On 16 and 17 February, the eyefortransport 17th Annual Logistics CIO Forum took place in Amsterdam. This gathering of CIO's and IT Directors of the top logistics service providers proved an excellent platform for discussion. The overall theme of the forum was 'digital disruption and transformation' with industry speakers and technology providers presenting insight into their journeys towards digital leadership. This was a sold-out event which provides a good indication of the level of interest in digital disruption and transformation in the industry.
Key topics within the overall theme of digital disruption were emerging technologies such as the Internet of Things, Big Data Analytics, autonomous vehicles and aircraft (a.k.a. drones) and subscription based computing (SaaS, Cloud, etc.). Presenters discussed how their organisations have trialled and implemented these technologies and the implications of that for their customers and internal operations. Customer experience and digital engagement with stakeholders were discussed as new ways of driving business value. Finally, the concepts of smart cities and increased collaboration were highlighted as the new normal that the logistics industry will have to deal with.
In this post, I would like to share some of my key observations as the moderator of the forum:
Disruption is happening
A large number of logistics startups were mentioned as potential disruptors in the areas of freight rates quoting (Freightos, Shippo), crowd shipping (PiggyBee, Nimber, UberCargo), end-to-end shipping (Flexport, ShipWise), trucking (UShip, Cargomatic), Fleet Management (Fleetsu, Local Motion) and data analytics (Transmetric). Moreover, the entry of Amazon to the logistics services industry is seen as a major potential disruption albeit more for B2C than B2B services (?). The early signs of disruption are there and this conservative industry with a fairly traditional approach to embracing technology may prove to be an interesting playground for new entrants.
New technology is introduced in certain pockets
Throughout the excellent presentations by industry participants, there was evidence of the introduction of new technologies within operations and customer interaction. This ranged from examples of the use of drones for mission critical transport of blood samples to the use of internet connected temperature monitoring devices. Good old RFID got a few mentions as a technology that was seen as disruptive some 15 years ago and still hasn't really delivered. Obviously, the adoption of cloud based applications and infrastructure is becoming more mainstream as is collection of data from internal and external data sources. These are often still early trials where the full implications and benefits are to be determined and where the full integration into process and data architecture are outstanding.
Visions are emerging - are there achievable?
Many players in the industry have a clear vision about the future needs with respect to customer expectations, process and data transparency, visibility (of the information flow) and the more general role of freight forwarders, integrators and asset owned operators. There was also a strong appreciation for the different needs and expectations of millenniums when they enter the workforce and become our employees and customers. They will question things that have been taken for granted for many decades (use of email, green screens, non-responsive web page design, lack of notifications, and so on).
So, it seems that we know where we need to travel to, but we are not necessarily sure where the journey starts and what we need to bring in our suitcase. There is a large gap between the desired future state and the current starting point with respect to technology foundation (dare I say 'legacy'...?), process alignmentand standardisation and data architecture. Moreover, we need to take our executive teams and all other stakeholders within the organisation with us on this journey. This requires very strong leadership and many organisations will look at the IT function to provide this leadership.
Master Data and Integration are key
Throughout the proceedings of the forum, it was also highlighted that master data and integration are key. In order to drive process optimisation and data analytics, we need to be able to rely on the quality of the data and have clear definitions. This generally needs a level of governance around data and process creation and definition. In an industry that is quite geographically dispersed and decentralised in nature, it will be a major feat to implement strong data and process governance to drive operational optimisation.
With the emergence of many data sources that need to be mashed and analysed to provide information for decision making, integration is becoming of utmost importance. This means that existing integration platforms need to be modernised and/or new platforms need to be implemented. It is one of the key responsibilities of the IT Leadership to ensure that sufficient investment is allocated to this area which is traditionally hard to explain to the CEO/CFO of the organisation. In addition, we need to attract or develop new skills in the areas ofdata analytics, customer experience and integration. How do we make the logistics industry more compelling for data scientists, developers and other roles as we will be competing with not only technology companies, but also other industries that will need similar recruits.
It is not about technology...
The role of technology is important as an initiator of disruption in an industry. Its fast pace of change and rapid development provides an ever changing landscape that is hard to keep up with. Technology investments traditionally have 5 year+ horizons and significant implications for operations and customer service. Cloud computing technology provides more flexibility around the investment side, but these are long term decisions nevertheless. Customers and users within our organisations will demand new functionality and cannot wait for legacy to be depreciated or modernised. So, it is the IT leaders' role to ensure that the new toys will be able to talk to and integrate with the existing platforms.
We have seen that many large scale (technology-driven) transformations within the logistics industry have failed or, at least, not delivered to expectation. This shows the complexity of transformation and driving change within the logistics industry. Technology is only one factor in this and generally the technology works as designed. The challenge often comes from the willingness to change, a lack of good engagement across the organisation, a lack of understanding and a lack of involvement/sponsorship of senior executives outside IT. These transformations are frequently referred to as IT projects which tends to downgrade the importance and reduce the need for involvement of other functions.
Transformation is not about technology. It is about preparing the organisation as a whole for a new competitive environment. It is about linking data, processes, people and technology to provide better products or services to customers and to drive efficiency within the organisation. It is about developing the right business operating model (not just IT operating model - that comes later) that will enable the organisation to compete in the changing industry.
Within logistics, this may lead to further and better collaboration between actors in the industry so that we are better able to deal with new entrants and disruptors. The lack of collaboration and standards cannot however be an excuse for inaction.
Overall, I was impressed by the well-informed presentations and discussion at the forum. Digital transformation is clearly high on the agenda of logistics CIOs. It will be interesting to see how this develops in the near future.
If you and/or your executive team need any support in the area of digital transformation, please contact me. We operate globally and focus on the business implications of digital transformation.
Frits de Vroet
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