Technology alone is not the answer to common supply chain problems

Jonas Mehrhoff
Jonas Mehrhoff
May 17, 2022
5 min read

Note on the authors

Heiner Murmann is the founder and CEO of Orkestra SCS, a logistics, technology and services company. In addition, Heiner serves as Executive Chairman for Evolution Time Critical and President of The Five Inc., and as an Advisory Board Member for both Metro Supply Chain Group and Black & McDonald Limited. Notably, Heiner previously held various senior executive roles at DB Schenker, one of the top three global logistics companies, as a Member of the Board of Management responsible for Air and Ocean Freight, and as CEO of the Region Americas.

Arnold da Silva, Senior Ocean Freight Advisor for Orkestra SCS, is head of an ocean freight consulting company where he actively advises global shippers on ocean freight strategy and execution. With 40 years of experience in the ocean freight industry, Arnold served as Executive Vice President for Ocean Freight Region Americas for DB Schenker. Arnold's passion is to conceptualize and implement innovative ocean freight solutions that transform one’s supply chain and promote a shipper's success.

Supply chain encompasses several segments including shipping, freight, maritime and logistics, all working towards enabling trade, both locally and globally. There is a distinct difference between these segments each with its own moving parts and problems.

The Fourth Industrial Revolution (4IR) is truly on its way, impacting many industries including supply chain. Technology and its transformative power have become a key differentiator for many companies and industries over the last couple of decades. While there have been several positive developments owing to the adoption and implementation of technology there is also a fallacy that technology may be the sole answer to many supply chain problems.

COVID-19 has shown the benefits of technology such as electronic bill of lading, changes in communication, improved agility and visibility, it has also brought to the fore many issues such as port congestion, equipment and space shortage, which cannot be solved only through technology. Such issues in supply chain require the concerted efforts and willingness of all stakeholders for a solution.

In addition to using technology, efficiency in supply chain can be achieved through proper and efficient management of logistics activities, as The Mumbai Dabbawalla has proven since 1890.

The Mumbai Dabbawalla is a grouping of around 5000+ Dabbawallas providing a lunch pickup/delivery service on a round trip basis to around 130,000+ customers daily using the customer’s Dabba (lunch box). The reliability of this operation without any of the modern technologies has shone a spotlight on raw logistic capabilities. The seamless execution of this large operation has piqued the interest of many business schools and famous personalities including Richard Branson and Prince Charles.

The Mumbai Dabbawalla received a 6 Sigma rating from Harvard Business School for a logistics service with fewer than 3.4 mistakes per million transactions which in this case translates to around 400 delayed or missing dabbas in a year.

The secret to the Dabbawalla’s success lies in the way in which its logistics is organized, managed, processed, and most importantly driven by organisational culture.

Some of the common supply chain topics that affect efficiency are:

  • OTIF – On Time In Full deliveries,
  • Customer satisfaction,
  • Cost effectiveness,
  • Risk management,
  • Vendor relationship.

Companies can mitigate these supply chain problems and ensure a successful operation if they follow below basic requirements.

Capitalise and optimise your logistics network

Capitalise and optimise your logistics network

The backbone of any logistics activity is the logistics network that is used, and the modus operandi adopted. All operations including the picking up of parcels, movement to various hubs, sorting, segregation, and despatch to final destination have to be streamlined. Whether it is forward or reverse logistics, companies must make use of the most efficient and suitable transportation networks available in various cities and countries.

A one-size-fits-all all solution will not work here. These networks include trucks, trains, vans, buses, and even bicycles as required for deliveries to both B2C and B2B customers. Capitalising and optimising the logistics network can help the companies in reducing supply chain costs.

Improve on time in full (OTIF) deliveries

OTIF is one of the key aspects to ensure successful supply chains along with optimal usage of assets like vehicles, containers, and ships. Where multiple 3rd party networks are used, efficient route planning and schedule management are essential.

Based on the various networks used, a supply chain should have its own schedule and planning to determine which tasks need to be completed and by when. To achieve maximum efficiency, each asset must be allocated specific timelines for loading, transport, and delivery. By allocating these time schedules the activities can be synchronised and done diligently. This schedule allocation allows the activities to be synchronised and done in a disciplined manner.

Simplify the process flow and identification

Maintaining a simple but effective supply chain process flow is key to increasing supply chain efficiency. This includes how the required information is collated, secured, communicated, and processed.

As the product shipped is physical, markings of the goods that are being shipped are essential. Whether it is FCL, LCL, LTL, FTL or airfreight, it is important to ensure that the goods are properly and clearly marked so even if the delivery has gone wrong, the goods can be easily identified and diverted to the correct destination. This is one of the key reasons for the success of the Mumbai Dabbawallas as they have perfected this technique of delivery identification through the use of simple processes and codes which are highly effective in communicating the origin, route and destination to all those involved in the chain.

Having a consistent codified marking and identification system can be effective in ensuring deliveries to the correct parties without displaying compromising details such as details of the goods, addresses and other sensitive information. Additionally, using the same people and routes creates familiarity and the codes can be deciphered accurately, and deliveries can be affected correctly.

Standardize operating procedures and kPI's

Standardize operating procedures and kPI's

Consistency is key to success in supply chain and consistency can be achieved only when standards are adhered to. Whether it is in transportation, warehousing or shipping, each segment of the supply chain should have some Standard Operating Procedures (SOP) and Key Performance Indicators (KPI) to achieve consistency. If the logistics service provider allows the customer to keep shifting the goal post, their service delivery will be affected which affects their ability to perform consistently. Adhering to SOPs will help the company achieve their KPIs and provide a consistent service to its customers.

Empower your employees

It is all well and good to have the best SOP, clear KPIs, best supply chain platforms, best infrastructure, and supply chain architecture, but if the people handling the work are not sufficiently trained, empowered, and motivated, everything can go to waste. Remember, an effective supply chain is only as strong as its weakest link and an untrained and disempowered employee can be the weakest link in the supply chain.

Continuous on-the-job training is a necessity and all operational staff should be fully trained in various activities involved in supply chain such as collecting, sorting, transporting, finance, and customer service/experience. Many supply chains are labour intensive and operate in a variable environment. Employee empowerment can help in ensuring that the employees have the required capability and capacity to handle any issues or emergencies that may arise in the provision of services

Key take-aways

The essence of supply chains is to ensure timely delivery of goods to the customers, and this should be ingrained in the culture of every partner involved in the supply chain.

COVID-19 has highlighted that supply chains need to be agile enough to find alternate solutions to problems and use a developmental approach that infuses and integrates supply chain resilience, which in turn can ensure customer satisfaction.

Much of the technology that is available now and expected to be part of the 4IR can be used to revitalise supply chains and make them more effective and sustainable. But the current congestion issues plaguing supply chains are proof that technology alone cannot be the answer to all the problems. The solutions to these problems need some good old-fashioned human ingenuity. Something that the technological world has not yet mastered.

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Technology alone is not the answer to common supply chain problems

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