1 Whitepaper Stretching the Boundaries of Visibility through the Smart Logistics Tower to Better Manage Your Supply Chain Abstract: Logistics Service Providers (LSPs) deploy Supply Chain Control Towers to gain visibility into their operations and networks. However, their immediate concern is how to use all this available data to derive maximum value from this visibility? This paper proposes an intelligent and practical solution the Smart Logistics Tower (SLT) and describes how best to deploy and integrate it within your supply chain ecosystem, coupled with the latest technological innovations (social, visual, analytics, mobility and big data), to maximize the benefits accrued Published On Author Id : April 2015 : Naval Sabharwal Associate Vice President - Enterprise Services : Hexaware Technologies. All rights reserved.
2 Table of Contents Executive Summary Introduction Why is this visibility so challenging to achieve? Demystifying the Smart Logistics Tower Unraveling the SVAMB element adding the smart flavor! SLT Deployment Model Conclusion Author s Bio Naval Sabharwal is the Associate Vice President - Enterprise Services, in Hexaware Technologies. He has around 30+ years of industry experience and has extensive exposure to Logistics and Supply Chain Domain and specializes in areas like 3PL Solutions, Transportation Management, Warehouse Designing/Planning and execution etc. A Presidential Award Winner in Supply Chain, he has served in past, key stints at Indian Air Force (Logistics Arm) and other private companies as Head of Department Unit. The author can be contacted on Hexaware Technologies. All rights reserved. 2
3 1 Executive Summary The Logistics industry is anticipating some radical technology-related changes in the near future. In order to stay ahead of the competition, Logistics Service Providers (LSPs) will need to pursue the elusive end-to-end supply chain visibility; and this can be achieved only if they reinvent themselves. When LSPs analyze their supply chain operations and network, a commonly occurring concern is that of visibility. How much visibility do they have into operations? Is this visibility comprehensive and detailed? Are they collecting enough data from across their supply chain that will help them make quicker decisions and respond swiftly to events? Thanks to the rapid progress of technology, there are good visibility solutions available in the market today that allow organizations an overarching view of their operations. But of what use is this visibility if it is not allowing you to derive maximum value from your operations? After all, the data that you have, gains value only when transformed into actionable information that helps you achieve your objectives. In this context, LSPs should be looking at deploying technology that answers the following questions: 1. Can achieving visibility help reduce inventory of my customer? 2. Can it improve customer order fulfillment? 3. Can it help me utilize my network better? 4. Can it help me use my resources more effectively? This paper intends to help you shape your thinking, and plan for the future. It proposes a practical, smart, and actionable visibility solution, using innovative technology platforms (social, visual, analytics, mobile & Big data) to create Smart Supply Chain Logistics Towers. The paper also describes the ideal strategy for the deployment and integration of such Logistics Towers within your supply chain ecosystem, to maximize the benefits accrued and realize true value from visibility. 2 Introduction It is inevitable that, like other industries, the logistics industry will also be driven by technology in the future. Technology will enable transformation and new business models, and will be the only competitive differentiator; as such, third-party LSPs will need to reinvent themselves to get on board the technology wagon. The true effectiveness of technology can be gauged when LSPs begin to pursue the ideal visibility solution that can offer End-To-End Supply Chain Visibility (E2ESCV). 3 Why is this visibility so challenging to achieve? The need to have E2ESCV across the logistics supply chain has become an imperative in a world of global and widespread networks, distributed teams, and multiple and worldwide suppliers, channel partners and customers. A 2013 survey by Aberdeen Group on Supply Chain Visibility polled 149 companies with global supply chains 63% of respondents clearly indicated that Supply Chain Visibility was of high priority for them. The report went on to state that Increasing visibility is a crucial strategy for enterprises aimed at reducing costs and improving operational performance in the context of their increasingly complex and multi-tiered global supply-demand networks. Hexaware Technologies. All rights reserved. 3
