September 13, 2018

Analyst: shippers are leading carriers in progress toward digital supply chain practices

Logistics industry is only at level two out of ten in digitalization process, as customers demand change, Project44 panel says.

By Ben Ames

On a scale of one to ten, logistics practitioners are merely at level two of the process of applying the technologies that will allow them to digitalize their operations, a Gartner analyst said Wednesday.

Shippers have evolved faster than carriers so far in this effort to transform their practices, Bart De Muynck, research vice president at Gartner, said in a session at technology vendor Project44's Transform conference in Chicago.

However, all supply chain partners are chasing the same goal as they face a challenging transportation environment, he said. Technology could be part of the solution because as companies begin to automate their data flows, they will build the capability to meet rising consumer expectations, handle disruptions to freight flows, and manage rising transportation costs.

One sign of progress toward digitalization can be seen in some companies' willingness to create leadership structures that assign oversight to a single person—such as a chief supply chain officer or a chief data officer—instead of breaking up logistics tasks between many departments, De Muynck said.

Another tool for building digital, interconnected supply chains is the increasing use of artificial intelligence (AI), said Jett McCandless, founder and CEO of Project44.

But instead of using AI directly to make forecasts with predictive analytics and to suggest solutions with prescriptive analytics, most organizations first need to use the technology to clean up their data, McCandless said. Layering complex analytics tools over raw data will not produce helpful results, so companies need to normalize and enrich that data first with AI, he said.

When that process is successful, it can lead to far more powerful results than simply tracking cargo shipments like dots on a map, he said, and like many other logistics processes, the e-commerce giant Amazon.com Inc. is leading the way. "Amazon flipped the idea upside down from transportation being a cost center to being the tip of the spear for driving customer satisfaction," McCandless said. "They've been doing that for a while, and organizations are now catching up with that."

The strongest force pushing the concept of digitalizing the supply chain is customers themselves, who are demanding an Amazon-like experience from all retailers, consultant Peter Sheahan, the founder and group CEO of Karrikans Group, said in another session. "Supply chain is becoming the new battleground of the customer experience, and that puts pressure on us because it has traditionally been seen as a cost center, but it is now a competitive strategy to differentiate you from your competition," Sheahan said.

About the Author

Ben Ames
Senior Editor
Ben Ames has spent 20 years as a journalist since starting out as a daily newspaper reporter in Pennsylvania in 1995. From 1999 forward, he has focused on business and technology reporting for a number of trade journals, beginning when he joined Design News and Modern Materials Handling magazines. Ames is author of the trail guide "Hiking Massachusetts" and is a graduate of the Columbia School of Journalism.

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