In the past few weeks, I’ve had three different journalists ask to interview me regarding how the idea of a Digital Transformation applies to logistics. Coincidentally, I also recently got a briefing from Logistyx, a leading provider of parcel software. This briefing served to remind me that the terms digital and logistics have gone together for at least 22 years – which is the time span in which I have been covering logistics technologies.
If you are using a labor-intensive process to help plan and execute parcel shipments to your customers, and then you put in a multicarrier shipping software, you’ve just begun your digital transformation in logistics. Multicarrier software solutions are primarily focused on planning and executing parcel shipments, although if a shipper is also doing a relatively small amount of less-than-truckload and truckload shipping, they might choose to have their multicarrier solution execute all their shipments rather than buying an expensive transportation management system.
Parcel software does a few main things. It provides label compliance, enables intelligent procurement, provides analytics and visibility to improve the shipping process, and allows for bills to be audited to insure the shipper has not been overcharged.
Label compliance is focused on remaining compliant to carriers’ – like UPS and FedEx – standards regarding how the labels attached to packages should look. The carriers have created these standards to gather the data they need to optimize their logistics and billing processes. If a shipper lacks the right label, the carrier may choose not to pick up the package. If the label is mostly right, the carrier will pick up the package but then fine the shipper.
Label compliance is a big job. The labels can and often do change annually. And there are a lot of carriers. Logistyx is complying with 480 carriers label mandates. And as Ken Fleming, the president at Logistyx pointed out, big carriers can have multiple label formats. “The label formats, manifesting structures, protocols for status updates can be all be different in different markets.” In effect, the same carrier looks and acts like a different carrier in different parts of the world. Mr. Fleming said that a global presence gave them the local domain knowledge that helps them stay on top of these standards, as well as being better able to serve global customers.
Complying with the standards set by 480 carriers understates the problem by an order of magnitude. Logistyx has 8500 carrier services. Each service represents unique way to provide data to a carrier so they can execute a transaction. So, for example, a hazardous material shipment requires a different label with distinct data fields. Shipments in Europe require the use of CMR documents. Our philosophy is to “never say no,” Mr. Fleming said, “we will always add a new carrier at no cost.”
When it comes to a digital transformation, a shipper begins by just generating digital information and then being able to use that data intelligently. But a higher level of digital transformation is achieved when you have a platform that can intelligently drive better collaboration with key partners in an extended supply chain. Software solutions with a Public Cloud architecture are particularly good at creating productive ecosystems.
Public cloud multicarrier software solutions do this in two ways. First, compliance is much easier for shippers. The software supplier updates a carrier’s label and then that update goes out to all shipper customers. It is easier to accept a software update than it is to have to apply a software patch to an on-premise solution.
More importantly, a solution based on a public cloud provides a more efficient architecture for generating control tower style shipment visibility. Each time a large carrier completes an activity, like picking goods up at origin, delivering them to a sort center, picking the package up after sortation, and so forth, the package is scanned with a barcode gun. These scans generate data that provides visibility with event management triggers.
Finally, when the term digital transformation is used, the topic of machine learning comes up. There is lots of potential for a digital logistics platform to make use of machine learning. Machine learning uses a feedback loop. The digital platform can be used to make a prediction about whether a package will be delivered on time, and then see whether the package really did arrive on time; In short, a natural feedback loop. My colleague Chris Cunnane is about to kick off a study on transportation execution, which includes parcel solutions. As part of that effort, he is planning to write some case studies on how customers are using parcel solutions in his Logistics Viewpoints column.