4 Growing global operations / complexity ( e.g. longer lead time and lead-time variability, or need to gain visibility) 45% Need to improve supply chain operational speed and /or accuracy 43% Increased stakeholder and customer demand for accuracy and timeliness of inbound / outbound shipment events 30% The business mandate to reduce supply chain execution costs 26% The need to reduce, proactively allocate, or manage inventory help at various stages in the supply chain 15% Need to optimize the numbers of trading partners, suppliers, carriers, logistics service providers (LSPs) 13% 0% 10% 20% 30% 40% 50% Percent of Respondents, n = 149 Source: Aberdeen Group, May 2013 Top Pressures to Improve Supply Chain Visibility Complex requirements in the logistics space can result in high costs, high inventory, and low customer satisfaction arising from delayed deliveries. Valuable insights into supply chain operations will allow organizations to identify and respond to events in near real-time, saving them millions. Every LSP today is racing (or should be!) to obtain real-time visibility across all tiers in the supply chain, as well as to increase speed to market, reduce capital expenditure and manage risk. As we move towards a demand-driven world, E2ESCV is probably the single most important step to achieve customer satisfaction. However, E2ESCV is difficult to achieve for a number of reasons: Organizations operate in silos, leading to fragmentation of data; this is further exacerbated by external stakeholders (suppliers, customers and carriers) having their own information silos that are not shared with supply chain partners. Market and freight intelligence data reside across various entities (scanning, GOS, government-led carrier safety data, free lane capacity across networks, statutory data that impacts supply chains, etc.) and are not effectively studied and exploited. The lack of standardization across systems adds to the complexity, leading to communication and process gaps between stakeholders. LSPs are not adequately integrated with the inventory management of shippers. Unless users are able to seamlessly link back to the planning applications, complete visibility and agility is virtually impossible. Technology Service Providers (TSPs) who have the capability to help Shippers and LSPs gain almost real-time visibility are kept at a distance from the organization, and tend to enhance capability only in a reactive mode. Logistics organizations have a veritable goldmine of data available to them, but are exploiting only a fraction of this. A majority of the LSPs do not even have comprehensive and robust plans for capturing, assembling, and integrating data. DOES YOUR ORGANIZATION SUFFER FROM LOW VISIBILITY? SOME INDICATORS: Your planners are working in silos and there are no global KPIs It is hard to determine the most cost-effective balance between network connections and direct transports It is difficult to locate bottlenecks and overcapacities You are unable to predict how profitable a new contract will be You are unable to respond quickly to disruptions in your supply chain Your network has not changed in ages THIS LACK OF VISIBILITY MAY BE CAUSING YOUR BUSINESS MILLIONS! Hexaware Technologies. All rights reserved. 4
5 4 Demystifying the Smart Logistics Tower What LSPs really require today is a Smart Logistics Tower - an agile solution that will provide an integrated, comprehensive, and centralized view of the entire supply chain operations, thus reducing cost, lowering inventory and speeding up response times. The SLT goes a step ahead of existing control towers by effectively leveraging cutting-edge technologies to provide visibility that offers true value and actionable data. The SLT shows you the cash in the chain and provides the intelligence required to operate an optimal supply chain and transportation network. It makes key data available to the partners in a supply chain, facilitating data exchange and coordination of customer demand with supplier response. Changes in demand and supply, orders, constraints and potential roadblocks are monitored in near real-time, allowing a swift response to events. The real power of SLT lies in deriving maximum value from visibility. Visibility can offer real value only when technology goes beyond merely sensing and gathering data, to analyzing it and recommending mending the appropriate action to be taken; when these Towers can cull out retrospective information on an event, as well as performance indicators, and use these to better predict outcomes in the future, and enable continuous improvement. Deploying Control Towers - A modular Solution Data Extraction: Operational, Historical, Transient, Market Visibility Tactical Analytics Near real Time Raw Data Storage of Big Data Data cleaning, Enrichment and Structuring of Big Data Intelligent and Guidance Analytics Analytics and Predictive Ananytics Reporting and Intelligent Triggaring Post - Activity Analytics Communication: Mobile, AR, Visual, ESG Response Intelligence So how do you leverage technology to derive maximum value and near real-time information from logistics control towers to make them smart? As a first step, three aspects need to be considered: