When logistics technology hurts more than helps

When logistics technology hurts more than helps

Technology is often cited as the key to overcoming two challenges for shippers and the logistics providers that serve them: customer satisfaction and cost savings.

But what if technology hinders the achievement of those goals instead of enabling them? Approximately half of supply chains failed to meet their goals for 2019, according to an American Productivity & Quality Center (APQC) survey of supply chain professionals in late March, and technology shortfalls were cited as a primary factor in those failures.

In terms of the specific areas where supply chains broke down, 43 percent of survey respondents said they failed to meet customer service goals; 41.2 percent failed to meet cost-savings goals and sales goals; 35.7 percent failed to meet inventory control goals; and 27.1 percent failed to meet return-on-investment (ROI) goals for technology.

It may be more instructive to look at the underlying reasons many of these supply chains don’t reach their potential. Respondents cited regulations (46.6 percent), a lack of support for collaboration (44 percent), and technology itself getting in the way (40.6 percent) as the primary roadblocks.

Digitalization offers supply chains an opportunity to maximize revenue streams, overcome obstacles, and build better customer service experiences. But even when armed with a full lineup of systems, problems still regularly arise.

Let’s drill into the latter two roadblocks: a lack of collaborative ability and friction caused by juggling multiple systems.

It’s natural for a software user to wonder, “Are we really getting what the software vendors promised if we have to spend hundreds of hours clicking and moving between software suites? Where is the efficiency? Where are the real savings, and what do I really know about those savings?”

For most, the answer to these questions is “no,” and it often starts with breakdowns in collaboration, which is much more than people just communicating with one another. Instead, it involves the integration of supply chain partners’ systems and people.

Generally speaking, logistics services providers want to be able to measure the health of their businesses. Freight brokers need speedy and accurate cargo capacity availability information and a faster invoicing process. Shippers need faster pickup and delivery. Carriers need more data and access to drivers. Relationships exist between all of these parties in some form, but each interaction is a risk of lost efficiency.

These inefficiencies were present prior to the COVID-19 pandemic — and supply chain leaders knew they existed — but they were easier to ignore given their relatively low impact. Now, those minor inefficiencies are under the microscope as companies try to survive. A simple enough solution exists for those that know what they need, one often referred to as the “single window” strategy. This is intended to describe a unified platform that allows a user to access multiple systems — connected on the back end — thereby avoiding the issue of lost inefficiency through having too many platforms in use.

What does it all mean, really?

Well, each of these companies likely has some form of system that provides information to its supply chain partners. Assume a single process takes three minutes. It seems efficient and leverages digital systems. It feels like that’s not a lot of time, and that people can check their data entries to save money, right? Well, across 250 daily shipments, that's the equivalent of 1.5 full-time employees (12.5 hours), and that excludes the costs of fixing errors during rekeying.

The same concept applies to creating carrier scorecards, managing invoices, and other laborious, resource-intensive processes. Every redundant task adds to expenses. But unified capabilities can enable more efficiency, reduce update downtime, unlock revenue gains, and shorten the technology investment repayment clock drastically.

Viewing such investments through the return on investment (ROI) lens can help sharpen the use case for investing in technology, particularly as a way to better leverage existing investments that aren’t performing optimally.

Adam Robinson is director of Product Marketing for Turvo. He can be reached at arobinson@turvo.com.