Jul 17, 2021

The three lessons we learnt from the Suez Canal nightmare

supplychain
Logistics
SuezCanal
DigitalSupplyChain
Neil Murphy, Global VP, ABBYY
4 min
As the Ever Given finally departed Egyptian waters this week, ABBYY’s Neil Murphy considers the takeaways of the high profile disruption

The Suez Canal crisis compounded disruptions in a global supply chain already strained under the ongoing impact of the pandemic. At least 367 vessels were backed up waiting to cross, which included container ships, bulk carriers, and oil tankers. Some ship operators opted to re-route around the Cape of Good Hope, adding more than a week of additional sailing time, increasing fuel costs. Ultimately, the disruption caused the canal authorities in Egypt alone to lose $95 million in revenue.

While we’re relieved to see that the Suez Canal is open for business again, it shines a spotlight on the urgent need to rethink supply chain management in the shipping and logistics industry.

Nearshoring isn’t the answer for short-term problems

Supply chains are still recovering from the impact of Covid-19 and Brexit, and the Suez Canal crisis has put even greater pressure on the UK’s global trade routes. A BDO Consulting survey found 33% of manufacturing companies plan to focus on nearshoring manufacturing goods to the UK. As more companies nearshore, many supply chain management companies are investing in digital transformation and stepping up automation. But even with new technology in place, the majority do not have the capability to adapt quickly – a key element in a time of crisis.

Nearshoring may cut down on time and expense, but it’s a long-term strategy that takes several years and may or may not solve problems like the Suez Canal blockage. The more immediate problems are understanding and solving how supply chains handle delays, source supply shortages, and overcome lack of visibility into their operations. Companies need to have a deeper understanding of their supply chains. As the pandemic has shown, the demand for flexible, accurate supply chain logistics is on the rise and it’s important to be able to adapt to larger, more complex methods of information and product transportation.

Don’t underestimate the value of supply chain resiliency

 

For years, quick delivery, lean operations, and a widely distributed footprint have been the top priorities for supply chain management teams. But in a matter of a few short weeks, the global coronavirus pandemic coupled with the Suez Canal nightmare demonstrated starkly that many management teams have vastly underestimated the value of supply chain resiliency and visibility.

Supply chain leaders must realise that there is no “one size fits all’ when it comes to automation. To achieve a resilient supply chain, a holistic approach is needed. Before investing in technology, they need to gain visibility into their processes that can expose delays, shortages or even assess vulnerabilities that can be remediated before they occur. 

According to Lloyd’s List, the average end-to-end container shipment involves more than 30 organisations, more than 100 people, and over 200 information exchanges – yet the processes and technology supporting such shipments rarely matches up. There are processes requiring the delivery of accurate information to enable smarter business decisions in real time, and access to critical data such as bills of lading, trade bills, waybills, dock receipts, packing lists and invoices. Many of the systems of trade are currently conducted through a chaotic mess of e-mail, paper, fax, and misaligned Excel spreadsheets. Triaging disruptions via manual tasks like sending email and updating spreadsheets can only further break processes. So, what’s the solution?
 

Optimise your supply chain with process intelligence

 

Not embracing digital innovation in the supply chain is a missed opportunity. A higher level of digital intelligence is needed that will enable supply chain leaders to properly identify and understand how process workflows operate, and how intelligent automation impacts downstream and upstream processes. Sophisticated process intelligence not only effectively monitors the full scope of organisational processes, but it also evaluates the direct cost associated. This enables organisations to strategically improve the cost of completing each individual process. 

Process intelligence can go a long way in creating more effective, efficient, and ultimately successful supply chain operations. It can fix time-wasting processes while immediately predicting and reacting to adverse conditions – which gives staff more time to spend analysing trend data, forecasting, and focusing on exception handling and relationships with clients.

More than this, having the right technologies in place will also help supply chain leaders prepare for the worst – whatever the next major obstacle for our global supply chains might be.

 

Neil Murphy is Global VP at ABBYY

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Jul 29, 2021

DHL and UPS: How is 3PL Evolving in 2021?

UPS
DHL
ThirdPartyLogistics
Logistics
Elise Leise & Oliver James Fre...
6 min
Philippe Gilbert, President of UPS Supply Chain Solutions, and Phil Roe, CCO and Strategy Director at DHL, discuss the shifts in third-party logistics

To optimise their supply chains, many companies have turned to third-party logistics providers—3PLs—to outsource how they manage inventory, stock warehouses, fulfil customer orders, pack pallets, and handle returns. Especially in the midst of the pandemic, corporations have struggled to satisfy their customers, mitigate shipping delays, and react to rapid spikes in demand. In short: if logistics isn’t your core competency, rely on the experts.

To examine the current state of 3PL, we decided to have a quick roundtable with Philippe Gilbert, President of UPS Supply Chain Solutions, and Phil Roe, Chief Customer Officer and Strategy Director at DHL Supply Chain. Here’s what they have to say on the subject: 

What are the fundamental benefits of partnering with a third-party logistics provider? 


‘Proper supply chain visibility and planning is one of the key challenges facing modern supply chains’, says Phil. ‘Supply chains now cover multiple jurisdictions across significant distances. They’re also omnichannel, meaning that it’s now standard practice for there to be multiple routes to the customer’. Philippe adds that, ‘3PLs can deliver efficiencies and resources across the supply chain that are difficult for most businesses to replicate’. 

