Four steps supply chain planners need to follow for better visibility and smoother operations
Planners are failing to connect the dots before, during and after deliveries are made, says Jørgen Behrens, CPO, HERE Technologies
“As consumers, we're now used to having stuff delivered to our house in less than 24 hours. We know exactly where our packages are,” said Jørgen Behrens, CPO of HERE Technologies, at the Reuters Events Supply Chain Europe 2021 Summit. “We get emails and we have apps to track them. We get very accurate Estimated Time of Arrival (ETA) blocks from last-mile delivery fleets. But, actually, if you go and talk to large shippers and businesses that ship millions and millions of euros- or dollars-worth of equipment around the world, they often lack even basic visibility of where their products are.”
Most supply chains are handled by multiple companies, and even inside one supply chain data is not exchanged, let alone between supply chains
Behrens was illustrating a critical issue in many current supply chains: A lack of consistent connectivity across players, and even within businesses, that is standing in the way of them cutting costs and becoming more accurate in assessing the true state of goods in transit.
This kind of basic visibility that we are used to as consumers is not available to almost all professional shippers for shipments that are obviously much more critical and also much more valuable
“Most supply chains are handled by multiple companies, and even inside one supply chain data is not exchanged, let alone between supply chains,” noted Behrens, which is preventing disruptions from being noticed and handled early. “So, this kind of basic visibility that we are used to as consumers is not available to almost all professional shippers for shipments that are obviously much more critical and also much more valuable.”
In his opinion a lot of this has got to do “With inflexible legacy systems, lack of standardisation, and information staying in silos inside a company [or] a particular supply chain,” which “leads to very poor predictability of the estimated time of arrival.”
He implored that the solution is “To collect much more data - much, much richer data - all of which is location data inherently. About where things are, what's happening on the road, what's happening on the rail network, what's happening in the air, where shipments are. Then we need to use simulation and artificial intelligence models.”
Four steps for progress in supply chain planning
Behrens outlined four steps to address these issues and introduce significant savings, starting with the set-up for supply chain planners and the underpinning systems.
- In Behren’s experience, “Very often planning still happens in spreadsheets, on paper, in very inflexible ways that don't allow data level and real time data to be used.” Therefore, he advised that it was key that organisations get the “right data available and have the right technology available,” enabling them to find the “most efficient, the most predictable way of getting things to their destination,” at the very start of their process.
- “The second component is that is that you need to collect real-time tracking data” as the goods transit from factory gate to distribution centre, he explained. He thinks the best companies “monitor devices that are in vehicles, and they attach trackers to shipping containers that do position updates. That allows them to know where things are in real time.” This way, “they can always see the situation. They don't have to wait for something to pass a certain gate to perhaps find out that it arrived or … that it's actually been lingering in a yard somewhere for four weeks, even though it should have already been shipped.”
- The third component sits in optimising the last mile, where Behrens sees “A lot of room for optimisation,” most notably in “making sure that routing is efficient, so that the utilisation of vehicles [and] drivers is as efficient because in many cases, actually, the ability to hire drivers is the bottleneck.”
- Finally, he told the Summit that it is critical as a fourth step to “Do post-trip analysis: Figure out what happened; what actually took place; see where your delays were; understand the behaviour of the different providers that you work with in your supply chain.” Then organisations can “use the information from the post-trip analysis to make optimisations to your planning process.”
Visibility, and therefore connectivity, is everything
Behrens sees a new reality dawning, where “We need to be able to locate goods shipments anywhere … and that means we need to connect data sets and information flows from the providers of the transportation services, from the logistics companies that arrange the supply chain, and from the tracking data that we collect from the shipments themselves.”
With this “Exchange of information and the ability to get the data out of silos and bring it together,” organisations will gain the “ability to have better predictability of when something will get to a destination.”
The exchange of data and the ability to integrate new technologies with these legacy systems is key
However, Behrens warns that this “Will require a lot of system integration because a lot of companies that manage supply chains have a lot of systems, some quite legacy systems…. They can be a huge barrier to solving the problem I just described. So, the exchange of data and the ability to integrate new technologies with these legacy systems is key.”
Behrens predicted that this would become easier and more secure in the future as “The ability to store the data that's privacy sensitive in the right way using blockchain technology” will emerge and become mainstream.
Overcoming these barriers will be worth it, believes Behrens. Achieving integration and overarching visibility will unlock a new level of analytical processing power through machine learning and artificial intelligence.
Access to the data from multiple sources will allow supply chain planners to “Train models, which can handle large datasets that humans can't really interpret.”