Published on JOC.com (http://www.joc.com)
ORLANDO, Florida — Logistics has changed drastically. What was once called “physical distribution management” is now just as digital as physical, and the rapid growth of e-commerce, coupled with mobile technology, is pushing the limits of omnichannel supply chains.
“I don’t think you can have a presentation anywhere without talking about ‘omnichannel,’ but I prefer the term ‘customer centricity’,” Fab Brasca, vice president of solution strategy for JDA Software, said at the 2016 Council of Supply Chain Management Professionals meeting.
That’s what the latest round of supply chain change “is all about,” Brasca said during a session on the future of transportation management at the CSCMP conference here Tuesday. “Consumer behavior drives change, and omnichannel is the result,” not the other way around.
It’s a simple idea, but it leads to increasingly complex supply chains, as shippers, carriers, and their logistics partners are forced to create highly individual, customized lines of supply.
“Today the software revolution is meeting the industrial revolution,” Seth Bodnar, chief digital officer of GE Transportation, said Tuesday. “We’re moving from sledgehammers to digits.”
There’s an “incredible opportunity” to merge information with operations via technology, Bodnar said during a presentation. “Industrial companies today have massive amounts of data, but many of them aren’t doing anything meaningful with it,” Bodnar told logistics managers here.
Increasingly, shippers are turning to third-party logistics providers for help managing and crunching that data, a report released at the CSCMP meeting by Capgemini Consulting, Penn State University, and Penske Logistics shows. Outsourcing is “increasing over historical values,” the report said, with more shippers using 3PLs for strategic, technology-based services.
The report found 19 percent of shippers are taking advantage of supply chain consultancy services, compared with 11 percent last year, and 17 percent of shippers are utilizing IT services, compared with 11 percent last year. Nearly three-quarters of shippers said real-time analytics from 3PLs help them better understand shipping alternatives, and 61 percent valued 3PLs’ assessments of trade lanes and origin-destination pairs in terms of cost and service levels.
Ninety-eight percent of the 3PLs surveyed for the 21st annual Third-Party Logistics Study said improved, data-driven decision-making is essential to future supply chain success, and 93 percent of shippers agreed. Both groups, 86 percent of 3PLs and 81 percent of shippers, told the survey the effective use of big data will become a core supply chain competency.
“We’re seeing the walls come down (between partners),” Brasca said in his session. Improvements in technology are fostering deeper collaboration across supply chain networks, including collaboration among shippers, he said, but getting processes right is key.
“Someone has to own the process at all times,” Brasca said. “There have to be rules of governance and recourse to allow true collaboration. Otherwise someone loses.”
As greater collaboration and digitization create new opportunities to rethink supply chain strategies, logistics managers will have to adopt “asymmetrical” methods of tackling supply chain challenges, said Bodnar, a former US Army captain and anti-insurgency specialist.
“I think it is likely every leader in this room will be forced to work under circumstances you weren’t trained to handle and for which your organization is not designed,” he said. “We have an obligation to quickly adapt ourselves and our organizations not merely to survive but to win.”
In logistics terms, that means delivering what your customers need when they need it, not earlier or later. “In this world, you either disrupt, or you’re going to get disrupted,” Bodnar said. “You have to fight the war you’re in, not the war you want. We’re finding the same thing to be true at GE. If we don’t disrupt ourselves, somebody else will.”
For example, GE Transportation is transforming itself from a “big iron” supplier of locomotives to railroads to a provider of equipment and software and data services that can help its rail customers — and rail shippers — better manage freight networks.
GE Transportation is making that change even though greater rail and supply chain efficiency could reduce the need for its core industrial product, the rail locomotive, Bodnar said.
“Just selling more locomotives, that’s not the war we’re fighting,” he said. “We’re using analytics to help drive efficiency. Our apps can help an industrial shipper manage its yards. You can’t run a factory effectively if you don’t have visibility into when your inputs are going to arrive.”