Supply chain software has the potential to help retailers reduce waste, both physical and intangible, speakers at a symposium held by the Worldwide Supply Chain Federation in New York said Wednesday.
Technology vendors covering a wide spectrum of software categories — from marketplaces for unused apparel fabric to global trade facilitation blockchain platforms — said the adoption of such systems could bring particularly strong benefits to shippers in emerging markets.
Speakers said end consumers and business-to-business buyers of goods pay supply chain costs hidden by process inefficiencies and a general acceptance that waste is a byproduct of those inefficiencies. Those extra costs could be tied to administrative personnel required to input data, track goods, and conduct compliance audits. Or it could be as simple as writing off unsold finished goods or dumping unused raw materials.
The reasons for that waste are myriad, from a lack of cohesion between sales demand forecasts and purchase orders, to the quality of finalized products and an associated lack of control during the production cycle, to more freight-related issues, such as the traditional inability to match unused carrier capacity with available cargo.
The technologies discussed at the Supply Chain Innovation Technology (SCIT) event were typically buzzworthy: blockchain, machine learning, and robotic process automation (RPA). But the focus was on practical uses of such technology, as well as definitions of what those technologies were not.
For example, Ken O’Brien, chief operating officer of the Gemini Shippers Association, said he understood the potential value of blockchain in the container shipping industry, but said the liner carrier industry and ocean freight shippers have more pressing and basic needs.
Other speakers talked about using the much-maligned blockchain to redefine core global trade processes. Tanjila Islam, founder and CEO of trade facilitation software provider TradeFlo, said blockchain can provide broader trust between a buyer and its suppliers while also driving digitization of paper-based documentation. Islam is focusing on empowering sellers of goods in emerging markets, such as those in African countries covered by the African Growth and Opportunity Act (AGOA) trade treaty between the United States and sub-Saharan countries.
Data before optimization
Speakers on a panel on how technology is reshaping landside logistics said data integrity must improve before shippers and their service providers can optimize the movement of goods, not to mention broader supply chain activities, such as the coordination of logistics with upstream activities (such as sourcing and production) and downstream ones (such as e-commerce fulfillment).
Bob O’Donnell, head of North America e-commerce logistics for Maersk, said the carrier is engaging with shippers on how it can provide more final-mile services for goods sold online, using historical data to build out those activities not typically associated with liner carriers. O’Donnell spent years in Hong Kong and China with Maersk setting up such capabilities there.
Ahmad El-Dardiry, chief revenue officer at the freight broker Transfix, said his company is using shipper and carrier behavioral data to rethink existing logistics models. El-Dardiry, who came to Transfix after 19 years at Intel, said he couldn’t fathom how often contracts weren’t honored, and that companies that can understand the data they are using are best placed to change that paradigm.
Juliana Nascimento, optimization expert in operations research at Princeton University and a startup called Optimal Dynamics, spoke of supply chain as a big math problem. She described building predictive routing models for carriers, ones in which she might run 20 different scenarios to get a driver from a load pickup to destination and then back home at night. If 18 of the 20 scenarios enable the driver to make it home, the carrier might decide to accept the load, depending on the threshold set by the carrier. For some carriers, that threshold might be 15, while for others it might be all 20.
Nascimento spent seven years in supply chain optimization in Brazil for Kimberly-Clark, so the thread of working in logistics in emerging markets worked its way throughout the program Wednesday. Broadly, the takeaway was that technology has the potential to allow companies in those markets to leapfrog existing technologies built around legacy enterprise resource planning (ERP) systems and usher in a more efficient future for trade.