The Top 5 Threats to Delivering the Intermodal Promise – Part Four

By Cento Sharp, Cento Sharp Consulting

#3 – Lack of End to End Supply Chain Integration

Supply Chain Management 101. A supply chain requires a minimum of three entities; a supplier, a producer and a consumer and each must share information and exchange currency in order for the supply chain to work.

How simple is that?  Why isn’t every supply chain completely automated if it is that simple?

As common practice indicates, the minimum of three entities in a supply chain is just a basic tenet of supply chain management and holds true as theory only. In reality, supply chains are often both explicit and implicit to their participants and are highly complex spatial algorithms.

Let us momentarily ignore the obvious technology and orchestration issues with integration between suppliers, manufacturers, logistics providers, wholesalers, retailers, and the like. These are the explicit supply chain nodes that we know requires constant integration efforts in order manufacture freight and transport it from point A to point B at a profit.

Let us look at a less obvious and oftentimes hidden detractor of end to end supply chain integration. This hidden detractor is what makes end to end supply chain integration impossible for some organisations.

Transportation providers are the most egregious offenders of this principle, which is…

Supply chain companies that don’t realise they are supply chain companies.

Using transportation providers as an example; companies must see themselves as a part of their customer’s supply chains; as key enablers and an optimisation tool for their customers. Many transportation organisations do not operate in this manner; the keyword is “operate”. The operations mentality of “find more freight”, “book more freight”, “move more freight” reduces the level of intimacy needed between transportation providers and their customers in order to create a fully integrated supply chain.

These transportation providers see their role as more transactional instead of strategic, which causes distance and a lack of trust between customers and suppliers.

With a lack of trust and relational distance between just two of the three supply chain entities comes EDI messages that require constant manual fixes, web portals that add more work for the customer and irate phone calls to customer service for status updates on the most rudimentary of tasks.

End to end supply chain integration starts with all participants in the supply chain first realising that they are a supply chain company, regardless of their size, service offering or role.

The Top 5 Threats to Delivering the Intermodal Promise – Part Three

By Cento Sharp, Cento Sharp Consulting

#2 – Poor Development of Transportation Infrastructure

The transportation infrastructure aspect of the global supply chain is undoubtedly the most difficult aspect to improve. Significant infrastructure improvements cost countries billions of dollars. The improvements to waterways, railroads and highways must be planned, initiated and approved by government stakeholders as well as leaders in the business community.

What makes transportation infrastructure projects difficult to obtain approval is the inability of one or two single entities to profit quickly from their implementation. Infrastructure is a commitment to improving the overall community in which the businesses and corporations operate. When a coastal trade lane becomes capable of handling more raw tonnage in terms of freight imported and exported, it often takes years and sometimes decades to realise the financial benefits.

Across the globe:

• India plans $7 billion in ports investment – estimated by 2017 to build seven new ports and triple merchandise exports
• Marseille plans huge shift to rail – estimated in 10-15 years with rail shipments expected to double
• President Obama pledges $50 billion for failing United States transport infrastructure – immediate start includes highways, railroads, airports and seaports
• Bulgaria freight privatisation moves forward – more rail flexibility desired by splitting BDZ Passenger Services from BDZ Freight Services through privatisation of the organisation

As each of these stories indicates, the ongoing battle with infrastructure improvements is the global supply chain’s most ominous challenge. The long time to recoup the benefits of infrastructure investments and the massive business and political commitment required to ensure the success of these types of projects will keep expansion slow, but steady.

The Top 5 Threats to Delivering the Intermodal Promise – Part 2

By Cento Sharp, Cento Sharp Consulting

#1 – Lack of Technological Innovation

As today’s supply chains become more complex, so have our information technology systems and paper-based processes. The requirement for collaboration among geographically dispersed trading partners, local governments and customs agencies will continue to choke productivity out of our global supply chains if the speed of supply chain technology is not put into overdrive.

In this week’s blog we examine the technology-based issues that the global supply chain faces. We take a look at this area because it is the obvious area of concern that the industry has already taken aim at.

