding, and electronic scanning.

Automated document processing systems can read and interpret data more accurately than humans; hence, they help minimize mistakes. 

They are more efficient than manual processes, as the system can complete mundane tasks faster. It helps achieve the goal of improving accuracy and speeding up documentation processing by streamlining tasks.

Thinking Beyond Legacy Software

Data processing in most logistics companies is still done using traditional OCR software. However, it is slow and expensive, and creating new templates for each document is challenging. 

Automated intelligent document processing software is a much better solution. It is much faster and more accurate than traditional OCR. AI eliminates the need for manually setting up rules and preparing templates. 

The AI OCR Process involves the following steps:

  • OCR gathers data from paper, email, scans, photos, etc.
  • AI reads the unstructured data and sorts it into fields to send structured data to the database
  • User validates data variations and exceptions while simultaneously training AI
  • Export data and analytics as required.

AI-powered OCR and automation document processing software become more intelligent the more it is used. Like any machine learning technology, the system learns from information gathered over time and improves its effectiveness. 

With the help of AI/ML tools, logistics companies can customize the software/tool to meet their specific needs and interests to get personalized results. 

In addition, automating document processing can help ensure that all relevant documents are available when needed. It also improves communication and coordination among logistics companies, suppliers, delivery vendors, and customers.

6 Benefits of Automated Document Processing in the Supply Chain and Logistics Industry

There are many benefits of automating document processing in logistics and supply chain, including:

  • Reduced costs: Automating document-related tasks can help businesses save on labor costs. Optimizing operations will also control losses and penalties because of manual errors.

  • Greater accuracy: Manual logistics document processing always involves a risk of human error and duplicate data. Automating document processing can help reduce errors and improve data accuracy.

  • Faster turnaround time: Automating document processing can help businesses speed up supply chain document processing and related tasks, resulting in a faster turnaround time.

  • Increased efficiency: Automating supply chain document processing can help businesses increase efficiency by reducing the need for manual data entry and improving workflows.

  • Improved compliance: Automated systems can help businesses comply with industry regulations. The systems are automatically upgraded with any changes in policies and guidelines.

  • Better customer service: By freeing up employees' time, businesses can involve them in more strategic tasks and customer engagements to enhance the customer experience.

How to Use Machine Learning for Automating Document Processing?

The large amounts of paperwork associated with logistics document processing can be easily handled through AI-driven OCR automation tools. The key steps include

Document Classification

The first step in automated logistics document processing, document classification involves automatic sorting of documents. The documents are classified according to their type and usage. 

Machine learning algorithms recognize the patterns in the documents and assign them to the correct category, like Commercial Invoices, Bills of Lading, Customs Declaration, and Accounts Payable Invoices.

Data Extraction

The next step involves extracting relevant information from the documents to create a database or populate the information in a transportation management system (TMS)

It is done using machine learning algorithms, which are able to identify the essential data points from the documents and extract them accurately. The unstructured data is then structured and mapped to the respective document schema. 

Data Exceptions

If any extraction exceptions are encountered, the system alerts the logistics-focused exception manager. It provides the reason for each exception. Manual approvals or corrections are allowed for these exceptions. 

Once approved, the app automatically updates and syncs the information with the TMS. 

ML technology learns from such encounters and can be improved based on user feedback.

Data Release

The data scanned from paper-based documentation is transferred to the TMS and made available for users. 

The new information of each document is updated in its existing records to ensure updated and accurate data is released.

Data Analysis

The final step in automated logistics document processing involves the analysis of extracted data. The insights are used to make decisions about the logistics business. 

For example, it can measure performance, identify trends, and make predictions about future sales. 

Use Cases of Automated Data Extraction

  • Packing Lists: A packing list is an essential tool for exporters. It tells recipients and customs about the package contents. 

Data related to the consignment, such as exporters' and consignee details, purchase order numbers, invoice numbers, origin and destination countries, ports of loading and discharge, and description of goods can be extracted from the packing list. It also has other important information such as marking, numbering, terms of delivery, and terms of payment.

  • Bill of Lading: The bill of lading is a legal document that also serves as an acknowledgment receipt from the carrier to the shipper upon receiving cargo in their shipment yard or port location. 

Details like the type, quantity, and destination of goods being carried can be extracted from the bill of lading.

  • Proof of Delivery Documents: Proof of Delivery, also known as POD, is an assurance note that confirms the package has been delivered. It is a confirmation that the intended recipient has received the package. 

