End-to-end visibility into your supply chain is more important now than ever before, and goes beyond the methods that have been effective in the past. The changing economics of manufacturing, inventory and shipping require new technologies. To survive, companies must proactively adapt by embracing products and services that provide insight and analytical analysis of their processes, and deliver real-time information about in-transit shipments regardless of size or distance.
The economics of shipping is changing. In the supply chain and logistics industries, the shrinking world manifests itself in shorter distances and smaller shipments. Even LTL (less-than-truckload) carriers, already familiar with a very competitive marketplace, are struggling with lower margins as a result of lower and lower weight per shipment. To preserve their bottom lines, these companies have kept operating efficiency high and tried to keep shipping rates consistent. However, there’s evidence that pricing wars are returning, which will put strong downward pressure on revenue.
In the face of these threats, LTL carriers are turning to the “last mile” delivery market—a potential source of sustainable income, but also a highly competitive market with numerous daunting challenges. Last-mile customers are often consumers who expect their packages to arrive the same day they’re ordered online. The expectations of perfect performance have risen precipitously, meaning that even a few small errors can have a deep effect on a company’s reputation.
To solve these problems, companies are turning to the latest Internet of Things (IoT) technologies to make the shipments themselves smart enough to know where they are, and in some cases, re-route themselves to avoid damage or spoilage.
But how can IoT close the visibility gaps?
Supply chain management has generally relied on Electronic Data Interchange (EDI), a standard that was developed to integrate the variety of systems that sprang up independently to manage business information. There is, however, little in the way of communication while goods are in transit, mainly because it was impossible to determine with any precision the location of a particular shipment.
The problem is compounded in the LTL and last-mile realms, because they both mean that a single conveyance is tasked with carrying a large number of individual shipments that must be tracked separately. Furthermore, these small on-demand loads are often managed by third-party logistics (3PL) companies, which sometimes offer limited visibility at various stages of progress of the shipment. Through no fault of their own, therefore, an entire logistics team can lose sight of products in transit, resulting in a number of risks:
- Loss or theft – cargo theft can occur at any point in the supply chain, but is more likely when there is no visibility into the location and authenticity of the product in transit.
- Adulteration or replacement – it is crucial that the goods that arrive at the destination are exactly the goods that were shipped, with no replacement or contamination along the way.
- Diverted, expired or counterfeit goods – products intended to be destroyed can be diverted into the supply chain for illicit sale. Expired goods not fit for sale, misbranded or relabelled products can be introduced into the supply chain.
- Regulatory compliance – certain types of products require certification of environmental factors (temperature, humidity, vibration, shock) or chain of custody.
- Customer satisfaction – the ultimate test in supply chain management is serving the needs of customers, who increasingly demand their own visibility into the location of goods in transit
- Performance, efficiency and the bottom line – fast transport at a low cost to the carrier relies on the detection and mitigation of pinch points, risks and inefficiencies to maintain continuous improvement
As more suppliers choose LTL shipping to keep costs down, it’s obvious that they will be demanding greater supply chain visibility to keep their customers content. To keep pace with internet shopping, logistics teams must keep abreast of the Internet of Things. In my next blog, I’ll talk about smarter shipment solutions that fill the gaps in supply chain visibility.