Will the pandemic finally spur needed investment into visibility?
This crisis has exposed visibility gaps across all supply chain verticals, so will we get any closer to dealing with this thorny issue?
“Companies don’t compete any more. Supply chains compete.” That’s the perspective of Loudon Owen, CEO and Chair of distributed technology company DLT Labs. While that statement might be particularly true in the current environment, many are struggling to gain that competitive edge, or even have the right products in play where their customers need them, as a longstanding issue has become even more painful now COVID-19 has struck: Visibility.
So, will this pandemic finally provide the push needed to really get down and solve the visibility issue in supply chains? Is there the right tech to support it? And why haven’t we done this already? EFT by Reuters Events talked to experts from Ryder, Penske and DLT Labs to find out.
Gaps in knowledge lead to chasms in capability
Right now, the visibility issue is being exacerbated as a number of factors across supply chains stress all actors’ abilities to move goods to the right locations. Usually busy shipping and trucking routes have seen capacity slashed. Air freight costs have soared. Demand patterns are hugely different to just a few months ago and workforces have been scattered to work remotely or find themselves being reduced by sickness. This means many are losing out as they struggle to acquire enough of the goods that remain in high demand, particularly in the most frenetic markets of groceries and medical products.
“I reached out to two of our food and beverage customers,” Karen Jones, Executive Vice President, Chief Marketing Officer and Head of New Product Development for Ryder, “both of which are in the specialty grocery business and they said that the ability to sell product was exponential,” but “they didn’t have the product.”
One who worked in “Latin American, with specialty foods as his primary business … he was freaking out, as he couldn’t find out what was going on with his shipment of garlic from china.” He needed to know “when the shipments were arriving, what was actually happening, where the ship was in transit, where it was when it hit the port, the whole nine yards,” in order to maximise his ability to profit in this time of high demand. However, he couldn’t capitalise due to a lack of agility hindered by low visibility.
“The demand was clearly there … but the supply was something they didn’t have visibility to and certainly they were handicapped in that regard,” notes Jones.
What you have is not a war zone, you have a combat zone. The low of goods and services has reached a level of crisis not only because of coronavirus but also because of the competition for supplies
This kind of mismatch and lack of visibility into suppliers and their capacity and capabilities to meet ongoing demand levels is even more extreme in the medical sector.
“What we have seen with regards to PPE is that approximately 10% of the orders are being received,” reveals Owen. “Of the orders that are received, approximately 10-25% are orders that actually fit the specs. What you have is not a war zone, you have a combat zone. The low of goods and services has reached a level of crisis not only because of coronavirus but also because of the competition for supplies.”
Why is there a visibility vacuum?
So, why hasn’t this been addressed in more detail already?
“While shippers have made very good progress in recent years on transportation visibility, and may have made good progress on supply visibility and inventory related visibility, it’s not that common that that’s all merged into one view,” says Andy Moses , SVP of Global Products for Penske Logistics.
Instead the standard has been lots of manual labour and constant checks across cumbersome systems. “If you have a retail store employee, someone who wants to know where is my load of lumber? That retail store employee would have to place a phone call back to their retail central support company trying to get someone back at the corporate centre to tell them what’s going on,” explains Jones. “Retail central support then has to place a phone call to an operator. The operator says they’re not sure, let me call the driver. That could take a couple of hours before driver could get back and information is passed back to the operator, back to the retail employee. All of that takes time, you can’t plan your labour, you can’t plan for your retail sales.”
Moses agrees that “What we are all after is to make it work to the extent that we no longer have an office filled with cubicles and all those people in those cubicles making track and trace calls. That’s the old way. To get away from that you have got to have the right technology and you absolutely have to have the right integration to get [the most] value out of it.”
Most people are starting with a host of disparate systems and they’re struggling to get their neighbours to talk to each other
However, that technological challenge has been its own major barrier in the recent past. “I think the biggest challenge in this is that everybody has their own homegrown systems and off the shelf technologies and honestly some of the capabilities have not been there prior to the last three years, with new sensor technology, GPS technology, and [the abilty to have] an Application Programming interface (API) and Electronic Logging Device (ELD) that can seamlessly extract the data needed to get all of that information and have it all integrated,” believes Jones.
“Most people are starting with a host of disparate systems and they’re struggling to get their neighbours to talk to each other,” points out Owen. “They’ve got massive fences built up internally to be able to knock down the fences externally. In particular after there’s been mergers and acquisitions, you find all sorts of fences: Physical; cultural; social; every fence you can imagine.”
It is this final cultural, change-management barrier that may be the most difficult to shift, with the idea of sharing proprietary information often unacceptable to many managers.
Everybody thinks the data is theirs
“The problem inherent in supply chains is that they are supposed to work together but each information system is a slave to the master that paid for it,” says Owen.
Jones agrees that “Everybody thinks the data is theirs,” and “the change management process of getting compliance from all those who carry the goods,” is a huge issue but she believes that “you are going to see the compliance factor go up significantly because I think customers are going to mandate that if you are going to be a supplier of mine, you have to feed this data into my platform or my system, so that I can start making the right decisions and understanding where all my goods are in the transport system.”