Processes: Eliminate silos within your organization so that processes can become more collaborative. Implement data sharing and planning enterprise-wide. Relationships: Share information not only within the organization, but outside the enterprise as well across suppliers, carriers and customer providing a real end-to-end process view of the complete supply chain. Technology: Leverage the power of, and deploy technology effectively. The deployment of multiple layers of technology to share data between disparate systems, its enrichment, cleansing, and storage, complex analytics software for sensing and shaping data, communication systems, etc. make control towers a viable reality. Additionally, we propose that organizations embrace the SVAMB strategy of technology enablement. Entrenching the SVAMB strategy within the organizational strategy will exploit the full potential of Logistics Control Towers and add the smart factor to it. Hexaware Technologies. All rights reserved. 5
6 Unraveling the SVAMB element adding the smart flavor! S Social - for the supply chain Deploy technology so as to provide a collaborative enterprise social networking interface for your supply chain stakeholders one that connects all partners, and gives unrestricted and complete access to critical information; thus removing the inefficiencies that add costs and reduce revenues. More importantly, this kind of social sharing of data can capture real time responses to events and alerts, allowing for time-sensitive decisions to be made, and creating intelligence for future events and alerts. V get Visual & Voice - hands-free Hands in the supply chain should handle products and not data! Deploy visual- and voice-based technology to capture data and guide field staff. Voice has been found to be the most effective response tool from the field staff. And the technology that we have at our disposal today makes it possible to make sense of voice messages and give them structure for effective use in tactical and strategic functions. A don t Analytics - lead with it, just follow An analytics tool should not simply provide you with a set of measurements that you then compare to static benchmarks. Rather, it should be almost prescient, alerting you to the possibility of events before they occur, and thus allowing you to mitigate them within shorter response times. Wouldn t you rather know about the likelihood of customer churn right when the problem starts, reduce idling time when the loss is taking place, act on delays before it causes real damage, or use network capacity before it is lost? Deploy analytics technology that assists field staff to act before the damage occurs, helps define benchmarks realistically on an ongoing basis, and provides intelligence in an easy-to-use form at all levels in the chain. Mobility - capture anything, anywhere, Min any form Mobile technology gives you the freedom to receive, capture and send data in any form, anytime, and from anywhere with no restriction. Convergence on one mobile device is really the future of technology. From reefer tracking, to tire pressure monitoring, to electronic driver logs (all disparate systems today) the use of mobile applications will allow instant access to information on the go, thus facilitating faster and efficacious decision-making. Additionally, mobile technology can be a big enabler of safety, freeing drivers from dealing with interruptions and distractions that are associated with crashes. This, in turn, reduces negligence and the big settlements arising from accidents. Big data on the B cloud Build a long-term data strategy if you do not have one. Treat data as your second biggest asset after your people. Capture all the data you can, without allowing any to slip through, for this is your goldmine. And not just within your organization stretch the boundaries of your organization to include your eco-system; collecting data from your extended network can add considerable value to your supply chain. Deploy technology that helps you capture all forms and types of data, enrich them, and structure them into a ready-to-use form. Use the cloud effectively to increase participation from stakeholders across the globe, as well as to achieve scalability. Hexaware Technologies. All rights reserved. 6
