There’s one big problem with global logistics today: There’s a lack of accurate, up-to-date, and accessible information for all stakeholders involved.
The problem is best illustrated through an example: a German industrial company has a supplier in China. This German industrial company has adapted a just-in-time, lean manufacturing process which emphasises the need for having a well-functioning logistics network to enable just-in-time inventory supply for their manufacturing strategy to work. It needs to be reliable as they need to know that their delivery will arrive when it is needed for manufacturing and transparent so that they can quickly adapt if anything unforeseen happens. Otherwise, they would either face expensive manufacturing down-time or they would have to go back to building in buffers in their inventory supply – defeating the point of just-in-time inventory strategies.
Logistics reliability today is arguably low. For example, ocean freight carriers have a reliability rate between 60-67%. According to our research road transports, and even train transports to a degree, also struggle with reliability issues. Furthermore, reliability is declining as heavier traffic on all transport networks has lead to more congestion and delays. Thus, the need for transparency and reliability is higher than it has ever been.
Getting insights into logistics operations is tedious due to the lack of standardisation across data sources. Often, companies only get track-and-trace data that tells them when goods have gone through a logistics hub like a port or a distribution centre. For many, that is not enough. They require data on where goods are or what is going on while a cargo is in transport as that is where delays happen – for example, when ships have to reroute because of a storm.
As a workaround, logistics operators in industrial companies spend their days on the phone, trying to get hold of someone that can give them an update on their shipment. A task that is increasingly more difficult due to the popularity of outsourcing increasing in the logistics sector. Today, most logistics operators do not know which subcontractors their freight forwarder uses. In fact, logistics operators’ often have their own contractors that are in charge of the actual transportation. Thus, even they are unaware of who the subcontractor is. This complexity leads to information being harder to get than ever before.
The same is true in reverse. If something happens to cargo when it is in transport, be it delays, damage or theft, the information flow from the trucking company to the industrial manufacturer is cumbersome and sluggish as there is little direct contact between the two. Often, it takes days before an industrial company receives information that something unforeseen has happened with their cargo.