1. Flexibility

Agility has always been important in supply chains. This trait has to trickle down to next generation supply chains, as they should be able to react to sudden changing circumstances in the operating environment. Any kind of unpredictable and devastating incident, such as a natural disaster, medical epidemic, political or economic instability, has the potential to overthrow supply chains.

However, when they are flexible, have a strong risk assessment program, intelligent decision support systems and are demand driven, next gen supply chains can thrive in even the most challenging and competitive environments.

2. Speed of Delivery

Speed is of the essence of the next generation of supply chains. It will be more and more critical for supply chains to be able to respond to demands as quickly as they can, in order to ensure quick delivery for retailers and other key members of the supply chain.

Companies will want to have a stock of products as soon as they are needed and they will also want to move more stock in a shorter period of time.

3. Global Reach

Long gone are the days when companies could locally limit the delivery of their products. Thanks to the Internet, you can expand supply chains on a global scale. At the same time, it is possible for global supply chains to react at a local level.

Next gen supply chains must know how to create global hubs that are not only effective, but can also supply products locally without needing to transport them across the world for just a few orders.

4. Optimized Inventory

The trick with efficient inventory management is that you should have just the right amount of stock in the warehouse. Having too much will result in expired and unsold stock, while too little will almost always assure that you don’t have enough stock when it is urgently needed.

This calls for optimizing inventory so that your supply can always meet the demand. The quantity of stock must be dictated by the current consumer behavior, buying trends, and local demand for the product.

One way you can optimize inventory in any supply chain is by incorporating various tools, such as industrial weighing scales and truck scales. Innovative shipping techniques must also be employed to speed up the delivery process.

5. Go Green and Sustainable

Try to have a green supply chain which does not impact the environment negatively. Ensure that you don’t put any kind of pressure on the environment during any stage of the supply chain.

At the same time, make sure that the supply chain is sustainable as well. Practices like utilizing raw materials in a sustainable manner, making eco-friendly packaging and using alternative energy sources to run the manufacturing plant and supply chain will go a long way in ensuring that next gen supply chains are sustainable.

6. Proactive Strategy

Supply chains should be proactive in case of disruption, sudden changes or potential disasters. Utilizing data modeling and research, you can gain insights and knowledge into how you should be prepared for such events.

By being proactive, you can ensure that you offer great services at all times. This also helps to ensure you don’t get tangled with excuses that hinder your ability to deliver when needed.

7. Innovativeness

Every supply chain should embrace innovation and technology. By incorporating the latest technology in your supply chains, you can ensure that you stay competitive and offer excellent services at all stages. Modifications can be small or large, but you must constantly try to incorporate innovative approaches across various functions and supply chain processes.

Supply chains must not remain stagnant. When you don’t employ strategies to transform the supply chains of the next generation, it is equivalent to losing revenue and business.

There must be an urgency to give your supply chain management a facelift so that it can unequivocally strive in the competitive business world.

The post 7 characteristics that next generation supply chains must possess appeared first on Trade Ready.

Innovation is everywhere, as we observed in my previous article about smart ships.

The efficiencies gained through recent technological advances in the transportation industry are undeniable, and now it seems the stagnant air freight market may finally have its turn.

Air freight has endured numerous issues, despite opportunities for growth and improvement in recent years.

For example, according to a recent International Air Cargo Association (IATA) survey, problems in the industry include a lack of transparency, no real-time information on tracking, inefficient processes, and the detrimentally complex nature of moving goods by air.

These issues have resulted in a reluctance in shippers to use air cargo for their freight.

Air freight’s status quo is costing it business

Currently, cold chain transport and e-commerce deliveries are the two biggest markets for air freight services. However, industry experts have dinged the air freight market for its lack of standards, procedures and service handling.

Air freight’s share of the cold chain market has steadily declined from 17% in 2000 to 11% in 2013. They lost the majority of this business to ocean freight, as those services were able to respond faster and more thoroughly to their clients’ needs.