7 SLT Deployment Model Self-fund and get everyone s skin in the game Technology advancements and the SVAMB framework can help you achieve the ideal visibility solution. However, this should be accompanied by a well-planned deployment strategy, a plan that slots all the pieces together in the most effective way, so as to gain maximum benefits. How can this be done? 11.4% Align technology and business objectives: Complete visibility demands a long-term execution roadmap and cannot be treated like a typical annual planning process. To identify what kind of visibility data is needed and to derive maximum value out of it entails a constant dialogue between senior executives, operations and technology teams to integrate technology and business strategies for data management and analytics. Identify the right skills: A critical enabler for building visibility solutions is skills, i.e. identifying the right people and capabilities. LSPs need a road map for assembling a talent pool of the right size and mix to deploy SLTs; a roadmap that outlines how the organization can nurture, internally or through partners, data management specialists, analytic modelers, and a workforce who will thrive and strive for better business outcomes in the new data- and tool-rich environment. Be aware that LSPs and their supply chain stakeholders (Shippers and Carriers) are not likely to have the internal capabilities to make SLT a reality. These capabilities reside with TSPs. Make TSPs your invested partners: Currently, the relationship between LSPs and TSPs are transactional and, at best, based on point to point project deliverables. To leverage the power of SLTs, LSPs and TSPs need to build partnerships, a shift from the existing hands-off safe mode. TSPs should be encouraged to put their skin in the game in building and operating SLTs Towers that deliver real business benefits. A hybrid SLT model where policy is driven by the shipper, execution by the LSP and technology by TSP on near equal terms can provide the right balance. Additionally, joint investment by the LSP and TSP in a Centre of Innovation and Excellence will enable continuous improvement and innovation a key element for success of SLTs. Deploy SLTs in phases: LSPs should deploy SLTs in phases, module by module, based on the needs of business. The benefits derived from each phases can be used to self-fund the next phase of improvement. The creation of a self-funding engine is the only way to achieve the end-goal of fully exploiting visibility through technology. The constant advancements in technology drive the need for incessant enrichment, which can be achieved through a self-funding model. Hexaware Technologies. All rights reserved. 7
8 Conclusion It is inevitable that LSPs will play a larger and expanding role in global trade in the future. This will allow them to take a bigger share of supply chain profits by working closely with customers, supply chain partners, and TSPs. This profit can, in turn be used to offset increases in operating costs. As visibility models evolve, the boundaries between customers, suppliers, TSPs and LSPs will increasingly blur. Deploying SLTs will allow LSPs to: Achieve E2ESCV across multiple tiers of the supply chain, improving the flexibility and agility of response across the entire supply chain. Reduce inventory levels and costs, by providing manufacturers and retailers with adaptable and responsive capabilities. Boost utilization, by decreasing the idling loss of assets. Better exploit the logistics networks capacities and remove redundant networks instantly, thus improving on time delivery and reducing costs. Increase customer satisfaction, by fulfilling customer demand for choice in terms of product, delivery time, and location. In addition, SLTs will drive higher order fulfillment rates and improved customer service levels. Enable green logistics, and use reduced CO2 emissions as differentiators, next to price, quality, and speed. SLTs promise LSPs high profitability, increased operational efficiency, and improved customer satisfaction. According to Gartner, quantitative ROI levers include: Inventory savings of 20% of value Increased forecast accuracy of about 25% Improved SLAs to consistent 98% levels Freight charge reductions from 5% to 3.5% of volume Decrease of inventory on stock from just over 10 days to fewer than seven days Reduction in workforce by 10% And this could mean savings in multi-millions! To be able to leverage the full power of Supply Chain Logistics Control Towers and drive maximum value from visibility, LSPs need to stay ahead of the curve and convert them into their smarter version (Smart Logistics Tower), and be ready to adapt their strategies, structures and operations to future proof their businesses. The more you stretch, the farther you will go vis-à-vis competition. About Hexaware Hexaware is a leading global provider of IT and BPO services. The company has achieved leadership position in domains such as Banking, Financial Services, Travel, Logistics, Insurance, Healthcare and HR-IT solutions. The Advanced Solutions Group (ASG) of Transportation and Logistics Practice, designs innovative solutions for the industry. Hexaware s ASG team not only help you to identify and prioritize your transportation improvement initiatives, but can help you to execute it, too. For more information To learn more about Hexaware Insurance fraud management solution, please contact or visit 1095 Cranbury South River Road, Suite 10, Jamesburg, NJ Main: Fax: Disclaimer Contents of this whitepaper are the exclusive property of Hexaware Technologies and may not be reproduced in any form without the prior written consent of Hexaware Technologies. Hexaware Technologies. All rights reserved. 8