Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

Taking a Big Picture View of Supply Chain Networks

Supply Chain Visibility | By •

supply chain networksI recently read a thought-provoking report with several predictions about the future of supply chain technology. As I read through it, I was struck by a glaring dichotomy: Supply chain organizations are expected to double down on artificial intelligence, advanced analytics and various digital supply chain technologies — and yet the report predicts that “through 2023, less than 5% [emphasis mine] of control-tower-like deployments will fulfill their end-to-end potential.”

Let me underscore the obvious here: 5% is a woeful “success rate”. How can it be that so many companies will continue to invest so much in state-of-the art technologies, and yet fewer than one in 20 control tower deployments are expected to deliver on their potential?

My view? Much of the industry at large simply isn’t seeing the forest for the trees. To actually realize the promise of end-to-end visibility and control over our incredibly complex supply chain networks, we need really big picture thinking — particularly when it comes to the supply chain data networks that serve as the foundation for true digital transformation. Here’s what I mean.

Supply chain networks: A big-picture view

At its core, the control tower concept is about “stitching together complex and siloed supply chains” so organizations have greater visibility and better insights to help them run more efficient operations. Real-time visibility platforms are an indispensable piece of the puzzle, and the report predicts that 50% of global product-centric enterprises will have invested in real-time visibility platforms by 2023. But advising that visibility vendors should be evaluated based on “how well they align to the company’s existing carrier network” overlooks several other critical factors that should be part of the calculus.

Without a doubt, real-time visibility into carrier networks is a must-have. But carriers are only one component of a complete supply chain network. Taking a bigger-picture view, there are also other critical elements to focus on when building out a robust supply chain data network:

  • Quantity. Numbers matter when it comes to supply chain data networks. When we launched FourKites more than seven years ago, we were maniacally focused on signing up as many of the world’s largest shippers as we possibly could. Our strategy was to lead with shippers, then onboard their vast networks of carrier, broker and 3PL partners. The more users and the greater the usage, the richer the data set for benchmarking, analysis and, ultimately, insights to help organizations improve their KPIs. More users = more data = more potential value. (Our efforts paid off; today the FourKites network includes more than 500 of the world’s largest shippers and thousands of their partners, generating 1.5 trillion terabytes of new data every day.)
  • Diversity of sources (carriers + vendors + customers). Elaborating on my earlier point, viewing a supply chain network solely through the lens of the carrier component is severely limiting. For starters, I’ve yet to work with a supply chain organization that didn’t prioritize two other key constituents — namely, customers and vendors! A supply chain data network needs to aggregate and share data from and with customers and vendors, too. And it must integrate with a myriad of internal and external systems such as transportation management, warehouse management, order management, ERP, weather and traffic systems and many more.
  • Data integrity. In 2006, British mathematician Clive Humby coined the phrase “data is the new oil” to help make his point that corporate data has the potential to be an incredibly valuable resource. But he also rightly noted that data, as with oil, is just raw crude if it’s not refined. The same is true of supply chain network data, which require the latest data tools and services for ingestion, processing, automation, security and virtualization, governance and the like. Supply chain network data must be complete, accurate, fast and secure.
  • Consumability. Supply chain data is of little value if it isn’t packaged for efficient access and consumption. Role-specific interfaces, advanced analytics, robust search and filter capabilities and exception management are a few of the ways data can be packaged and presented so that busy supply chain professionals can quickly move from data to information to insights and action.

To be clear, achieving the “end-to-end promise” of supply chain control tower capabilities is hard work. But organizations will never achieve anything like robust control tower functionality without first taking a big-picture view that comes from a data network bringing together the right stakeholders. That means unifying quality data from disparate systems, layered on top of artificial intelligence, advanced analytics and other state-of-the-art technologies — all in one modern platform.

