This blog post was written by our partner Trade Tech, Inc.
What does digitization offer that is so compelling?
The long and short answer is that it should offer simplicity; it should make the business of managing international supply chains much easier than they are today. Digitization should simplify what is a complex process today.
The international supply chain is an extremely complex services-based assembly process with none of the automation or standardization found in the manufacturing process.
There is no question that the international supply chain is complex. There are many parts that must be joined together to move enormously large volumes of cargo and there are regulations and compliance issues on both sides of the water. Furthermore, supply chains come in a variety of sizes–all with different requirements and different pricing. Today, many vendors are used throughout the world, so building expertise with a vendor is much more difficult. And, the process is changing all of the time due to market conditions impacting rates and space, not to mention weather and other issues.
Digitization should be to the international supply chain service-based process what the assembly line was to the physical manufacturing process. The machines should take over the day-to-day administrative processes, which frees up the logistics service workers to do skilled functions, such as decision making, swiftly addressing problems, and offering superior customer service, and of course, working closely with their customers to manage the overall process.
There are some clear steps to getting to digitization.
1) The user interface needs to be Browser-Based and accessible to anyone with the appropriate permissions, anywhere in the world so that everyone can work together in one place. This concept of central server computing represents the single largest creator of efficiency because it eliminates the need for data to be re-entered / re-keyed at each step of the supply chain.
This is not an easy first step. The interface needs to be “Global by Design” so that users all over the world can work on it and meet their local requirements. It is not good enough to just bring everyone together on a software interface that works well in one country.
2) The software interface needs to be easy to use. It needs to be “commercially presentable,” meaning it is easy on the eyes with information presented in a way that is organized, straightforward and easy to find. Even though the supply chain is complex, no one wants to navigate a complicated and confusing interface. A cumbersome, cluttered and “old fashioned” user interface immediately alienates the potential users—they simply are not interested in investing the energy into learning something they feel is too hard to use.
The end goal is to drive collaboration between a logistics provider and the end customer. When both parties are working together on the same system with the same real-time data, the workload is reduced, confusion is eliminated, and mistakes are minimized. This concept brings tremendous efficiency similar to the way bringing the origin and destination stations together does.
A quick note here. There is a huge difference between a “Track N Trace” interface that simply presents a simplistic view of shipment movement and an interface that offers true collaboration whereby the customer has the authority to enter data, change data, and view all of the data associated with the shipment excluding costs.
3) The software must integrate the overall business process from quotes to cash and from PO to delivery. The legacy environment of today has the overall business process broken down into too many silos, with Sales, in particular, working outside of the software system. The Sales Team is the group within an organization that interacts the most closely with the international customer and would discuss details regarding shipments, logistics requirements and pricing.
Sales leads the business process and leaving them out of the operations and accounting is like leaving the memory chip out of the computer.
4) The server / software system should be connected to all of the carriers and Customs agencies. This eliminates a significant amount of re-entry of data, which creates efficiency and minimizes the accidental mistakes that can cause the process to stall out.
Remember: Data moves freight and bad data stops freight movement.
5) The software should be process based with a clear sequence of events outlined to move freight from the start of the supply chain to the end. So often software has been treated as a fancy typewriter and document generator. Digitalization shifts the focus on software to Event Management which empowers users to keep track of exactly what needs to be done to move the freight and what is not going as expected. This is the foundation of one of the best practices in manufacturing – Management by Exception.
Management by Exception tracks every event in the sequence and notes whether or not it has been completed. These events should be automatically completed by direct tracking functions coming from the air lines, ocean carriers, rail roads, satellites, and various other Internet of Things (IoT) devices and services so that manual tracking is not necessary. Other events should be noted as completed when they are triggered or when feedback from other sources, such as Customs agencies is received.
Management by Exception allows the users to focus on what is late or about to be late and step forward to expedite the situation. This is where the human intelligence is most effective and where machines will have the least ultimate impact. Humans need to be freed up to focus on expediting problem situations and allowed to rely on the system to focus on keeping track of everything else that is moving smoothly.
Lastly, process controls and data standards need to be applied generously throughout the process. The only thing that should be difficult in an advanced digital system is making a mistake!
Digital systems are the future because they are easy to use and make it easy to provide consistent supply chain services to the end customer, who, in turn, benefits from having a predictable supply chain.