The Tough Reality Of Ushering Visibility And Trust Into End-To-End Supply Chains
Supply chains are fragmented, involve many stakeholders, and are riddled with traceability challenges.
A hearty welcome to the 80th edition of The Logistics Rundown, a weekly digest that aims to put some perspective on what’s brewing within the logistics industry. This is a space where we religiously dissect market trends, chat with industry thought leaders, highlight supply chain innovation, celebrate startups, and share news nuggets.
If you're a regular reader of freight tech news, it would be difficult to get by a week's worth without hearing about 'visibility.' Media is awash with exhaustive discussions about how the pandemic accelerated companies' need to gain visibility into their supply chain.
And yet, large swathes of the supply chain ecosystem are still bereft of change — end-to-end visibility is still elusive as ever. But that hasn't stopped businesses from trying. Rising consumer interest in understanding product provenance is a significant tailwind for the pursuit of visibility. This is especially true of retail verticals like food & beverage, automobile, and fashion, where products pass through various stakeholders in the value chain.
In a globalized market, a lot of these stakeholders tend to be small and mid-sized businesses (SMBs), often lacking the necessary tools and control to gain visibility into their operations. And in supply chains that are highly dispersed and patently unique across different tiers, sticking to standards and collating data in a way that makes sense across the end-to-end value stream is challenging.
In supply chains that are highly dispersed and patently unique across different tiers, sticking to standards and collating data in a way that makes sense across the end-to-end value stream is challenging.
That said, the quest for visibility isn't new — improved visibility will ultimately result in better control of operations. In the past, companies have sought to fully own and control their entire end-to-end value stream. Ford is a famous example. In the mid-1900s, the company pursued vertical integration, owning numerous subsidiaries across their supply chain, including iron ore and coal mines, rubber plantations, steel mills, and assembly plants, and running dealerships on the front end of the business.
While this did give Ford unparalleled visibility and control, it also fought a losing battle with globalization, which meant it was easier to scale by partnering with suppliers. Manufacturing principles like Just In Time (JIT) production and lean manufacturing also encouraged minimizing inventory and reducing inefficiencies, leading to a more flexible and collaborative approach to supply chain management.
However, as we now see, outsourcing and subcontracting did a number on visibility. "Transitioning from a rigid supply chain to a dynamic value stream introduced new complexities. While established relationships with long-time suppliers facilitated data exchange and issue resolution, challenges emerged when upgrading data infrastructure and transitioning between systems like SAP and HANA Cloud," said Ophir Gaathon, the co-founder and CEO of DUST, a startup utilizing nanodiamonds to provide digital identities to real-world objects.
While major suppliers manage to align themselves with such changes, a diverse value chain will have suppliers that use different systems, making data integration and visibility challenging.
"This Tower of Babel situation where not everyone speaks the same language isn't just across companies; it can happen within a single organization. My PLM systems may not communicate effectively with other systems, procurement and inventory may be disjointed due to different vendors. Navigating through such fragmented data presents significant challenges," said Gaathon.
“This Tower of Babel situation where not everyone speaks the same language isn't just across companies; it can happen within a single organization.”
Discussions around sorting out disparate data streams point to deploying AI models to make sense of vast amounts of data that can easily overwhelm organizations. The challenge, though, is relying solely on AI to process these massive data lakes. Gaathon stressed on the concept of triple-A data — data that is accurate, accessible, and auditable, ensuring consistency over time.
For companies building predictive models for consumption profiles or optimizing the value stream — particularly in the last mile or customer interactions — it is crucial to work with specific data sets that relate directly to the actual products being delivered. It means going beyond averages and identifying the precise rows in the database that represent individual components or units.
"By understanding the pedigree and relevant information of each part or raw material, companies can gain insights into metrics like fatigue schedules, usage patterns, or environmental exposure," contended Gaathon. "This deeper understanding allows for extracting meaningful value from the data, rather than relying on unreliable averages and number crunching."
It's important to acknowledge the significant issues surrounding data accuracy and meaningfulness. Organizations can derive more valuable insights and make better-informed decisions by focusing on the right data and understanding its context.
However, this is easier said than done when it's about the value chain at large. Considering there isn't enough sophistication down the tiers, tracking a product's provenance is a two-pronged problem — elusive standardized data and issues with trust.
Considering there isn't enough sophistication down the tiers, tracking a product's provenance is a two-pronged problem — elusive standardized data and issues with trust.
Gaathon explained that building trust between stakeholders within a value chain would make communicating easier — be it between themselves or the end customer. "Many suppliers face challenges due to a lack of adequate digital tools. Moreover, it is exceedingly difficult for them to compete based on quality and trust, as everything seems to revolve around the bottom line. Ultimately, the market becomes highly commoditized, leading to price competition."
Empowering suppliers and fostering a level playing field will help address such issues, creating a more equitable and prosperous global digitalized economy. For companies like DUST, this presents an opportunity to assist trustworthy actors in effectively communicating their reliability and accountability. DUST provides unclonable digital fingerprints to material things via engineered diamond particles that stick to products, parts, and packaging — offering tracking and authentication at less than $0.01 to apply at scale.
Trust and trackability will inevitably reduce counterfeit products from entering the ecosystem, safeguarding brand reputation, consumer safety, and the end consumers. "Understanding provenance will help ensure everything around us is safe, be it the toys we buy for children or parts of the aircraft we fly in. A clear understanding of a product's background will instill confidence in the end customers and help them make informed choices."
The Weekly Roundup
US seaports are experiencing a decline in imports at a double-digit annual pace, reflecting the aftermath of record cargo volumes during the pandemic. However, business has been growing month by month, with many ports surpassing pre-pandemic box volumes, indicating a resurgence in importing.
Imports are seeing a rebound in spring, with wrought iron outdoor furniture, bookcases, doors, and household items among the top items being imported. Supply chain issues and shifts in manufacturing locales across Asia, such as the movement of manufacturing from China to countries like Vietnam, Malaysia, and Thailand, continue to impact trade volume.
New housing data and allied retail earnings reports provide some optimism for the housing market, suggesting a potential turnaround. However, weak manufacturing activity and a decline in inflation-adjusted wholesale volumes raise concerns about a deeper freight recession and the possibility of increased carrier failures.
Despite over $1.4 billion in venture capital invested in freight visibility providers over the past five years, shippers express disappointment with the lack of transformative outcomes. The main concerns revolve around data quality, particularly in container terminals, as well as unmet expectations for end-to-end supply chain visibility.
…said who?
“We’re seeing that the retailers are in a much better position than they were a year ago. Now the question is around the consumer. With everything going on with the macro economy, we still have to make sure the demand is there from the consumer.”
- Drew Wilkerson, CEO of logistics services company RXO, commenting on inventories coming back under control for retailers across the country
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