Distribution at lightning pace! – by Salil Pillai, Senior Managing Consultant (Freight & Logistics), IBM GBS

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Gone are the days when you order for something and then wait for days and months to get it delivered to you. Advancements in Information Technology has disrupted the pace of distribution.

As the world is becoming smaller with information revolution, the logistics sector was perhaps one of the later entrants to join this transformation journey. We have seen new generation ERPs coming into play over the last 10 years with logistics majors across the world, and a natural extension to this has been the advent of the Transport Management Systems and the Warehouse Management. These were more a reactive strategy.

Information Technology is still in its nascent state and its reasons are:

  • Overwhelming presence of legacy platforms managing the transportation and warehouse
  • Industry is going through a consolidation phase, where mergers and acquisitions bring new and / or redundant processes and systems that becomes hard to rationalize, given the regional nature of the business.
  • Global operations, extremely volatile and unfriendly economic conditions and the inability to mitigate the risk of migration, considering the aforementioned parameters, make logistics companies too conservative to take any decisions around transformation

 

However, the last four years have seen tremendous drive from global players and a good percentage of local players taking bold moves to transform their processes and systems. The key reason for this can squarely be attributed to the socio-economic reforms that has been evidencing in the buying patterns of the logistics customers.

What is the single most important attribute that customers are looking for from their service providers? All new initiatives narrow down to the concept of getting the right things at the right place at the right time at the lowest cost.

This is primarily because:

  • Whatever is in transit is unproductive
  • End state of whatever is in transit is unpredictable – so the longer the transit, higher the risk and cost
  • Unproductive artifacts add to overhead

 

Clearly, the reduction of transit time is the key, and the faster you get the artifacts to the clients, the more efficient your client’s bottom line would look like! Getting into the fundamentals was deemed essential to bring out the significance in a holistic perspective.

What are the key aspects where Information Technology will enable this smoother and efficient goods movement?

  • Integration of the Information Systems across the logistics cycle to make sure that information is readily available to the entire ecosystem for decision support, including dashboards.
  • Optimization of material sourcing to minimize transit distance.
  • Optimization of assets deployed
  • Digital validation of the acceptance details of shipments into the network, which enables to begin the downstream activities in anticipation of the shipment, including proactive tracking, safety, security and re-planning as required.

 

This being the next level of focus areas for a typical freight company, having put the TMS, WMS and ERP in place and talking to each other well, further market capture will be dependent on how fast enterprises can turn to innovation. Information availability is the key. Big data and its analysis, meaningful interpretations and currency will become the most pressing demand from enterprise in the near term.

[message_box title=”Disclaimer” color=”red”]The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of IBM[/message_box]

 

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