The supply chain is becoming a mainstay of public concern as a result of COVID-19, but industry leaders know that supply chain health is historically fragile under natural and market forces: hurricanes, tariffs, wildfires, labor regulations, and carbon-reduction mandates. The rising demands of e-commerce amid increasing consumer expectations for fast and free shipping have only added more stress to the system.
The combination of these forces has pushed the supply chain into the spotlight, highlighting the challenges of the ever-shifting landscape, the impact on workers up and down supply chains and various levels of the economy, and the growing need for innovative technologies and strategic partnerships to tackle these issues.
Today, most shippers must rely on an interconnected network of technology, logistics and service providers to keep goods moving — transporting them across the world and across the country through various warehouses and distribution centers before they hit retail shelves or your front door.
This complex behind-the-scenes coordination involves multiple companies and technology platforms — reliant on a backbone of communication largely done manually through emails and phone calls.
At its recent conference, FWD21, global logistics platform Flexport featured a conversation between its chief technology officer, James Chen, and Ziad Ismail, the chief product officer at digital freight network Convoy. In June, the two organizations announced a strategic long-term partnership and shared commitment to create full end-to-end supply chain visibility — from international production to the final store delivery. In addition to discussing the impacts of the partnership, Ziad and James also unpacked the industry’s sticky communication issues.
According to Chen, large volumes of information come through disparate channels, like phone, email and chat because we’re dealing with the physical world. Chen states that while “a large carrier or logistics service provider hopefully has a great process they’re augmenting to automatically send and communicate, in reality, when an exception happens, you want to get information out,” and that urgency creates fragmentation around how we communicate.
For the industry to achieve the next level of innovation, it has to solve the email and phone bottleneck and embrace API’s technologies and standardized data interfaces, added Ismail. “Something as simple as a document going to the wrong email address can lead to delays and an inability to get capacity.”
The fragility of this system has always existed, but it has been exposed as the pandemic disrupted the global supply chain.
“When unplanned events send shocks through the system, the current supply chain just isn’t equipped to react fast enough,” said Convoy CTO, Dorothy Li. “The current trade-off shippers are making to build resilience into the supply chain is to have a supply chain that is highly wasteful. To truly fix this, companies need to collaborate. A shipper’s network of transportation partners need to be truly interconnected, freely sharing data and critical information needed to run the supply chain in a timely manner.”
The acute pain that COVID-19 caused for shippers is incentivizing deeper technological change. Chen added that companies will be incentivized to join digital networks with end-to-end visibility when the user experience provides a single version of true events in global logistics. Shippers will be able to make smarter decisions when they see the entire network, as opposed to each piece of the supply chain making a local decision without considering the downstream implications.
Here’s another incentivizing factor: The cost for companies to integrate enterprise software, join visibility networks and build platforms has been going down. Since 2011, $302 billion of venture capital funding has been invested in supply chain technology, which has lowered barriers of entry and paved the way for existing platforms to build new capabilities and open up for third party enhancements.
“Convoy and Flexport have a shared vision and shared DNA in that we’re both technology companies looking to solve the distinct challenges in freight,” said Li. “Being in adjacent parts of the supply chain, our mutual shipper customers will benefit most from our technology integration as we look to connect international manufacturing and shipping through to over-the-road delivery to stores.”
Chen believes that data transparency will provide the greatest value to the industry, stating: “The most important thing is how we leverage other companies’ information to make the overall better.” In the domestic side of the business, this means using data on trucking capacity to determine how to forecast and optimize routing. For international routes, tracking ocean carrier schedules and container volumes can help dictate how to manage people and resources working in our ports.
But how close is the industry to ditching email and phone calls and modernizing its communication tools?
“We’re getting close with the acceleration of digital adoption and there’s a lot of standards bodies out there continuing to consolidate so that the data is more uniform,” said Chen. “It’s still probably at least five years away, but you can see the light at the end of the tunnel.”
“Shippers are coming to terms with the fact that the standard traditional antiquated way of doing things isn’t working in this fast-moving more volatile market, and that the sooner they embrace digitization, the sooner they can benefit from it,” Li said. “Even when the pandemic and the effects of its aftermath are behind us, these problems will remain.”
This article is published jointly with our partners at Convoy. To view more Future of Freight content, click here.