Social Media platforms of all hues are abuzz with Webinars, and Articles on the crying need for Automation through Digitization in the domain of Transportation, Warehousing & Distribution. There has been an entrepreneurial zeal around the opportunities of digitization in Logistics which has resulted in thousands of STARTUPS – 99.99% addressing the area of Technology Solutions for Logistics. Not getting into quoting news feeds that talks about the Billions of dollars raised in India and abroad for such ventures, we the older generation in this logistics business is happy to see the influx of smart PEOPLE, CAPITAL, and finally the acceptance of Logistics as the differentiator in business.
Roti (Food), Kapda (Clothing)& Makan (Shelter) is the Indian version of the hierarchy of needs for a human being. Similarly, organizations also ascend these hierarchies based on their progress. While the co-existence between the Logistics Service User (LSU- Manufacturer) and the Logistics Service Provider (LSU – Forwarder) has crossed a century and has attained maturity in terms of meeting expectations, often these status quos are challenged by disruptive technology which promises better productivity. What history tells us is that Productivity enhancement tool adoption is done only when it provides business sense – reduction in cost or increase in, efficiency.
First in the hierarchy of needs comes Roti – All things which are required for the LSP to breakeven and here tech tools are way down the list. Then Comes Kapada, the first step of sophistication – Like a transporter’s transition into a 3PL and here the tech tools are somewhere in the middle of the list. Finally, Makan, the established LSP stage where he moves from an Asset-Less to Asset-Lite to an Assetised Model. Here the tech tools feature at the top along with his Infra shopping list. However, the tech tools at this stage relate more to Financial & Process Control and he levels the playing field with the LSU in tech adoption by onboarding applications like SAP, Salesforce, Oracle, etc.
The impact of two models covered by the Disruptors in Transportation and Logistics are discussed here for the brevity of this article, even though there are a host of other similarly important models where such tech-driven disruptive solutions have made their mark.
Transport Aggregators provide Platform-as-a-Solution for Air/Sea Freight, Road Transportation, etc. Mostly working on the Subscription model, most of them do not handhold transactions that are left to the entities who meet on the platform and get into the business. While the model holds great potential, the Users have to work with a clutch of these platforms to cover the whole market and modes. Each platform is a silo and the silos do not talk to each other and the silos do not talk to customer’s systems very often. The disruption promise was to break the silos and level the playing field for the customer. In a lighter vein, a lot of these tech platforms end up being dating sites for transporters and Customers. There is a need for the aggregators to address the Freight Management landscape to remain in business in the long run.
Imagine sending a courier to your friend. Today, you can get a blow by blow account of how the package moves along the execution chain of the LSP and finally gets signed off and you even get the name and photo sometimes of the person who has taken delivery. Compare this scenario when you send a consignment weighing tons across the border – What you normally get is an ocean of emails and a DSR in an excel sheet from the same LSP as “tracking”. For sure, Visibility is a challenge and we need solutions for the same. When the execution chain is through its own assets and modes, there is no visibility tool externally needed. When the execution chain of the shipment is through the third party as in Freight Forwarding, visibility tools are required for internal consumption and only filtered information goes to the customer making disruption a lesser reality. Visibility tools are highly recommended for the LSUs, but adoption is very little as the IT depts are not ready to fund these initiatives of Logistics visibility. In most cases, it is seen as the service liability of the LSU to provide the same. The initiative in LSU IT is to in-source all these functionalities in the ERP itself as an IT solution. None of these ERP solutions has an evolved Logistics module like their Financial or S&D modules.
There are other models where a Tech invention creates an opportunity for new solutions like IoT, Conversational Systems, Big Data Analytics, ML, AI, etc. While Supply Chain is discussed as the biggest differentiator for businesses, the Supply Chain Execution process – LOGISTICS – is an Enterprise OUT function and outsourced. Most of the LSU tools lack Enterprise-wide Applications Integration and also lack External integrations with data sources. This makes those systems behave like form filling accountants providing no great disruptive value. Adoption of these tech tools will definitely be a reality as we go along as it will provide great value to enterprises. However, the enterprises first need to be ready with their operational systems to receive the benefits provided by these disruptive tech solutions.
That brings us to the discussion on where is it that the Multi-Billion-Dollar funded tech tools for the Logistics Industry find relevance and create disruption. While speaking to my customers who are both LSU and LSP, these days I am keen to discuss the new-gen tools of disruption they are using. The standard response I get from the LSU is that it is up to the LSP to use all those because, in the end, they are responsible for the Safe and Timely transit of the shipment. The response from the LSPs is quite interesting. They are dabbling with some of these new-gen solutions for sure, but mostly as trophies on the wall as the entities are quite popular in social media and find immense potential as Sales tools for more business rather than benefits accrued from using them. While delving deep on the benefits of the new-age tools, they are frank enough to admit that they evaluate outcomes in line with Customer happiness, the effect the expenditure has on the bottom line, and the Business Value they bring to the table. That means the new-gen apps and models are yet waiting to create the promised disruption. Imperative to add here that there are some highly adopted disruptive tech tools in the industry coming from entities who have designed very relevant solutions.
While tech-driven apps like Uber have hit the high ground of adoption by the people for personal use, Uberisation of Logistics Execution is yet to reach anywhere near the tipping point of going viral in adoption. In Business, there is very little of an emotional purchase. Every spend is weighed against the relevance of the solution and the benefits on the ground by the adoption of such solutions. Technology is not the panacea for every problem in Logistics. Technology is the chief facilitator of the Supply chain. As a facilitator, technology solutions have to be grounded in business reality and have to deliver leveraged value to make adoption go viral and make the business of creating solutions commercially viable.