The recipient's name, invoice number, transaction details, product description, and shipping address are some of the information that can be extracted from the proof of delivery document.

  • Certificate of Inspection: A certificate of inspection certifies the condition of a commodity before shipment. Perishable goods are mainly required to establish that they conform to quality standards as stated on the sales contract. 

Essential details such as inspection date, location, purchase order number, contact details of the importer, country of origin, product details, description from Bill of Lading, gross weight, and name of the authorizing person can be extracted from the document.

  • Certificate of Origin: A certificate of origin is an international trade document that confirms the details of the country where a shipment was produced. It certifies that the goods were manufactured or processed as committed. 

It mentions the details of the producer and expiration date. Other data that can be captured from the document are the destination and the country of export.

  • Certificate of Insurance: A Certificate of Insurance confirms completion of insurance of a shipment. It is an assurance of risk coverage and can be used to show proof of any claims. This document also covers any loss or damage during transit, providing peace of mind for shippers and consignees. 

Insurance details can be extracted from it as it includes the name of the insurer, goods insured, and insurance amount. Key aspects covered by the policy are also mentioned on the certificate. 

  • Advanced Shipping Notice: The Advanced Shipping Notice (ASN) is a document that provides detailed information about the impending delivery. It notifies customers when their shipments are due for delivery so they can prepare for receiving them. 

The document includes physical characteristics like the size or weight of each item. Details about the type and number of items can be extracted from the document.


  • Delivery Docket: Delivery Docket is a formal document detailing the shipment contents and schedule of delivery of goods. 

Information related to the goods, like overall weight, purchase order number, order date, delivery date, and names of sender and receiver is mentioned on the document. These can be extracted for document processing.

  • Customs Declaration Document: The Customs Declaration document provides the list and detailed description of goods bound for import or export. It is essential to report the imports and exports accurately for customs purposes. 

Details of the consignor, consignee, and declarant can be extracted from the document. A movement reference number, details of the type of goods, packaging, and currency of transaction are other essential details mentioned in the declaration.

  • Dangerous Goods Declaration: A shipper must submit a dangerous goods declaration as a vital document. It ensures the safe loading and unloading of hazardous packages. It is helpful to prevent any mishaps during transportation. 

The document has details like the UN number of the product, name, quantity, and nature. Division or class of the product, dangerous goods packing group, emergency contact details of the shipper, along with contact details and address of the consignor and the consignee, can also be extracted from the declaration.

4 Best Tools for Automated Document Processing in Supply Chain

Now, you must be wondering which are the best OCR tools for automated document processing in the supply chain industry. Though all tools perform the basic document processing functions, only industry-specific software can be of help. 

The top tools for automated logistics supply chain are:

  • Butler Labs is powered by NLP and Computer Vision to extract text from both printed and handwritten documents. It is an AI and OCR tool that imports data based on its context to ensure each piece of unstructured data is converted into structured JSON or CSV format files. It processes all types of documents, including PDFs and images.

  • eFileCabinet supports logistics companies of all scales and sizes to streamline document processing. The tool uses OCR technology to extract data to categorize and store it in encrypted digital folders. It also provides a secure file-sharing solution by protecting files with digital signatures as they are shared in an automated workflow.

  • ABBYY Finereader has in-built OCR capabilities. It is a PDF reader and editor suitable for global logistics companies. The tool supports multiple languages and also allows the rectification of any OCR mistakes.

  • AWS Textract intelligently extracts data using OCR technology. The API uses AI to study the structure of the documents and extracts relevant information from invoices and receipts. It efficiently reads data from PDFs, images, scans, tables, and forms,

Final Thoughts

Automated document processing is no longer an indulgence for logistics companies. It is a necessity to keep pace with the evolving industry landscape and meet the rising demand. 

AI OCR document processing allows humans to focus on higher-value work without struggling with mundane tasks.

Automated document processing in logistics and supply chains can save businesses time and money. It can also improve data accuracy and efficiency. When choosing a solution, it is important to consider the needs of your business. 

The right solution will make document processing easy and help you make better decisions about your business.

Before making a decision, test out the automated document processing tested and used by companies in the Logistics and Supply chain industry from us at Butler Labs. Try Butler Labs Document AI tool for free to test the platform’s effectiveness.

Build document extraction into your product or workflow today!