From trade wars to natural disasters, the global trading ecosystem is well-versed in the importance of maintaining an agile supply chain amid market volatility.
Indeed, the supply chain management, shipping and logistics arena became a hotbed of technological innovation in recent years as disruptors looked to fast-track the evolution of an industry with centuries-old legacy processes.
But for all of its recent digitization efforts, nothing could have prepared supply chains for a global event as disruptive as the pandemic. Now, more than ever, organizations are leaning on their logistics providers to keep business moving amid dramatic swings in customer demand and production capacity.
Grant Goodale, co-founder and chief technology officer at trucking services technology firm Convoy, spoke with Karen Webster about how the present market climate has ramped up efforts among supply chain solution providers to achieve the kind of flexibility the industry has sought out for years. But it’s not as easy as it seems, even for digital-native players in the space.
“A lot of what we’ve seen from our shippers is a recognition that the new normal may look different from the old normal,” he said, noting the importance of collaboration to ease the pain of market volatility. “They’re looking for partnerships to try and figure out how to be flexible in the face of changing demand from their customers and changing capabilities and timelines of their suppliers.”
Disrupting Centuries-Old Processes
While the shipping and logistics arena has seen a fair share of technological disruption in recent years, Goodale explained that industry heavyweights continue to operate with legacy, manual processes, relying on customer loyalty — not digitization — to remain competitive.
“Just like there are retailers that feel their relationships with their customers are what anchors them, it’s the same with some transportation providers in logistics and supply chain,” he said. “They believe that’s what brings people back, and going digital is not going to make those [customer] relationships stronger.”
This no longer rings true in today’s climate, and just as retailers that fail to embrace an eCommerce business model are likely to fall behind the competition, logistics players that continue to rely on customer allegiances rather than invest in digitization are likely to fall behind, too.
There’s another challenge holding the trucking and logistics space back from modernization: Many processes in this arena are decades old, if not literally centuries old.
The bill of lading, for instance, a critical document that presents proof of shipment and legally transfers goods from one party to another, is about as old as the concept of shipping and trade itself. Today, it remains a physical piece of paper that must be handed off on-location.
“Everyone assumes this is obviously going to be digitized, and it will be automatic, seamless, digital,” said Goodale. “But this piece of paper is the tip of a process iceberg for companies, and you can’t just walk in and replace that with a digital piece of paper or digital screen.”
The shipping arena, despite digitization efforts, remains stubbornly loyal to many of its old ways. And yet, amid widespread disruption, there is an expanding understanding of the importance of change and flexibility — and that means embracing digitization, too.
Flexibility Through Collaboration
From a surge in consumer demand for groceries and toiletries, to forced shutdowns of manufacturing facilities, the dramatic fluctuations in product demand and production capacity have rarely been aligned over the last few weeks and months. Goodale pointed upstream along the supply chain where many bottlenecks and delays are occurring, and for many logistics service providers like trucking companies, understanding exactly how to be ready when shipping demand surges — and what to do when it drops — has been a challenge.
“The sheer volume of companies that have had changes in their own shipping patterns has meant that truck drivers are looking for ways to fill that schedule, to reduce empty miles, and to try to get a good level of utilization of their assets,” he said, noting that the development of a digital-native solution with flexibility in mind is key to making progress in this industry.
For Convoy, that means operating asset-light to more easily shift transportation and manufacturing capabilities as needed. The firm also recently launched its Convoy Go tool, a drop-and-hook marketplace enabling carriers and owner-operators to haul pre-loaded trailers and to “decouple the arrival and departure of the trailer with the loading and unloading of the trailer,” as Goodale explained.
Achieving flexibility through technology also entails a high degree of industry collaboration. As a platform with connectivity into both shippers and carriers, data sharing can also support a higher degree of flexibility on both sides of transit, and a higher understanding of how to optimize freight matching.
Logistics players today are looking to collaborate with technology providers to transition into new business models, adjust transportation schedules, optimize capacity and react appropriately to continuous change. While deeply-rooted processes won’t go away overnight, Goodale said the pandemic has opened even more minds to change.
“One of the interesting outcomes of COVID-19 and all of the shifts we’ve had to make in our daily and professional lives is that people are more open to trying something different because supply chains haven’t entirely stopped,” he said. “We’re finding new digital solutions provide value, and in some cases, they’re even better [than the old ways]. So, I think people are starting to question a lot of things that they might have taken for granted before, which is healthy for the industry.”