Piece of the puzzle
It's not easy to see the length of the supply chain
Stevie Knights ponders the place for ports in the modern day supply chain
There has been a lot of pushing to rethink ports’ roles within the supply chain and even as far back as 2002, a paper by academic Ross Robinson concluded that “to persist with an inadequate paradigm is to find the wrong answers”.
Mr Robinson suggested a view of “ports as elements in value-driven chain systems, not simply as places with particular, if complex, functions". So, why aren’t we now all seeing things differently?
Peter Ford of Salalah Port explains: “The big problem with this is that the supply chain is virtually opaque. We don't know where cargo is ultimately headed, and the guy who owns it is insulated by two or three layers from the port or terminal operator.”
In other words, it’s a fractured operation - and there’s a lot of inefficiency falling through the gaps between the fragments.
Mr Ford adds that at the moment the ports don’t even really know what is valuable to the cargo owner, beyond what is simply useful for the shipping line. A facility could simply aim to cut costs - but the people who would immediately benefit would be the lines and this doesn’t necessarily mean anything to the owner of the goods, who may be operating under a different dynamic, such as speed or flexibility.
And further, he says: “While a port can make the boxes or bulk move faster, there’s a cost to this and there’s no guarantee that’s what is wanted. Supposing, for example, it actually suits the owner of the cargo to keep it in limbo for an extra few days to act as a buffer against economic fluctuations?”
So, if we are going to make this age of information technology actually work for us, we have to realise there’s limited value in information that stops short, almost at the edges of our own part of the operation.
However, there's a natural suspicion between the different parts of the supply chain as the service has developed over an extremely long period. “There's a natural resistance to information sharing between people who, while maybe not in direct competition with each other, have almost certainly been jockeying for a bigger slice of the pie. Co-operation doesn’t necessarily come easily to us. However, what we should be doing now is making a bigger pie,” says Mr Ford. “But in order to do this we need to work together.”
APM Terminals has, given its resourceful pockets, taken the opportunity of acquiring CIS, a logistics portfolio which has within its embrace inland depots, trucking operations and container management sections. And this has given them a start without having to work out the touchy issue of how much sharing is enough, and how much is just a little uncomfortable.
However, other facilities may be looking more at a cooperative stance rather than outright ownership. Mr Ford makes a very good point when he says, “things don't even have to go so far as being a package or bundle that's sold as such to the end customer. There’s plenty to be gained from just looking at efficiencies that present themselves from supply chain integration and sharing in those benefits.”
This sharing of the benefits is something that’s important to the success of the approach, says Mr Ford. Interestingly, he adds that it’s important to recognise that this works best “when the efficiencies gained require multiple parties to work together on reducing waste. This provides an improved overall product - and an incentive provides benefits to all parties involved.”
He goes on to say: “Although the benefits can be purely financial, it’s often time and energy and these have value too. Sometimes this kind of sharing is more to the point when what you are doing is ironing out the wrinkles in the supply chain.”
So it’s just possible that advances of information technology could best be backed up by an age of co-operation.
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