Furthermore, this crisis has made people rethink supply chains believes Owen. “I think what’s happened is that supply chains used to be considered dull and used to be considered a backwater organisationally, as crazy as that sounds. Now we’re understanding that supply chains are integrated with every aspect of a company. If you need PPE and you can’t get it, what happens to your brand? What happens to your marketing? What happens to your organisation? Your finances? Your culture?”
Now we will move away from the idea of the supply chain as a cost centre and see real investment into visibility.
Building the foundations for more transparent operations
When it comes to building your way up to a more transparent and effective system, “You have got to have an even mastery of the underlying core executions and you have got to have some discipline around master data. This is mundane stuff but its where the game is won and lost,” extols Moses.
Having good process rigor and business rules around the management of data, they are all foundational to being able to leverage these kind of visibility tools and function well
“Having good process rigor and business rules around the management of data, they are all foundational to being able to leverage these kind of visibility tools and function well. Particularly in an environment like we are in now, where there is so much disruption
“The underlying execution systems, WMS systems, transportation management systems,” are all key he says and “you have got to have decent processes around new transactions flow into and out of the systems in order to have a data source that can be properly leveraged by machine learning,” which need to include “continually accurate updates of all the underlying delivery locations, customer information as customers come and go, and information regarding the changes to SKUs.”
Visibility in my mind is just the first step. If you can see it great, but if you don’t have the tools and the resources to act on it, to real time collaborate with everybody in the supply chain, then you are just watching a truck drive around
For Jones, “Visibility in my mind is just the first step. If you can see it great, but if you don’t have the tools and the resources to act on it, to real time collaborate with everybody in the supply chain, then you are just watching a truck drive around but can’t estimate its time of arrival. I think that’s where a lot of these visibility tools on the market have kind of left off. It’s a really pretty screen and I can really track it but if I can’t have a conversation with the driver, the dock worker, the distribution centre, the final retail channel in real time to let them know the impactof missing that delivery, it really doesn’t solve too many problems in that regard. That’s really what the focus of our product is.”
If you don’t have the right integrations you’ve got other problems
Instead Ryder is aiming to “ingest the data from the carrier or the truck. That data feeds back into our platform real time. Everybody has access to see what’s going on with that shipment and that load and where it is in transit. Is there any delay? And then they can collaborate and talk about what they need to do to ensure that the materials arrive at 8am. So, it takes out a tonne of steps. It gives you the full visibility.”
Moses also notes that “You absolutely have to have the right integration to get much value out of it, because people are going to want visibility internally: Stakeholders, purchasing, operations, sales, user customers. All these stakeholders are going to want visibility. So, if you don’t have the right integrations you’ve got other problems. You may have useful information but it’s not as easy as one would think to make that available in places and formats that all these stakeholders would want to consume it in.”
Communication and openness are key agrees Owen in modern, complex supply chains. “Because of the size, scale, multiple languages and multiple steps, it is extraordinarily difficult as information moves from phone to email to text to whatever particular way people communicate."
A further complication is “You don’t know every individual any more in a large supply chain. What you know is the information you get. What you have to do is build a secure providence and secure line of sight to the information.”
Companies are made to work together. Systems aren’t
Which is why DLT Labs is working on a shared system of data through a distributed ledger recording what happens at each stage of the supply chain.
“Companies are made to work together. Systems aren’t. So, when you try and get two people talking different languages you need a translator. Technically we’ve done it differently. You move everything to a shared ledger. It’s in one place. The information is shared and visible. The processes are shared and visible and that’s been a dramatic change and a really powerful solution.
“We have already demonstrated with Walmart there in Canada, where we do 500,000 loads and move $23 billion in merchandise a year, the benefits and implications from having real-time, actionable, accurate information.”
The long-term view on visibility
“Inertia kills innovation and I don’t think there’s any doubt that we’re no longer stuck in a period of inertia,” says Owen.
“This [COVID-19] has sucked the ability of supply chains to breathe, just as it has done physically, and I cannot see any chance that we’re going to revert and backslide.”
For him “The only way you can have agility is by an ability to have a confident, quick and secure way to interact with who you deal with and how you deal with them. I don’t think there’s any question that this is going to be a massive inflection point.”
Owen believes the change will be as big as the first to “containerising goods". He hopes that their shared ledger means “you can containerise the data. You containerise the information. In the case of the transport supply chain we’ve built out, you had literally hundreds of variables for each delivery. How can anyone keep track of that? What we’ve done now is by the time an invoice is completed it is shared information. There is no dispute and the process is automated. There is no checking.”
A single control tower. I think that’s where the industry is heading
Moses similarly thinks that the enhanced focus on visbility and data will end mean innovation and consulting fewer sources, likely ending with putting a supply chain into a “Single platform with visual capabilities," which "is a somewhat game-changing type view of the supply chain.” The next step is to have “time management systems and data coming out of warehouse management systems” heading into “a single control tower. I think that’s where the industry is heading.”
Taking and centralising that data will then open up a lot of “opportunities for prediction,” believes Moses. “It’s certainly a big buzzword, having a maching learning AI, but it’s a fact. Having all this data in one place and then having tools that are native to that machine learning environment,” will mean “you can do things from a prediction perspective to really guide supply chain teams towards where they might have likely issues a big leap in predictive capacity and accuracy.”
This is why “in our case, we have our data in a data lake," says Moses “and a data lake is in an environment where there are tools native to doing machine learning type work that help scientists work with that data.”