The Chief Executive Officer of Maersk, Eivind Kolding, has received plenty of praise and scrutiny for his visionary call for improved technology and integration among transportation carriers and his or her customers.

http://www.joc.com/container-shipping/changes-asked-maersk-ceo-will-take-years

There is no shortage of technology vendors, platforms and systems in the supply chain. There are Transportation Management Systems, Enterprise Resource Planning Systems, Manufacturing Execution Systems, Labour Management Systems and the list goes on and on and on. With so many technology vendors and so many IT systems, why is the global supply chain so inefficient and more complex for smaller shippers than ever before?

The answer is simple. Technology management without business process management is useless. The way the information technology and project management industries evolved help tell the story. In the late 1990s, project management was considered a quality that every business manager had. This was absurd, as most companies soon realised! As more disruptive technologies such as the internet and EDI (electronic data interchange) evolved and invaded corporations, business managers were continually exposed for their inability to manage ambiguous initiatives, goals and tight budgets. The most egregious offense by middle managers was their inability to motivate and engage resources that did not report to them on the corporate food chain.

So, technological innovation may look very robust in the global supply chain because there are hundreds of vendors and systems to match, but there is one fatal flaw that our industry has yet to address. Business process management is the missing link.

Yes, there are large organisations that have fully adopted six sigma and lean operations, but 98% of supply chain organisations are outliers with far less formal operations. Smaller shippers, freight forwarders, trucking companies and manufacturers either do not fully understand the benefits of business process management or believe in its long-term benefits.

Until the major industry players focus less on forcing their smaller trading partners to comply with their advanced technologies and focus more on helping them to improve their operations, the global supply chain will continue to hobble on.

The Top 5 Threats to Delivering the Intermodal Promise: Part One

By Cento Sharp, Cento Sharp Consulting

The supply chain has indeed become global, but with this new global expansion comes a host of pitfalls and detractors that could stop the ultimate delivery of the intermodal promise dead in its tracks.

I am delighted to have been invited to write for this brand new blog and over the coming weeks I will expose five threats, their significance to supply chain service delivery and what global organisations can do to shore up their operations to guard against these potential issues.

So, what are these threats?

1) Lack of Technological Innovation

As today’s supply chains become more complex, so have our information technology systems and paper-based processes. The requirement for collaboration among geographically dispersed trading partners, local governments and customs agencies will continue to choke productivity out of our global supply chains if the speed of supply chain technology is not put into overdrive.

2) Poor Development of Transportation Infrastructure

Without transportation there is no such thing as freight. Freight is not created until transportation acts upon it. With only a small portion of the world possessing a multimodal transportation network robust enough to support global logistics and distribution strategies, intermodal organisations will struggle to grow as planned.

3) Lack of End to End Supply Chain Integration

In terms of global operations, complete end to end supply chain integration is merely a myth. Imagine 30 glorious castles, each with their own kings (C-Level Executives), queens (Senior Managers), guards (Regulatory and Compliance) and royal families (Investors and Stakeholders) dependent upon each other, but each with its own desire for ruling the world as they see it. The sooner supply chain managers, intermodal carriers and corporate strategists realise that the risks and rewards of global distribution must be shared equally, the easier highly collaborative linkages will be to obtain.

4) Inability to Meet or Exceed Customer Service Levels

There is a belief that customers are demanding that product be delivered more quickly and at a reduced cost than ever before. This is only partially true.

Customers are simply fed up with the unpredictable performance of their supply chain service providers even though their orders are not becoming more complex. The continual mismanagement of the multi’s (multiple modes); road, rail, ocean, and air by their logistics service providers contribute to this frustration felt by customers. Predictability in terms of landed costs, requested delivery date, order accuracy and quality are the same as they were a decade of ago. Customers are not demanding cheaper, faster and better supply chains; they are simply demanding that there be no surprises.

5) No Long Term Plan for Environmental Sustainability

We are presently in the age of ‘Sustainability’ as a buzzword. Green supply chain initiatives are often fodder for annual corporate marketing campaigns. Until environmental sustainability is required to be put into measureable terms, corporations will be allowed to abuse the true essence of sustainability.

Over the next few weeks I will expand on each of these areas in detail. If you have any questions please do not hesitate to get in touch with me via email – centosharp@gmail.com