To survive, a typical logistics service provider needs to understand how technology is transforming the supply chain.
Much of the logistics service industry today continues to use what might be termed ‘conventional’ channels such as fax and telephone to try and interact with its supply chain partners. Even though the underlying carrier mechanisms may now be ‘digital’, this isn’t quite the digital end-to-end supply chain integration that many predicted as far back as 25 years ago.
So why has take-up been slow? And are things about to change?
Supply Chain Complexities
Back in the early 1990s, many forecasting gurus were talking about how technology would completely revolutionise the supply chain by the end of the decade.
Total systems integration was the promise, and a completely seamless global and largely automated supply chain seemed within reach. However, those visions proved to be unrealistically optimistic.
The first major inhibitor was the lack of a global communications infrastructure. Yes, systems were connected, but usually via prohibitively expensive, dedicated lines. Once you left your office, you could effectively forget about interacting with your supply chain as a logistics service operator, because even the early mobile phones and laptops had major problems with network coverage – particularly outside of urban areas.
Then there were the huge problems in compatibility. Many software systems couldn’t ‘talk’ to each other and were largely bespoke and idiosyncratic. To make matters worse, little of the legacy logistics and supply chain software at the time had been designed from scratch for integration and common standards hadn’t yet bedded in. The result was that, even where you could connect systems in communication terms, they couldn’t speak each other’s ‘language’.
The difficulties with human business politics can’t be underestimated either. Many of the key decision makers of the 1980s and earlier 1990s had not grown up with technology. Many saw it as a peripheral issue and feared it would threaten their own fiefdoms and ways of doing things.
Finally, nobody should underestimate the huge hit of the 2008 financial crisis. Even though technology had hugely improved by then, budgets dried up along with confidence. Nobody wanted to take investment risks.
Times Are Changing
However, the world moves on.
While nobody would pretend that 2008 has been forgotten, it is now increasingly seen as being behind us.
Furthermore, the technology really has accelerated and most of those old challenges and inhibitors of the 20th century have been resolved. Surveys also show today that technology-savvy leaders are demanding more digital transformation of the supply chain because it is seen as critical to future success.
This is going to change the landscape for typical logistics service providers.
What Does That Mean?
In future, when a retailer places an order with a supplier it could be automatically segmented and re-directed towards multiple sub-providers around the globe.
The implications of that order would also be automatically reflected in the various transport systems of one or multiple logistics service providers. The collections and deliveries could be scheduled automatically and the items concerned can even be reflected in a loading plan and included on a ‘pick list’ for loading bay staff to move.
None of this is simply just ‘nice to have’ – companies may have no choice but to operate like this in the future if they are to compete and survive.
This is all perfectly possible today. The only two things holding it back are fear of the unknown and the perennial problem of financial investment. However, most supply chain executives now expect to see such transformation over the next five years – and that should be a wakeup call for all logistics service providers!
Article Tags: Logistics Service Providers, Logistics Service, Supply Chain, Service Providers