How to Digitize Logistics Operations
Rescue Supply Chain Management from the Chains of Legacy.
The Motivation
Digital transformation is a cathartic effort for any participant in the conventional freight industry. Aim is to steer running your company in the new ways of working (Industry 4.0), that is for faster, cheaper, scalable, digital, transparent, compatible, user-friendly and eco-fiendly business by investing in tools to enable and mount your processes. Start with thinking through the necessary change and the vision for that change.
In this article, you will find actionable advice, props and traffic lights for the SME’s to bring Digital to their operations (Small to Mid-size transformErs 🙂 ).
Start with the Clear Objective – to improve on all sides – processes, costs, customers, forward porting capabilities, integration with partners, and then loop-back to processes (already a bit better)- costs… turns into virtuous cycle.
Process view – this is a process driven industry, so have a process flow/map and a general setup or your operation or an org chart (typical production run, delivery cycle, across process steps you have in your operation) use simple and straightforward visuals, with intuitive details so you plan project and discuss progress in broad context.
Legacy starting pont – the catch of the story! Candidate transformants have to either
(1) overhaul heavy monolithic apps, which is often an innovation project in its own glory, or
(2) start upgrading, streamlining and simplifying a collection of disparate tools. The (good) part to being left behind (and that’s for the bulk of the industry), is that one needs to catch up jumping stairs. An awakening and an intense call that’s also very coercive.
To boot, firms need to resolve for the journey and stick to it. Drifting and leeways are simply not worth it. Supply chain as a service function, and integrated with the rest of operations – materials, production, sales and marketing. Managing Supply Chain has turned from a dead-end cost burden, to cost plus, to now a fairly manageable profit centre and a fresh source of optimization, innovation and products design.
The Benefits from the Digital Transformation
Cost benefits – most important and relatively tangible and estimable, assuming you implement right the first time with no reworks and rollbacks. New ways of workings i.e. getting more digital is a compelling opex vs capex case. Just be sure, not all upfront cost and TCO are readily evident on vendors’ playbooks.
Efficiency gains, productivity improvements, streamline of operations – this would be specific for your organization and again, mostly touching processes, then culture and ultimately net results. Clichés to the side, a transformation project (water and stones pic) that helps get to terms with performance and efficiency metrics during the discovery phase is in parallel, an inspiring effort in legacy cleanup
Tools and solutioning modernization – you should step lightly here on a mix of intuition, experience and analysis. Be practical, unassuming and have a feel for the products, systems and platforms you need. As a thought experiment, map them out on your core functions – sales and marketing, operations, customer service, finance. How will that change your day? Trial as much as you can afford (in time), get as much consulting as you can stand. Have a shortlist and reiterate.
Think hard: do you need a niche, e.g. a CRM-only product to prove the concept and start off, or do you need a more comprehensive ERP-like systems with integrated modules say sales, marketing account management, all the way to accounting, reports and analytics. Can you put on some of the ERP, and later add more if working. In a separate article, we will share how to do product selection (bidding dynamics, integration, interplays).
Fringe benefits of the digital transformation, the intangibles:
- you can make news (PR, technology is always newsworthy),
- shipshape your branding as employer (hiring power), partner your vendor will promote, and even get a rebate as a reference case
- your customers perception and awareness get a slick upgrade
To second check, Logistics trade publications don’t tell stories so much in terms of ‘captains of industry’ anymore. They report them for the Digital. This new storytelling is more useful, practical, inspirational.
Your Digital Project in Practical Steps. The Flash Cards.
Timeline – lay out phases and next steps (and stops). Be involved in, have control and react . This is to communicate and bold-underline priority and commitment.
Have Quick Wins to signal new ways make progress and motivate the immediate contacts. The quickest wins are easiest – those are on the operations side. The earlier the better.
Focus on practical use cases and understandable metrics to flag improvement:
- Lower processing time with fewer errors, and quick search of documents, (shipment, warehouse turnaround/putaway volume, order fulfillment, quote response time)
- Transparent, auditable, manageable processes – timestamps, users, events, documentation, system messaging, order/shipment/account level P&L
- Automated notification for updates of services, rates, terms, regulations, industry content, upgrades, etc. details
- Integrated quotes -> order booking -> documentation -> invoice cycle
Separate the grain for the chaff.
Don’t get caught in or hot-air adrift on erminology – be it agile, scrum, Kanban, kaizen, process re-engineering, etc. These concepts are all part of the play but not essential. Have your vendor to commit the real stuff, i.e. what needs to be done by when, and then make sure they stand out through implementation and delivery. This is what you do for your customers.
Prepare mentally and emotionally
Be prapared for the jpsychological strain during the change ( “Qual der Wahl” /Torment of Choice classic), the push back from staff, the running business inertia, the false sense of equilibrium we all tend not to shake. And still, we cannot help the appreciating and encouraging grin to your daring mentality, overcoming attitude, and commitment to move on. If you gave it the hard thought, it should be time.
Finally, don’t overanalyze and don’t overwork. Perfect is enemy of done. As with most transformative growth, this should be, in essence, a value play. Brace for the innevitable black screens, error codes and untoward menus. Not so much plain wrong, but unfamiliar. They are part of the journey. When you drag through to brighter days, it will add up and get seen through.
Courage and Luck with Your Digital Transformative Journey!
Dintro.net, a CargoWise service partner, is a supply chain systems consultancy, helping shipping, freight forwarding and logistics companies with sales, operations, systems and processes.
systems@dintro.net | systems.dintro.net