Digitization and technology - the leaders of the supply chain network revolution

In order to become an entire digital company, we need to digitize certain key areas of our business infrastructure which we will discuss in the following. First, we will briefly explore in which technology fields logistics firms can invest in to digitize their supply chain. Then, we will explain the concept of value chain analysis combined with evolution to afterwards take a closer look at the areas “last mile”, “data interchange”, “augmented reality”, and “handheld device”, all segments worth exploring when considering to digitize the supply chain.

Value Chain Analysis
The first essential step when wondering about what kind of technology you should acquire for your business is the conduction a value chain analysis with evolution to gain a bird’s eye view of your organization’s situation. A value chain is a simple form of
visualization to understand current needs of a company (y axis). If you can combine this with evolution such as the maturity of vertical (x axis), you get a very clear picture of which technology your business requires and whether to build it in-house or purchase it externally. An easy example for this is the cloud infrastructure. It has matured to be a commodity like water or electricity for which you pay per usage. For a quick crash course on the topic, we highly recommend watching Simon Wardley’s humorous and insightful video called “Introduction to Value Chain Mapping”. The sample map below shows how a value chain for IT is drawn out with evolution. If you want to read more about value chain mapping, click here.

Value chain-evolution sample map



For RSA Global, we have identified six focus areas which should be digitized based on the conducted value chain analysis. Those are last mile, blockchain, augmented reality, Electronic Data Interchange (EDI), Application Programming Interfaces (APIs) and handheld devices. Next, we will explain each of them in more depth to help you getting a clearer picture of which areas in your own supply chain business need to be digitized.

Last Mile
“Last mile” refers to the short geographical distance that must be spanned to provide delivery services to end-user customers. While in the past largely dominated by major transport companies able to afford the high investment in technology needed, today nearly anyone can start off a last mile delivery business with an investment of US$ 5,000 and a bunch of Android phones. We see companies such as Loginext Solutions offering last mile services via an application using the software as a service (SaaS) model to appeal to companies wanting the Opex model. With a SaaS payment model, you pay for the last mile service on an ongoing basis such as a housing rent.

The rapid simplification of technology adoption along with ease of deployment is creating a fierce competition. Small and medium sized organizations increasingly gain business that previously large companies could claim for themselves before they missed to follow the technology development trend. This is further catalyzed by highly demanding consumers who are digitizing their lives by increasingly ordering on e-commerce platforms. The knock-on effect is a high throughput of transactions and expectations of same day or next day delivery. Traditional methods of fulfillment fail due to high transactional demands and insufficient technology solutions. But scaling up becomes a costly affair in terms of recruitment and business readiness.

Hence, when you combine the factors of large businesses losing market share and operations being less effective with higher workloads, there is a strong magnetic pull towards digitization. The most common hunt among e-commerce players right now is last mile delivery solutions that cover proof of delivery, trip planning and fleet management.

With companies being unable to handle the large volume of business generated by these e-commerce platforms, a need for last mile aggregators, an Uber service for freight, is apparent. An online business wants to win new customers and distribute in a crowd sourced fashion enabling it to handle the load smoothly with reliable partners that provide the business with an expandable work force to scale up or down based on demand. This part of the of software puzzle calls for inhouse development.

Blockchain
There is a lot of hype around blockchain. Blockchain is a system of recorded information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. To simplify, it is a technology like Wi-Fi and not a solution.

Hence, on the evolution x axis it is in genesis in terms of maturity. In this regards, larger firms are becoming aggregators in their industry space onboarding third-party providers onto their platform to perform transactions. For example, locally, DP World has joined a platform called like TradeLens. DP World has a target to connect all its 82 marine and inland container terminals with TradeLens. In this race, it is probably the most important to stay up to date and keep your eyes open as competition and innovation are fierce.

Augmented Reality


In essence, Augmented Reality (AR) is laying a digital layer over a real time video to achieve a goal. In the logistics space, we could quickly see a “Google Street View” product for warehouses or yards ensuring that forklift drivers do not only get to the right place but effortlessly navigate to the exact location of the cargo, pick up the right item every time and deliver it to the right person.

You might be wondering why a warehouse operator would need such a solution. It is all about simplification. Imagine you are running a multilingual workforce and there are 20 new forklift operators in a 200-aisle warehouse. Each operator wastes 5 to 10 minutes searching for the correct aisle/location to pick from. Now, multiply this time for each collection and the number of operators throughout the day. The waste may appear little at first, but can quickly rack up to 100 of hours should the team be large.

