Digital Supply Chain: New Research Highlights Growth in Automation

Perspectives
Nov 16, 2017
|
5 Min Read
Digital Supply Chain: New Research Highlights Growth in Automation

Digital Supply Chain: New Research Highlights Growth in Automation

 

Emerging technologies like blockchain and transportation automation hold much promise for 3PLs and their customers, but challenges remain.

The 2018 Annual Third-Party Logistics (3PL) Study, which looked at the global outsourced marketplace and leading trends for shippers and 3PLs in the logistics industry, was a team effort undertaken by Penske Logistics, InfosysPenn State University, and Korn/Ferry. Here, we examine the highlights as well as some examples that illustrate the trends mentioned.

 

Blockchain

A blockchain is a data structure that makes it possible to create a digital ledger of transactions and share it among a distributed network of computers. It uses cryptography to allow each participant on the network to manipulate the ledger in a secure way without the need for a central, often fee-charging authority. Blockchain is still relatively new to the 3PL scene. The study showed that while 30 percent of 3PLs and 16 percent of shippers see blockchain as a potential application, they have yet to engage with the technology. Participants recognized, however, supply chain visibility would be a huge benefit of blockchain.

Global shipping magnate Maersk just partnered with IBM to introduce blockchain technology linking shippers, freight forwarders, other ocean carriers, ports and customs authorities. According to a Maersk statement published in Logistics Management, the blockchain solution based on the Hyperledger Fabric is designed to manage and track the paper trail of tens of millions of shipping containers across the world and ensure highly secure sharing of information among trading partners. When adopted at-scale, the solution allegedly has the potential to save the industry billions of dollars.

 

Transportation Automation

The 3PL study discussed the potential of on-road automation with driverless vehicles.  Many participants claimed that automation is also providing returns across the supply chain through digitalized load matching and warehouse robotics. Available truck technology such as adaptive cruise control, collision mitigation systems, auto-docking functionality, and telematics allow truck fleets to operate with fewer mishaps.

Wishing to maintain their competitiveness, a majority of 3PLs (62 percent) and shippers (57 percent) are investing in transportation-related automation. “Data-driven decision making is the key to increase asset utilization, improve efficiency and decrease volatility,” said the report. Nevertheless, there are challenges. For one, technology is progressing so quickly that automation investments may become obsolete by the time a fleet purchase of several years is complete. Furthermore, many organizations simply don’t have the in-house talent to develop, implement and monitor new technology (12 percent of 3PLs and 10 percent of shippers).

 

3PL/Shipper IT Pain

Shared responsibility for digital transformation remains a critical component of the relationship between 3PLs and shippers.

In the study, 79 percent of 3PLs and 64 percent of shippers reported they were involved in projects in which the ability to execute quickly was directly impacted by lack of complete, accurate and consistent information provided by the shipper. The research illustrated a large increase in the percentage of shippers seeking information technology (IT) services from 3PLs, with 27 percent indicating outsourcing of IT services in the 2018 study compared to 17 percent in the previous year. However, the percentage of shippers indicating satisfaction dropped slightly this year from 65 percent to 56 percent, potentially due to higher expectations among shippers as technology has improved or because shippers are seeking enhanced analytical capabilities to help drive more effective supply chain decisions.

And 3PLs are under a lot of pressure. “They continue to deal with issues such as manual data entry, driver shortages, proliferation of data from Internet of Things devices, warehouse and on-truck capture devices interfacing into legacy systems, and the rise of emerging geographic markets with antiquated paper-based systems,” said Bruce Orcutt, senior vice president of product marketing at ABBYY, in an article he wrote for Supply Chain Management Review.

Orcutt acknowledged that 3PLs have worked hard to support a high volume of digital transactions and a diverse set of documentation sources through self-service portals that can handle fax, email and various formats such as EDI, ANSI X12, EDIFact, Web Services, spreadsheets, and CSV. A digitized and efficient workflow, intelligent data capture, auto-classification of document types, customized, real-time business intelligence dashboards of the supply chain, and load optimization algorithms based on real-time data are all ways that 3PLs are driving business value through digital transformation. “However, there are still remnants of the analog world that don’t quite fit with the new digital strategy,” Orcutt pointed out.

Then, finally, there are new competitors that threaten the delicate balance between 3PLs and shippers. “Google’s same day delivery, Amazon’s drone package delivery testing, self-driving trucks, and the inevitable Uber for Trucking with supply chain load sharing are examples of disruptions,” said Orcutt. “The influx of new market entrants is armed with new technologies and unburdened by legacy systems.”

 

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