The logistics technology revolution
Some of the most technologically progressive companies in the world, like Amazon and Uber, are now key players in the logistics market. These companies have no patience for inferior technology and they have the resources to develop innovative modern solutions. They’re already making a significant impact on the industry, and companies that want to remain competitive will need to execute fully digitised and visible end-to-end shipping.
Individuals and companies alike tend to stick with what’s familiar. As long as something is working, it feels safe, and they’re less inclined to make a change because they don’t want to disrupt that safety. With technology, however, there is a constant advancement, and that feeling of safety can quickly turn into a trap.
The tide is turning in logistics. While some legacy technology systems are still being used in the transportation and logistics space, companies are beginning to accelerate their businesses by leveraging modern data connectivity solutions to achieve more visibility. Seamless connectivity across the supply chain is only possible with newer technology like application programming interfaces (API), which are enabling end-to-end visibility into shipments, documents, costs, inventory, and invoices.
Full visibility into shipment data prior to tender, during transit, and post-delivery enables actionable decision making that benefits businesses and customers alike. While we’re only scratching the surface of what’s possible with deeper visibility into shipment data, the impact is already being felt industry-wide.
The information age of logistics
The supply chain has experienced more change in the last five years than it has in the previous 30 years combined. The retail industry has shifted towards e-commerce, and customers ordering goods online expect fast deliveries and total visibility. Providing customers the best possible service is a major key to success in today’s market, but ensuring that service requires some changes — specifically with supply chain technology.
E-commerce now represents more than 9% of all retail sales in the US — a rate that has tripled in just over a decade. The opportunity in the logistics sector is enormous. E-commerce logistics costs in the US reached nearly $80 billion in 2016, and Armstrong & Associates expects to see a 19.9% compound annual growth rate through 2020. Shippers and logistics providers alike are scrambling to carve out competitive advantages. Meanwhile, consumer expectations are changing just as quickly. Capabilities that were ‘nice to have’ just five or ten years ago are now considered essential by consumers. Real-time visibility is a must. Shoppers expect hassle-free, omnichannel returns. Retailers must provide precise delivery estimates or risk shopping cart abandonment. And, of course, two-day delivery has become the norm, a major challenge if EDI communications span hours.
Getting ahead — or even keeping up — has become a matter of data. Information must be shared accurately and instantaneously among the consumer, retailer, and logistics provider. Without such capabilities, some logistics providers will fall behind whilst industry leaders develop the next iteration of consumer-friendly technologies. Already, leaders are exploring mid-shipment address re-routing, scheduled delivery times, and fulfilment of same-day or two-hour deliveries.
“Standardised, actionable data is perhaps the most valuable commodity in the current logistics market.”
As consumers ask for more, retailers have realised that evolution is necessary to avoid falling behind. The largest US retailers, from Walmart to Home Depot, have been right-sizing brick-and-mortar facilities while making major investments in e-commerce capabilities. These endeavours must be supported with technologies developed either in-house or by third-party technology providers. The most successful technology will take an omnichannel approach and provide end-to-end visibility from the point of sale through delivery. Merchandise no longer flows strictly from manufacturers to distribution centres to stores. Orders are established through multiple channels. Brick-and-mortar stores are common pick-up locations. Ship-from-store capabilities are also increasingly common. Real-time inventory data, aggregated from multiple locations, must be integrated and available across platforms. Successful implementation of these omnichannel fulfillment capabilities relies on seamlessly transmitting data between platforms, from a transportation or warehouse management system to an inventory management system or distributed order management platform.
Standardised, actionable data is perhaps the most valuable commodity in the current logistics market. Thanks to digitisation, we’re gaining access to more data now than we ever thought possible years ago. When disparate systems pull in data from every corner of the supply chain, it comes down to providing practical uses for this data, and for that we need advanced analytics.
The downside of having so much shipment data across all different modes of transportation is that if it isn’t properly curated, it can become detrimental to an organisation, and most companies don’t know how to properly leverage it. In fact, Gartner predicts that “60 percent of big data projects will fail to go beyond piloting and experimentation, and will be abandoned” in the next year alone. That’s a lot of failure, which is costing millions.
In order to make these big-data projects a success for the logistics industry, there are a few things that need to happen.
- All parties must be able to see the same information at the same time. Valuable reaction time is lost when only one segment of the supply chain has visibility, and time is saved when you do not have to call a carrier to confirm a pickup or verify the location of a shipment.
- The information must be shared as soon as it is available, so that everyone has the longest possible reaction time.
- The information must be actionable. It’s true, we’re collecting data on just about everything at this point, but not all of it is relevant to the tasks at hand. A smart data collection system handpicks the most relevant and actionable data (an at-risk shipment, for example), then delivers it to the people who need it most.
The real key is automating end-to-end visibility
The human brain is an incredible thing, but it will never have the same speed and accuracy as a modern computer. The real benefit of fast, accurate data lies in the possibilities of automation. Digitising the transfer of shipment information with the use of API provides immediate visibility into pricing, routing, tracking, inventory, and invoices. There is zero lag time between receiving information and executing protocols with it.
Once reliable sources are selected, processes to mine those sources for data can be put into place and automated. Once the system receives one piece of information, it triggers a reaction based on an analysis of that information. For example, the moment a shipment is delayed, every aspect of the supply chain is notified, and the system can begin searching for ways to react to that delay without creating a waterfall effect that impacts other shipments.
Third-party integration is crucial to success
So, how can we ensure that all of this visibility data is collected from the right sources, normalised and analysed, then pushed out to the right places? Third-party platforms that specialize in handling data. When one platform handles all of the information across all modes of transport (full truckload, LTL, rail, small parcel, ocean), it is more likely to be in the same format, and if it’s not, it can be normalised. As long as data is normalised by the same platform before it is distributed, it will be synced across systems. There is also more total shared data thanks to a large partner network. Everyone receives the same data, so they can pull insights and collaborate efficiently.
This adds an incredible amount of width and depth to a logistics network. Companies will realise the quality of your data, and will go out of their way to join your network. The more people who join, the stronger the network becomes because more data is being shared. The growth and strength snowball.
“Essentially, companies must break free from legacy technology and partner with a best-in-class third-party data platform.”
A business case for end-to-end visibility and advanced data analytics
Visibility into the full shipment lifecycle is facilitated by a network of un-siloed technology. Every part of the transportation process is powered by the same platform, and all of the data is collected and processed by the same system. This allows for better connectivity and communication. The process works seamlessly, from getting a rate quote, to tendering a load, tracking, and then reconciling payments. Having visibility into this entire process enables more informed decisions and better overall business intelligence.
According to Forbes, “a small number of companies (9%), the progressives — that is, companies with the highest levels of supply chain digitisation maturity — are already moving ahead of the pack in terms of supply chain digitisation and reaping tangible rewards. Others need to catch up or risk falling further behind.”
Essentially, companies must break free from legacy technology and partner with a best-in-class third-party data platform. The possibilities of automating processes to achieve real-time visibility are incredible. We’ve only scratched the surface of what is achievable. Step one, however, will be getting the industry on the same technological page.
This White Paper was published in February 2018 by Armstrong & Associates, reprinted with permission. Armstrong & Associates, Inc. was established in 1980 and since then, through its leading third-party logistics market research and history of helping companies outsource logistics functions, A&A has become an internationally recognised key information resource for 3PL market research and consulting. For more information visit http://www.3plogistics.com.