SUPPLY CHAIN BRINGS CHALLENGES—AND OPPORTUNITY

The industrial “Internet of everything” is just in its infancy, and companies that can compel the supply chain to share and analyze integrated data—without compromising their own commercial strategy and interest—will find that ports, shippers, and other logistics providers can help tackle challenges and opportunity.

Kurt Beckett
Deputy CEO, NW Seaport Alliance, Section 3
Today’s supply chain is being asked to do more and more each day to keep up with the incredible innovation taking place in eCommerce. Relentless demand for speed over the “last mile”—when goods leave primary shipping streams for delivery to their final destination—creates major challenges for cargo haulers, ports, and transportation networks. But it also creates opportunities to drive more efficiency and more value for supply chain customers.

Most of the freight that moves around our world is not heading to customers of Amazon, Walmart, or high-end manufacturers that demand two-day delivery. But much of it flows together through the same roads, airports, railways, and shipping containers. This heightens competition for physical space and taxes the fluidity of the supply chain, often in dense, urban areas that lack the infrastructure to handle the additional volume eCommerce creates.

The wealth of available data, and the ability to process it, enables better forecasting and predictability over the supply chain, which offers clear business value.

It also raises costs, adding a premium for companies that need to store goods closer to their customers. Companies unwilling or unable to pay that premium have to settle for less optimal placement. Whether you’re a port, an ocean carrier, a marine terminal operator, a warehouse owner, or a trucking firm, you respond to what the cargo owner needs—but you can’t always charge for it.

What does that look like? In the Puget Sound area, most of the goods that come across our docks head to nearby warehouses, which could be anywhere from 100 miles away to 10 blocks away. Demand for eCommerce fulfillment raises pressure to keep more of those goods in the city in more expensive facilities. Low-margin products and bulk items have to go further down the road, maybe even over the Cascades. And in some cases, they come back near the port to get loaded on a rail car. These two-way trips increase traffic congestion and create efficiency challenges.

But, as they say, sometimes a challenge is just an opportunity in disguise. In this case, the opportunity is to improve service for the more traditional goods in the supply chain. The predictive capacity of machine learning and real-time data analysis add fluidity to the entire supply chain. This also helps businesses and their customers track business-to-business (B2B) bulk shipments the same way eCommerce shoppers can follow their new video game as it travels from the warehouse to their door.

Whether they realize it or not, all companies are affected by the supply chain—now more than ever.

The digitization of logistics, deployment of tracking sensors, cloud-based analytics, and warehouse automation that’s powering some eCommerce is all becoming available at a much lower cost. This means that even more traditional, low-price point cargos—which could never afford the time and brain space to fully optimize their supply chain before—can manage their processes more efficiently and make well-informed choices about their logistics providers.

The wealth of available data, and the ability to process it, enables better forecasting and predictability over the supply chain, which offers clear business value.

To fully capture the opportunities ahead of us requires that businesses share data at some level, and collaborate more deeply and consistently than ever before. The industrial “Internet of everything” is just in its infancy, and companies that can compel the supply chain to share and analyze integrated data—without compromising their own commercial strategy and interest—will find that ports, shippers, and other logistics providers can deliver even better service.

For our part, ports and other supply chain components must commit to integrating that data in an appropriate manner, taking care to avoid disclosing trade secrets and to secure commercially sensitive data from bad actors.

Whether they realize it or not, all companies are affected by the supply chain—now more than ever. Businesses also have unprecedented choices and opportunities to influence the supply chain to their advantage. Exponential changes are just around the corner, and forward-thinking companies are already taking steps to capture more value from the modernizing supply chain.