Putting potential into practice

It’s no secret that transportation and logistics are in dire need of modernisation, but what about supply chain visibility? Megatrends such as digitisation bring with them opportunities to all actors in the supply chain. Strategic and tactical employment of new technologies has the potential to significantly optimise the supply chain, and satisfy the customers’ increasing desire for knowledge and efficiency.

Digitisation isn’t just an added product or service, it’s a systemic change; a revolution not only in technology, but in society, politics and the economy as well. It’s an inevitable step change in the transformation of an analogue, capital-based world to an information, digital world.

The reason why digitisation of the supply chain is possible now is because technology, for the first time, is giving us the tools to do it. So, why isn’t the shipping industry taking advantage?

When it comes to the introduction of new technologies, maritime companies can ignore, adapt as best as they can or craft a strategy of their own if they have the opportunities and capabilities – not to mention the guts. Ultimately though, it’s not going away. So, all ports and terminals should at the very least be thinking about how they can use technology to add value to their customers, says Frans Calje, managing director of PD Ports.

Modern day

“Ports and terminals inherently are very traditional industries. If you want to make a difference, you need to understand where you can add value to your customers,” says Mr Calje, adding that automation and technology offer a “massive amount” of opportunities to do this.

“The whole IT infrastructure, for me, is absolutely key because it’s all about efficiency and it’s all about transparency,” he says. “We’re actually working closely with a number of our customers for example to link their road haulage landing systems with our terminal operating systems on the container terminal, so not only do we know what they’re going to do over the next 12 to 24 hours, we also know when they’re going to collect and/or drop-off a container.”

Mr Calje explains that when a truck is 30 miles away from Teesport, it gets sent a message telling Teesport that the truck is on its way as well as who is driving the truck, and what the truck is going to drop-off and/or pick up – “that means we’ve got about 30 to 45 minutes to start to prepare ourselves”, he says.

“We might find that the container the truck is coming to pick up is buried under three or four other containers and we have to do a bit of housekeeping so the truck can come in through the gate, find the box waiting for it, pick it up and disappear.

“If we can reduce a truck’s turnaround time from where it is roughly 26 minutes to 16 minutes – which is a hugely ambitious time, but let’s say that I can – that has a massive amount of benefits to our customers, and the customers of our customers and that adds value,” he says.

Ultimately, Mr Calje says people are more likely to say to Teesport ‘you’re fast, you’re efficient and you don’t create any problems; you’re the port I want to use’. “You have to use this technology to somewhere add value to someone else in order for them to add value to you.”

Thirst for knowledge

The idea of digitising the supply chain is becoming all the more important not only as the customer expects more efficiency, but also as their thirst for knowledge continues to increase.

FourKites, a Chicago-based company providing real-time supply chain visibility and logistics solutions across transportation modes and digital platforms, highlighted the need for the supply chain to react to lead the charge in the digital transformation age, and quickly, in an article published last year.

It said that although businesses and consumers rely on goods to be shipping on time, the complex and fragmented nature of trucking infrastructure poses a problem for shippers looking to track products as they move along their supply chain – something London Gateway’s James Leeson said was “ clearly unacceptable in this day and age”.

Speaking to an audience of logistics industry professionals at the Multimodal forum in April, Mr Leeson said: “The need for communication throughout the supply chain is very important. What we’ve been doing at London Gateway is engaging more closely with the supply chain, and it’s important because we know the weakest link will ruin the whole chain.

“Should we be further on in an industry such as this? I think we can all say yes, we probably should be. So it’s how do we get around that.”

Mr Leeson explained that the shipping industry is a “very expensive, high cost, asset intensive industry” and the inevitable consequence of the lack of profitability for carriers is that costs have had to come down. Subsequently, he said: “Bigger ships were the way it was going to go whether we liked it or not.”

Interestingly, Mr Leeson said that the increasing size of vessels and the pinch points it puts on ports is driving the thirst for knowledge from customers. Importers want to know immediately where their cargo is and so the digital economy and e-commerce are “critical parts” of this.

For its part, London Gateway has launched its own app called ‘Where’s My Container’ to satisfy its own customers’ thirst for knowledge, which Mr Leeson said had been a “big improvement” for the port. “I think many customers have been able to see over recent years where their container is on the ship and when it arrives in the port but then it’s a black hole; they don’t know what’s happening for a few days which is clearly unacceptable in this day and age,” he continued.

“Our app, for example, has been one of the big improvements where customers actually know what we’re doing. We’re telling them it’s here, and it also puts the pressure on us to keep the supply chain moving.”

He concluded that there will be more and more demand for information and therefore more and more demand on port operators to invest in new technologies to help the shippers get what they want, which is on time deliveries, while also delivering greater transparency throughout the supply chain.

Track and trace

Sheffield City Region’s Gareth Morgan echoes Mr Leeson’s comments about the increasing thirst for knowledge: “The end customer is asking for more and more information and you need to be able to provide that information, and most of that means electronically,” he says.

From a warehouse operator’s perspective, Mr Morgan says there’s even more pressure to reassure your customer that their products have been stored at the right temperature, that you are doing first in, first out and so on, “so the reporting of information to the customer, whether it’s a retailer like Tesco or a manufacturer, is increasingly important”.

Added to this, the expectations of the younger generation and new processes being introduced by service companies such as the UK’s National Health Service (NHS) to be able to track products throughout the supply chain could soon make digitising the supply chain less of an added value and more of a requirement.

“More and more manufacturing companies are automating their processes so you automatically order so many containers of x electronically and you’re able to track that right the way through the supply chain, but then you’ve got to prove that that particular cap goes with that bottle, for example,” says Mr Morgan.

“In healthcare logistics, the NHS is moving to a situation where everything has to be traceable, so if you’re a patient who needs a particular drug, the NHS knows which batch number they send you so that if there’s a product recall on that batch, they can ring you or email you and say ‘you’re in the batch that was affected’.”

He adds that technology is getting really sophisticated and logistics companies have to respond to that.

Ultimately, digitising the supply chain is crucial to building a more robust and resilient chain that is flexible and maintains the visibility that not only enables the successful management of supplier risk but also satisfies the customers’ growing thirst for knowledge.

Digitisation is dominating discussion in the transport and logistics industry, with big jumps in importance for a number of disruptive technologies which were, just a couple of years ago, considered irrelevant. It’s time for less talk, more action; to digitise the process before somebody else does.

PUTTING TECHNOLOGIES TO WORK

In other industries, companies are already starting to digitise the supply chain. HSBC for example is partnering with Danish business commerce platform Tradeshift to bring streamlined digital finance and working capital to corporate supply chains.

Together, they are creating a platform that will allow buyers to automate and digitise paper-heavy supply chain processes from all their suppliers and to organise supply chain financing in one place, due to be made available to clients from July 2017.

Multinational technology giant Microsoft is also putting digital technologies to work in the management of the supply chains and production lines that produce hardware.