According to a study from UPS Global Logistics, five major challenges drive companies to outsource: 

  • Limited Space 
  • Increased Customer Expectations 
  • Faster Order Fulfilment 
  • Reduced Labour Costs 
  • Multiple Fulfilment Channels 

Now, the pandemic has accelerated 3PL adoption. In that same UPS survey, 29% of respondents indicated that they’d switch to outsourcing their logistics as a direct result of the past year. ‘One of the biggest issues impacting our current customers is the timing on inventory levels’, says Philippe. ‘Production delays out of APAC have pushed receipts and built back orders of products’. 


How are 3PLs helping businesses cope with broader disruptions, such as Brexit, transport logjams, and driver shortages? 


‘We can categorise supply chain disruptions into three broad areas’, explains Phil. ‘Demand-side, supply-side, and environmental. Some of these are easier to control than others, but all benefit from proper oversight and the ability to quickly adapt’. When the Brits finalised Brexit, for example, DHL scaled up areas that needed specialist support, such as customs processing. ‘We can leverage our network and redeploy on demand’, he explains. 

As for UPS, the company developed a post-Brexit SCS solution that enabled its clients to keep inventory closer to their UK customers. ‘We can maintain a broad portfolio of carriers and providers to quickly adapt to supply chain disruptions’, Philippe says. ‘This allows customers to avoid service delays, added costs, and administrative burdens associated with customs clearance’. 

Next, this conversation would be incomplete if we didn’t talk about how the boom in e-commerce has affected 3PL. 

Do you anticipate that e-commerce growth will continue? 


‘The growth of the past 18 months shows no sign of slowing down’, Phil says. ‘Consumer habits have altered, in some cases, permanently. Over the last eight months, DHL has seen a 150% increase in its fulfilment division—reflecting the soaring demand’. To keep up, the company has focused on data and automation, as well as deploying robotics solutions alongside its employees. ‘Whether that’s automated pallet systems or pick-and-pack robots’, Phil explains, ‘we’ve coupled technology and data to manage demand, meet customer expectations, and smooth out labour requirements’. 

Fundamentally, e-commerce is driving demand for additional labour and space. ‘This presents a unique opportunity for 3PL’, Philippe says. ‘New entrants in retail platforms, though currently small, will look to disrupt the giant retail players. They’ll be closer to their customers in the city. And they’ll try to unify and digitalise SME brick-and-mortar retailers’. 

How are shifting customer expectations - such as the next-day “Amazon Effect” - impacting 3PL? 


‘We see 3PLs expanding their networks to be closer to consumers and integrating fulfilment with last-mile delivery’, says Philippe. ‘They have to expand their reverse logistics, including investments in warehouse space’. He suggests that data analytics can enhance visibility and help 3PL companies address inefficiencies. ‘With the right technology’, he says, ‘businesses can access accurate, connected data and derive actionable insights’. 

Predictive and prescriptive analytics, when coupled with artificial intelligence and machine learning, can help companies understand when, why, and how supply chain disruptions occur. ‘This way’, Philippe adds, ‘they can prepare for them—or better yet, sidestep them completely’. 

In addition, customers now expect companies to follow through on their social commitments...

Can 3PLs help organisations deliver on their ESG objectives, such as reducing carbon emissions? 


Absolutely. Through UPS’s Eco-Responsible Packaging Programme, for instance, the company evaluates its clients’ packaging processes to determine the best way to protect their products and the planet. In addition, the corporation works with carriers on creative, lower-emissions solutions. ‘By 2025, we plan to source 40% of all ground fuel from sources other than conventional gasoline and diesel’, Philippe explains. ‘That’s nearly double what we used in 2016’. By then, 25% of UPS’s total electricity will come from renewable sources. 

As for DHL, the company offers a portfolio of GoGreen solutions, which offers its customers a range of ways to minimise their impact on the environment. ‘This includes everything from carbon reporting and analytics solutions to investments in internationally-recognised climate protection projects’, says Phil. ‘Sustainability provides us an opportunity to collaborate with our customers’. 


Yet, it’s often challenging to serve customers in highly regulated industries. How can companies overcome those hurdles?

 
‘Companies operating in highly regulated industries such as pharmaceuticals and life science face extra pressure on their supply chains’, Phil explains. ‘Dealing with rapidly growing changes then requires depth and breadth, which is something a global business such as DHL can offer’. To overcome regulatory challenges, DHL offers its clients dedicated sector specialists who understand niche industries but still have access to its global network. 

At the end of the day, Philippe comments, 3PLs must take responsibility for running compliant programmes and services. ‘Licensed or not’, he says, ‘they’ll need to work with their highly regulated customers to ensure that SOPs (Standard Operating Procedures) and audit processes are in place’. 

What do the next 12 months hold for 3PL providers?

 
‘Providers will focus on mastering omnichannel e-commerce’, says Philippe. ‘You’ll see faster last-mile delivery, more sustainable logistics and packaging, and better forecasting for risk management’. Overall, he notes, 3PL providers will invest in data analytics and new warehouse technologies to provide greater visibility into their supply chains. 

For example, UPS is rolling out a new suite of digital engagement tools. According to Philippe, the company introduced a new UPS Forwarding Hub, UPS Customs Brokerage, and CoyoteGo portals to help their supply chain solution clients. In addition, its e-Fulfilment and Ware2Go products help small- and medium-sized businesses outsource with ease. ‘We’ve focused on adopting technologies to improve our operations’, Philippe says. 

Finally, UPS’s Advanced Technology Group (ATG) has implemented robotics, drones, artificial intelligence, autonomous vehicles, new software platforms, and sensor technologies to increase its 2021 revenues and cut bottom-line costs. Says Philippe: ‘With these tools, we can meet customer expectations for real-time tracking, end-to-end visibility, and personalised service’. 

And there you have it: the future of 3PL. 
 

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