Never stay complacent. Remember the time before the mass adoption of Google maps? Nowadays, every delivery courier wants a WhatsApp location pin and Google Maps to navigate to your location. At RSA Global, we believe that warehousing space will soon experience the same transformation. It delivers huge value when the picking and put away process is simplified. To build this amazing software in-house, it requires a passionate and dedicated team.

Digital Interaction
The moving away from Electronic Data Interchange (EDI) and the adoption of Application Programming Interfaces (APIs) has led to more firms exchanging data and performing integrations quickly. So, for those who are not familiar with it, EDI is a process of electronical exchanging documents between businesses. Traditionally, there are some global processes and file formats in place that have been agreed to, such as ASC X.12 and EDIFACT. API on the other hand is the modern way of achieving the same outcome. It reduces complexity of working with the EDI file format and communicates layers.

Every company needs to have an API roadmap as it integrates more businesses. Lacking public APIs can be a disadvantage, especially when dealing with high volume generating customers. With a well-thought-out API roadmap, you can combine both customized built applications APIs and off-the-shelves product. Delivering a hybrid collection of APIs will give your business the feeling of being the best tailor in town. No matter what the customer requires, you can always stitch together a suit that fits the size of the customer quickly and more comfortably.

There are also many companies becoming aggregators of APIs further solving the challenges of integrating with multiple partners that may have long lead times to certify a partner with their APIs. It is also a revenue channel that most companies overlook. If you create a great API, why not selling the technology and turning into a technology company? Becoming a platform is always a profitable business model to peruse.

Open Data Protocol (ODATA) Protocol is another interesting trend. APIs typically offer you a very narrow function. ODATA takes the approach of allowing the customer to specify what data they want. “Everything is a resource” is the tag line. You can think of ODATA as providing your customers with a database style access to their data without getting involved with excessive control mechanisms. This hugely reduces the quantity of APIs that developers create and delivers the most flexibility. It is a win-win situation and encourages data rich environments. Furthermore, due to the rich data sources it aids predictive analytics enabling companies to make forecast-accurate predictions - something most firms aspire to reach nowadays.

Handheld Devices
I remember my time at FedEx when mobile devices were a novelty and companies like Intermac (acquired by Honeywell in 2013) were charging a US$ 2,000 plus fee for accessories. Luckily today, manufacturers of mobile devices are increasingly taking on the consumer device trends by designing more innovate and purpose-built devices with better ROI, quicker response time and more rugged housing. A great example is the Honeywell CK-65. It has a super long battery life, offers a great keyboard for data entry, great drop resistance and software support that will last the business seven years of Android & security updates.

Honeywell handheld device
In the logistics space, choosing the right device for your workers is paramount. There is no one-size-fits-all solution. That is why a carefully conducted study of the end user’s demands and tasks is called for. Based on that, you can appropriately determine the features needed and estimate the price range. For example, couriers would not need a CK-65 device that is heavy and has a long-range barcode scanner. Instead, they need a 4G device with a pen function to sign deliveries, an amazing camera, long battery life to carry the device throughout long working days and a high level of durability to deal with the daily falls.

Belonging to the best accessories in the market right now are the Bluetooth accessories. They are highly innovative and simplify common tasks. So whether it is a contactless payment device accepting credit and debit card payment on road or a ring scanner to speed up scanning, there is always a great solution out there if you dare to explore.

Bluetooth Wireless Ring Barcode Scanner



Conclusion
By introducing the six focus areas RSA Global has identified as digitalization targets, I hope you could obtain a clearer picture of what those areas are about and why their digital development is crucial for a supply chain company in these ever-changing times. Considering that the supply chain industry has been lacking behind other industries in terms of digitalization and automation for many years, I feel it is an exciting time in the supply chain domain where teams with a passion for technology can carry out amazing business transformations. Product technology is a great development as many SaaS are available in the market with relatively low-price entry levels. So, go out there and experiment more yourselve!  For any evolved technology, it is a no brainer for businesses to start the adoption process. However, vigorous evaluation is key to obtain the best technology in your arsenal as handling failing tech not delivering true value to the business will most likely lead to massive waste of resources caused by several cycles of replacements.

For in-house development, the tech roadmap needs deep thought though in order to deliver a truly defensible competitive advantage that enhances the core competency of your business while being difficult or nearly impossible to copy by competitors.

When you can create stable and outstanding solutions for the business that result in improved products or service excellence, you can overtake the competition swiftly leaving them playing catch-up and wasting their human and financial capital to stay in the same rank.