Matt Elenjickal is the Founder and Chief Executive Officer of FourKites. He founded FourKites in 2014 after recognizing pain points in the logistics industry and designing elegant and effective systems to address them. Prior to founding FourKites, Matt spent 7 years in the enterprise software space working for market leaders such as Oracle Corp and i2 Technologies/JDA Software Group. Matt has led high-impact teams that implemented logistics strategies and systems at P&G, Nestle, Kraft, Anheuser-Busch Inbev, Tyco, Argos and Nokia across North America, Western Europe and Latin America. Matt is passionate about logistics and supply chain management and has a keen sense for how technology can disrupt traditional silo-based planning and execution. Matt holds a BS in Mechanical Engineering from College of Engineering, Guindy, an MS in Industrial Engineering and Management Science from Northwestern University, and an MBA from Northwestern’s Kellogg School of Management. He lives in Chicago.

How Will Brexit Affect Global Supply Chains?

Global Trade | By •

There has been a lot of doom and gloom surrounding Brexit. It is clear that in the short term Brexit has created uncertainty and roiled markets. In the longer term I believe its impact will be minimal. It is mainly tariffs and trade restrictions that would have the largest impact on global supply chains. I believe both the European Union (EU) and the United Kingdom (UK) will seek to keep tariff restrictions to a minimum. To do otherwise would adversely impact growth and make it more difficult for the politicians in power to get reelected.

brexit

There is already precedent for being outside the EU but still having full access to EU markets. There is a good BBC article on this topic, but I’ll summarize here.

Norway is not a member of the EU. But they are a member of the European Economic Area (EEA) – the single market – along with the 28 current EU members, Liechtenstein, and Iceland. The Norwegian trade model requires a full a contribution to the EU budget, abiding by most EU regulations and standards, and allowing people from across the EU to live and work in Norway.

Switzerland has a free trade agreement with the EU, plus a number of agreements which give it access to the single market for most of its industries. But it does not have full access to the single market for its banking sector and other parts of the services sector. Switzerland’s agreement also requires the free movement of people and a contribution to the EU budget.

But while I don’t see Brexit having much of an impact on global supply chains, there are other developments that have gotten less attention that probably will.

First off, there is the U.S. presidential election. The followers of Bernie Sanders and Donald Trump have made it clear that there is a significant proportion of Americans who feel that global trade has not been in their interest. Both Hillary Clinton and Donald Trump oppose the as yet unratified Trans-Pacific Trade Deal which would have lowered duties on a variety of products and services between a number of Pacific Rim and Asian nations and led to increased trade with Asia. That just means trade will not increase as rapidly as it could; it is still true that global trade barriers remain historically low and not passing this treaty would have little impact on existing global supply chains.

But what the presidential election does show is that if Trump wins, he will seek to increase barriers to trade with countries like China and Mexico. Both China and Mexico are the sites of significant offshore manufacturing where many of the goods produced there are produced there because of low cost production; those goods then flow back into Europe and North America. That, of course, does impact supply chain networks.

Further, Trump’s campaign has made it clear that there is political capital in rolling back trade in places like China, Mexico, and even Japan and Korea. Other politicians are certain to pick up the anti-trade banner even if Trump loses in November.

But one of the most significant supply chain developments has received far less attention than either Brexit or the U.S. presidential election: the EU is getting serious about eliminating tax havens. Many large multinationals have created subsidiaries in low tax nations like Ireland and Switzerland. In the case of Apple, the EU is trying to claw back more than $8 billion in back taxes based on Apple’s use of Irish subsidiaries to avoid higher corporate taxes.

From a supply chain perspective, international tax accountants have generally said that corporations are on more solid ground if a multinational runs a regional, European supply chain out of the low tax country they are using to shield their revenues. It is clear, executing this strategy is getting much more difficult. Now many multinationals may begin to locate plants, warehouses, and regional control towers where it makes the most logistical sense, rather than in locations that provide tax benefits.

So in short, how will Brexit impact global supply chains? Not much. The U.S. presidential could have a much greater impact, and changes in EU tax policies the most of all.

Copyright © 2020 Logistics Viewpoints, ARC Advisory Group. All rights reserved • Design by

Archives