Digitization is Coming—Whether the Supply Chain Likes it or Not

Date: Monday, April 10, 2023
Source: Sourcing Journal

Since the start of the Covid-19 pandemic, the supply chain has experienced quite a bit of upheaval, whether it be factory closures, labor shortages, wildly fluctuating freight costs, congestion at ports and even a war in Eastern Europe.

With uncertainty throughout the chain being the common theme among all stakeholders—retailers, suppliers, manufacturers and carriers alike—it has become more obvious that digitization is now a prerequisite for efficient supply chain operations.

At last October’s Sourcing Journal Fall Summit, Inspectorio co-founder and managing director Fernando Moncayo said it best—“change is not an option”—indicating instead that digitization is a necessity in achieving supply chain-driven goals like sustainability and traceability.

According to a survey of 1,000 supply chain and logistics decision makers conducted by Descartes Systems Group, it appears more businesses are hopping on board—65 percent of companies saying they plan to raise their technology spending over the next two years.

This represents a grand opportunity for technologies in the space dedicated to supply chain visibility, which is still wrought with manual processes that slow down tasks like freight quoting, e-mail or phone booking, managing documentation, measuring factory production and coordinating and tracking shipments.

Paul Magel, president of application solutions at CGS, is a major proponent of bringing these processes up to speed for the buyer-supplier environment to thrive.

In one such example of where digitization can better assure supply chain partners operate on the same page, CGS BlueCherry Shop Floor Control (SFC) technology is designed to empower both onsite and offsite managers and executives to view production milestones, key performance indicators and work-in-process inventory for production steps such as materials receiving, spreading, cutting, sewing, quality assurance/quality control inspection and packaging.

“You’re seeing brands now, who for a long time didn’t want to be in their suppliers’ business, have a need now to be in their suppliers’ business,” Magel said. “They need to be much stronger partners in how they do the work and share information.”

Supply chain tech funding bounces back in 2023

As economic concerns grow, investors may be more hesitant to put money into their supply chain than during the market highs of 2021. Total 2022 fourth-quarter venture capital activity in the sector plummeted 71.4 percent year over year to $4 billion, according to a supply chain report from PitchBook. But on a sequential basis, funding did rise 28.2 percent, illustrating strength to close the year

And the start of 2023 further illustrated more examples of a rebound in funding.

Earlier this year, digital air- and ocean-freight booking and shipping management services provider Freightos went public on the Nasdaq, raising $80 million via a SPAC merger. Freightos is designed so that carriers can sell their capacity and thousands of freight forwarders can conduct real-time rate comparison, book space, make payments and manage shipments in one place. The system, which is primarily used for unplanned shipments, also enables forwarders to share pricing and service to their import and export customers.

While Freightos went public, other platforms across various areas of the supply chain have generated their own private funding to start the year, including freight management platform Freightify, logistics and container visibility platforms Bluecargo and Slync.io, drayage transportation management software PortPro and supply chain risk management software Overhaul.

Aside from attracting investments from outside investors, they all share a common theme—offering real-time data to stakeholders in an effort to bridge potential gaps constraining their supply chain operations.

PortPro, which raised $12 million in Series A funding in February, offers DrayOS to address the broader challenges facing drayage and intermodal carriers that don’t have IT departments to implement and manage software. For CEO and founder Michael Mecca, PortPro represented a chance to modernize drayage, where he estimated that 75 percent of trucking companies still use spreadsheets.

Mecca told Sourcing Journal that he founded the company off the basis that “there wasn’t really a drayage software that was democratized,” with most drayage companies held back by enterprise, on premise platforms that were expensive and burdensome to replace.

The company recently unveiled its DrayOS Track product, which offers details like vessel ETA, container discharge dates and demurrage charges.

“Before the DrayOS Track launch, we might have only been tracking like three or four important data points. Now we’re tracking 13 data points, all with a container number,” Mecca said. “When you go in and out of a port, there’s a gate where you get a receipt saying you received a container. The driver usually has to take a picture, scan it and use it to invoice a customer. We’ve automated all that, consolidated all that information into one system.”

Overhaul, which raised $73 million in March, is leveraging supply chain visibility in a different way, focusing on mitigating cargo theft. The risk management software is expected to track more than $1 trillion in total moving cargo this year, with the company having a 96 percent recovery rate for full truckload (FTL) cargo theft.

Using real-time operational and behavioral data, Overhaul can provide alerting and performance monitoring alongside basic organizational tools like checklists. In leveraging artificial intelligence models, Overhaul can detect when a cargo load’s security is at risk and alert a security operations team as well as law enforcement of the concern.

The digitization has created a different dynamic from the “digital data wars” that often prevent collaboration within the supply chain, according to Barry Conlon, CEO and founder of Overhaul. Today, the concept should be less about competition between solution providers, particularly to hardware-agnostic companies like Overhaul.

“When you’re a hardware player and you own a piece of technology, everybody else who owns a piece of technology you’re trying to connect to sees you as a competitor and they just won’t play ball,” said Conlon. “We don’t have that so we can really help various different aspects of the supply chain ecosystem be successful for the same customer. If that’s a freight forwarder broker or carrier, and they all have visibility platforms, we play well with that and we don’t compete with it.”

Can collaboration improve after TradeLens collapse?

Collaboration still has a long way to go though, if the TradeLens dissolution is any indication. Built as a blockchain-based global trade platform operated jointly by Maersk and IBM, TradeLens was designed to facilitate better information sharing between various parties in the supply chain.

Founded in 2018, the platform managed to onboard several major ocean carriers, including CMA CGM, Mediterranean Shipping Co. (MSC), Hapag-Lloyd, Ocean Network Express (ONE) and Zim Integrated Shipping Services. Its technology enabled users to digitize processes that are somehow still often paper-based or operated within Excel spreadsheets, like bills of lading and trade document workflows.

But the platform still couldn’t get enough suitors to join it, with the TradeLens website itself saying, “Unfortunately, such a level of cooperation and support has not been possible to achieve at this point in time.”

Two new parties, trade document platform provider CargoX and global business solutions integrator CEBS Worldwide, are hoping their efforts will fill the void left in TradeLens’ wake. The companies are in the process of migrating TradeLens users to its own platforms.

“As CEBS was already working with ports and customs authorities using TradeLens, they shared information on the capabilities and benefits of CargoX and about using their framework,” Satish Swaroop, CEO of CEBS Worldwide, told Sourcing Journal. “Customers reviewed both the platform and services offered together, and it made sense to replace it for long-term benefit. As a combination of a reliable platform and framework it made sense to team up to become a one-stop for ports, customs authorities, etc.”

Whether the CargoX-CEBS joint endeavor is more successful than TradeLens is still anyone’s guess, but the attempt is an indicator that intrepid businesses in the supply chain are still willing to play the role of facilitator going forward—and more importantly, get others to play ball.

With data sharing across supply chain partners becoming more commonplace, this more digitized network has the potential to provide end consumers with more efficient and transparent service, all while alleviating some of the potential headaches that occur at the factory, out at sea or on the road.


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