The logistics industry is going to see some radical changes soon, and Logistics Service Providers (LSPs) are scrambling to reinvent themselves into a technology-focused industry to drive the elusive end-to-end supply chain visibility (E2ESCV) and remain at a competitive advantage against their peers.
By collecting meaningful data along the way, shippers, business partners, and customers have the ability to see where products are at any point in the supply chain, from the raw materials supplier to the final destination. Visibility in the supply chain can increase speed to market, reduce capital expenditure, risk and helps to achieve greater customer satisfaction. This article is intended to provide insight and best practices to implementing technology for an organization’s visibility.
Indicators that you need visibility
There are several factors that can contribute to lost revenue, many of which are overlooked, and can cost your business billions of dollars. Making business decisions in silos, without looking at the overall picture of where the company has been, and where it is aiming to go, can cost your company in the long-run. It’s difficult to determine the cost-effective balance between network connections and direct transports, and while this is especially true when opportunities to create roundtrip journeys don’t immediately present themselves, establishing a system early in the process can go a long way. If your company is unable to locate and define bottlenecks and overcapacities within the organization, and cannot predict the profitability of a new contract, then it might be an indication that the network and resources are dated, and haven’t updated to accommodate the vast technological changes happening every day.
The challenges to achieving visibility
Fragmentation of data between organizations and external stakeholders results in little to no insight into the system, which also means that market and freight intelligence is lost, and can’t be used for further development. This lack of standardization in the industry adds unnecessary complexity to an already intricate system. Unfortunately, LSPs are not always integrated into the inventory management of the shipper companies, which could provide additional value for inventory optimization, and technology service providers (TSPs) who have the capability to crack the visibility maze, have followed a low risk model instead. Due to the complexity and the danger of unintended effects, companies need to think ahead to prepare for unpredictability, however, this is largely missing in the industry today. Many logistics organizations are exploiting only a fraction of available information and don’t have a comprehensive data management strategy in place.
Think of Visibility as your ‘Control Tower’
True visibility provides the required intelligence in order to operate an optimal supply chain network and the supply chain control tower is a concept that has gained a lot of momentum to solve the mystery of visibility. The control tower makes key data available to the partners in a supply chain facilitating coordination of customer demand with supplier response. Control tower envisages:
• Processes become collaborative with data sharing and planning that happen across organizations
• Relationships are formed when information must be shared across processes within and outside the organization
• Deployment of multiple layers of technology to extract data from disparate systems and enrich and store large data and finally shape data using analytical tools that eventually trigger intelligent outputs and communication tools in order to make control towers a reality. Factoring the SVAMB element is also an imperative for LSPs to implement control towers.
Implementing the SVAMB element in your strategy
• Social for the supply chain– Deploy technology with the aim to provide a collaborative enterprise social networking interface within your supply chain stakeholders that connects all and gives unparalleled access to critical information.
• Visual and Voice- Get Hands Free – Hands in the supply chain are meant to handle products and not data. Deploy visual and voice based technology to capture data and guide field staff.
• Analytics – Lead with your analytics tools rather than just providing a set of measurements of past events benchmarked against static benchmarks. Deploy analytics tools that assist field staff to act before the damage occurs and provides intelligence in an executable form.
• Mobility – Have the freedom to receive, capture and send data in any form, anywhere and at any time with no restrictions, which can be achieved through the deployment of mobile tools. Mobile enables driver safety and can help in settlement of crash settlement cases too saving cash.
• Big Data in the Cloud- Treat data as your second biggest asset after people. Deploying technology that helps you capture all types of data, enriches and structures it into ready to use form. Use cloud effectively to increase participation across stakeholders as well as to achieve scalability.
Deployment Model – Self-fund and get everyone involved
Technology advancements have made it possible to achieve the visibility solution we have always dreamed of. By working together, Logistics Service Providers (LSPs) and Technology Solution Providers (TSPs) can provide the best plan that meets the needs of an organization. LSPs and TSPs both of have different roles that should be combined for collaboration.
• A critical enabler for building control towers is skills that due to LSPs and their supply chain stake holder’s inherent nature of business are not likely to have the internal capabilities for. These capabilities reside with TSPs.
• Currently, relationships between (LSPs) and Technology Solution Providers (TSPs) are transactional. LSPs and TSPs need to build partnerships with TSPs putting their skin in the game to build and operate the control towers. A hybrid control tower model where policy is driven by the shipper, execution by the LSP and technology by TSP will provide the right balance. By jointly investing in the center of excellence, LSPs and TSPs add to the continuous improvement capability a key element for on-going success of control towers.
• LSPs need to deploy the control towers in phases based on the needs of business and derive benefits to create a self-funding engine for the next phase.
Value = Visibility + What If Circumstances
Going forward, LSPs will actively seek to offset increases in operating costs by leveraging their expanded role in global trade to achieve a bigger share of supply chain profits. The key areas where gains would accrue from control towers are reduced CO2- emissions, reduction of inventories for shippers, better network and capacity exploitation and improved utilization of assets.