This feature appeared in the January/February 2018 issue of Logistics & Materials Handling.
In the increasingly complex world of supply-chain logistics, ensuring end-to-end visibility of product movements is no longer just a possibility – it’s becoming a necessity.
Real-time traceability of transport services offers consumers a sense of control in order deliveries – it’s now possible to see precisely where a purchase is located, at any time.
The increase in visibility through tracking technology has already been one of the most prominent changes to the transport and logistics industry in recent decades, explains industry expert, Naval Sabharwal. Naval, who has spent 35 years in various roles in the logistics sector, now holds the position of Global Head – Supply Chain and Logistics at business software provider Ramco and has experienced the technological shift first-hand.
“Visibility is the biggest change to the logistics industry, and technology is a huge enabler,” he says. “Gone are the days of working on pen and paper, using carbon sheets to make copies and waiting a week or more to get the status of a delivery. Now, you can see the status within milliseconds by using tailor-made software solutions.”
Yet, according to the latest State of Logistics report produced by global consultancy AT Kearney, the rising demand for greater transparency and reliability is becoming more complicated to deliver, as e-commerce adds complexity to supply chains. The report finds that rapid technological change and new business models are driving logistics towards fully digital, connected and flexible supply chains, optimised to meet rising consumer expectations of immediacy, personalisation and convenience.
Ramco has been in the logistics market for 10 years. Two years ago, the company made the strategic decision to address these new demands, developing an integrated suite of cloud-based software services for logistics companies to use to track cargo and provide transparency to customers.
“E-commerce recognises no borders,” says Naval. “With the likes of Amazon expanding globally, the need for integrated logistics software became apparent. While the biggest external challenge facing the customer is being able to provide end-to-end visibility of orders, we also found that by increasing traceability internally in a business, there is a real opportunity to maximise profitability.”
That profitability comes through increasing capacity utilisation, he explains, adding that the average logistics company’s capacity utilisation is only at 27 per cent – meaning 73 per cent of capacity created is not earning revenue. Simply reorganising assets using an integrated optimisation engine can bring that up to 42 per cent, he says. “That’s a 15 per cent jump, which directly impacts revenue margins,” Naval adds. “More important – once you improve capacity utilisation, suppliers become more engaged, and it becomes easy to build and create more capacity and improve the yields from capacity, driving the growth engine.”
Ramco’s software can match all of the data on available capacities to demand on a weekly basis, do the scheduling and also allow logistics service providers to draw on external assets as required. “What we did was use Uber as the base model,” he explains. “Uber’s strength is in how it manages capacity for its suppliers, and we built a model tailored to the logistics industry.
“Just like Uber, the focus is not just on its features, which include automatic data capture, scheduling, GPS, data management, billing and routing. The focus is also on ease of use – there have been many great logistics optimisation software tools that have failed because they are too hard for customers to use effectively.”
To ensure end-users are able to get the most from the Ramco Logistics suite, a member of its advisory board meets with its customers once every six months or so to get direct feedback, Naval explains. “We ask all our customers what they want the software to be able to do, collate the responses, analyse them, then add the features,” he says. “We implement around 93 per cent of the input we receive from customers and are constantly upgrading the software to meet the logistics industry’s evolving needs.”
Ramco’s findings on changing consumer demands are in line with that of the State of Logistics report, which advises that the industry is shifting from a transactional business model focused on discrete services toward an integrated model of ‘one-stop shops’ for end-to-end logistics services. “Ninety per cent of our customers use the complete end-to-end suite that covers transport, hubs and warehousing points,” says Naval. “The real value of the suite is its integrated nature. By covering every step of the transaction, we’re able to minimise revenue leakages.”
Naval notes that the average logistics company is subjected to revenue leakage of between one and three per cent, month-on-month, adding that it can be reduced to less than 0.1 per cent through the use of an all-encompassing suite of software. Utilising blockchain technology (see breakout box) will be an important next step to increasing visibility in the global logistics industry, he says.
“The way we see it, the global supply chain – including shipping, air, rail and road – has no option but to go to blockchain,” says Naval. “Consumers are bound to get more conscious of health and safety areas, for example. They want to know the food they eat wasn’t sourced with child labour or subjected to pesticides. That information is lying around, and the only way to provide end-to-end visibility to a consumer is with Blockchain.”
Though visibility in the global supply chain has evolved significantly since the early days of pen, paper and carbon sheet copies, according to Naval there is still a long way to go. The State of Logistics report echoes those sentiments, adding that as demand for e-commerce reshapes networks and relationships, technology uptake must follow suit.