When it comes to embracing digitalization and new game-changing business models, the global container shipping industry has been challenged to keep pace with its customers. To be fair though, the sheer number of parties and transactions involved in a single ocean shipment makes industry-wide collaboration for change of any type, difficult and prolonged.
Now, however, technologies such as blockchain are showing great potential to enable distributed digital records of global trade transactions for traceability, while services based on the Internet of Things (IoT) are already offering real-time visibility. In January, we saw the announcement of a Maersk / IBM joint venture for an industry-wide blockchain platform that is already attracting potential users. Meanwhile, IoT-based services offering real-time global container tracking, monitoring and analytics are available from Swiss-based company Arviem.
No doubt, new blockchain platforms and IoT-based services will eventually combine to provide business benefits to shippers that match the enormity of the global trade challenges they aim to overcome. Benefits include proven traceability for all types of compliance, better management of inventory, satisfying consumer demands for product availability, prediction of supply chain disruptions, management of exceptions, improved supply chain security, lower landed costs and more.
As new blockchain-based services mature towards higher levels of industry adoption, industry portals, booking networks, contracting exchanges, visibility tools and container tracking services will continue to expand and feed the digitalization appetite of global enterprises.
Meanwhile, business does not stand still for shippers. Planning a profitable and future-proof route through the compound components of global logistics digitalization and transformation is a challenge for busy shippers who must simultaneously manage daily operations, work towards concluding annual ocean contracts and contribute towards this year’s broader supply chain performance improvement goals.
So, what should shippers do now to prepare for digital change?
First of all… the need to prepare is urgent, but don’t panic! In a webinar (see note 1) with Forrester Research recently, I asked: “Given that blockchain benefits complex transactions such as those in global trade, the standards will have to remain open and barriers to entry for users of blockchain should remain low. Therefore, do you think 2018 is a time for future blockchain users to follow rather than lead? Maybe let the Maersk/IBM JV and others iron out the kinks and then use blockchain to enable transformation?”
To paraphrase the response from a principal analyst: This is a reasonable stance to take given the current stage of blockchain-based network development but keep a close eye on developments to potentially become a fast follower. If your business is such that the development of standards (for data or processes) may leave your company disadvantaged, then it may be better to engage earlier to influence the direction.
This seems like sound advice. In addition, understand your organization’s broader strategy regarding business transactions and the impact of blockchain. Talk to your finance, IT and other functional leaders to understand the enterprise-wide digitalization strategy and plan. Differentiate short-term (2018) from long term and make sure that logistics and supply chain are on your corporate digitalization and blockchain bus!
One way to stay grounded and develop focus amidst all the hype, is to build a clearly understood model for your current ocean transportation operations. Of course, ocean transportation is only one part of the end-to-end supply chain and global trade digitalization puzzle, but it is big enough and complex enough to carve out. A solid model will serve as a baseline from which to justify, manage and communicate future changes and improvements that everyone in your company will understand.
An ocean transportation operational model also helps to make processes, data exchanges, KPIs and partners more clearly understood by all of your company supply chain stakeholders – including your finance and IT partners. If your management style is team player and collaborator, this type of model will be invaluable to cross-functional business alignment, driving short-term performance improvements and providing a bridge to ease future change management, as new services and game-changers (digital or otherwise) are adopted.
The following diagram (see note 2 - email me for a pdf) shows just one example of a technology agnostic, top-level operational model for ocean transportation management. Every organization will have its own nuances, and while the model does not hold any new concepts, it is just one way of communicating the strategic, tactical and control cycles for ocean transportation management.
Beneath the model’s top level shown in the diagram, each practice will have clearly understood processes with defined roles, responsibilities, inputs and outputs to enable consistent execution. Some will have software systems for automation, data collection, storage and analytics. Some will be supported by spreadsheets – yes, still! Whatever the type of systems – manual or automated – the key is eliminating data duplication and identifying systems of reference. One single ‘view of the truth’ is essential when it comes to operational data.
To support management of future changes and digitalization, it is important to understand and clarify data interactions with other systems having owners outside of the logistics function, such as enterprise resource planning, supply chain management, product lifecycle management and systems from 3rd party logistics providers, carriers, suppliers and partners.
With an accurate operational model such as this one, shippers will gain better control and organizational alignment to manage today’s challenges while preparing their company for changes in the future, bringing a new level of agility to the ocean transportation world.
Notes:
1 Forrester Research – Predictions 2018: A Year Of Reckoning on Jan 30, 2018. Access a white paper on this topic at: https://go.forrester.com/2018-predictions/
2 The operational model in the diagram represents insights gained while working with multiple clients, service providers and various industry colleagues. Thank you to all concerned.