As organizations test the waters of digital supply chain management, many are moving to logistics platforms that integrate advanced technologies.
With supply chains criss-crossing the globe, logistics has far outgrown the simple model of shippers and receivers moving assets from point “a” to point “b.” Various forces, including consumer expectations and ecommerce as well as globalization, have made it extraordinarily complex. Companies from SMEs to multinationals need seamless coordination of disparate stakeholders. Business expansion often necessitates multi-party coordination, compounding the complexity.
Many in the logistics industry are heralding a new age in supply chain management, brought about by digitization. Inarguably this is a time of great change in logistics operations and strategy, and one that was inevitable with the proliferation of digital technologies. Potential applications can be found all along the supply chain.
Platform-based business models utilising blockchain technology and other new digital tools are seen as especially promising. In an article for Harvard Business Review, Sangeet Paul Choudary, entrepreneur-in-residence at INSEAD, Marshall W. Van Alstyne of Boston University School of Business, and Geoffrey G. Parker, a research fellow at MIT’s Initiative on the Digital Economy identify three factors driving the shift to platforms in the logistics industry: new infrastructure and technology, more detailed and visible logistics data, and relentless pressure to lower costs.
The ability to capture sensor-generated data from delivery vehicles, containers and warehouses has enhanced transparency and collaboration across the logistics value chain. Blockchain technology, particularly when integrated with ERP systems, can have an immense impact here, enabling multiple parties to add immutable, time-stamped records to the open ledger.
One early adopter is global shipping giant Maersk, which developed TradeLens, a blockchain-based logistics platform, in collaboration with IBM. Event data from across the shipping lifecycle, such as contract signings, arrivals at ports and payments, are recorded publicly on the blockchain. Contracts can execute automatically, triggered when a specific event is recorded, such as a delivery.
Another type of platform is Singapore’s Transport Integrated Platform (TRIP). It connects multiple logistics stakeholders and provides a shared view of the shipping lifecycle, including data from different sources such as depots, port authorities, freight forwarders and shippers.
Other solutions use enterprise cloud technologies, which increase coordination throughout the supply chain and optimize efficiency. Moving their digital processes and workflows to the cloud allows companies to more easily share data with one other. Individual supply chain events can be unified on a central platform that receives data from multiple participating firms’ distributed systems.
Small and medium enterprises (SMEs) are using logistics platforms to facilitate cross-border trade by bringing localized fleets and warehouses on board. This is creating opportunity for organizations with sophisticated tracking and logistics coordination. Alibaba’s Cainiao data platform, UPS’s Ware2Go platform, and project44, for example, connect e-commerce companies with logistics players to manage end-to-end logistics. For last-mile service providers, this is fertile ground.