Meanwhile, e-commerce cross-border growth is expanding. In a recent Loadstar article, FedEx executive vice-president Raj Subramaniam stated that:

E-commerce is driving significant change in the air cargo status quo, from shipment sizes to customer profiles.

Furthermore, a spokesperson for Alibaba’s logistics unit, Cainiao, issued a challenge for the air freight market. He stated that Alibaba marketplaces were experiencing bottlenecks from shipping with air freight due to restrictions on products with batteries, liquids and powders.

“So I don’t know if you have any solutions on this, because the volumes are huge. And with these restrictions, a lot of the time we have to switch to sea freight,” he said.

Despite the challenges, there are signs that things are changing for the industry.

Taking billing and booking into the 21st century

Through a collaborative effort between IATA and key stakeholders, the e-air waybill (eAWB) was introduced in 2006.

The initiative aims to build and implement an end-to-end paperless transportation process for the air cargo industry, where paper documents are replaced with the exchange of electronic data.

The change has been implemented slowly but steadily.

Unfortunately, the lag has contributed to the air cargo industry falling short of its end of year target for market penetration in the transportation industry, achieving 36.4% out of its 45% target for 2015.

For 2016, IATA has set a new target of 56% penetration.

This year, IATA is also launching a new initiative called eAWB 360, in order to work with selected airports to implement the eAWB as standard operating procedure for all parties involved in shipping air cargo.

Montréal’s Pierre Elliott Trudeau International Airport is set to become the first airport to implement the program on May 3, followed by Toronto Pearson International, Vancouver International, John F. Kennedy International, Dallas/Fort Worth International, O’Hare International, Los Angeles International, Miami International and Hartsfield-Jackson Atlanta International.

Additional service offerings are finally being introduced by various stakeholders. One such example is the Cargo Reservation, Operations, Accounting and Management Information System (CROAMIS), which was developed jointly between Wipro and Qatar Airways.

The system provides end-to-end views of cargo operations, and is compliant to IATA initiatives such as e-Freight, e-CSD, Cargo XML. CROAMIS will also facilitate adherence to Cargo 2000 quality standards.

Another solution comes from Alaska Air Cargo and simplifies billing for customers. Quite simply, Alaska Air Cargo rolled two current surcharges into its base rates.

This, in turn, will result in customers only being charged by freight weight and a single screening fee. According to Alaska Air Cargo, the changes will allow customers to easily estimate and manage shipping costs, thus allowing for more predictable pricing throughout the year.

Welcome to the web, air freight

Similar to ocean freight, start-up online platforms including Haven and Freightos, offer shippers the ability to book and track air freight shipments online, providing visibility and flexibility for the customer.

Lastly, Lufthansa Cargo is targeting new customers, cutting costs and revamping some of its products after a slump in profits and no signs of improving cargo markets.

This summer, it plans to introduce “myAirCargo”, offering customers flying with its parent group the chance to ship personal belongings or purchases bought on their travels directly, without going through a third party.

In addition, Lufthansa Cargo teamed up with business incubator firm RocketSpace to take part in its “Logistics Tech Accelerator” program. Launched in 2011, the program helps foster innovative technology startups in the air freight logistics sector.

Has the air freight market emerged from its slumber, ready to modernize and innovate? Positive signs are starting to appear.

Let’s hope the pace picks up so that together air freight and ocean freight can bring forth a renaissance in global trade for all shippers, big and small.

Would you consider switching to air freight if the industry can catch up to its competitors in ocean freight?

The post Has the air freight market missed the boat on innovation? appeared first on Trade Ready.

The spread of disruption and innovation in supply chain technology has now reached the ocean freight industry.

More than 90% of international trade commodities are transported via ocean freight, and the industry has seen its fair share of disruption over the years, including the creation of the container and more recently the mega-ship.

However, with global trade increasing over the years it has become increasingly difficult to maintain visibility and efficiency throughout ocean freight operations.

Indeed, the Port Technology periodical recently quoted Martin Stopford, Non-Executive President of Clarkson Research and Author of Maritime Economics as saying that “a fleet of ships should be run the same way BMW runs a car factory”.

As a result, like every other segment within logistics, the ocean freight market is undergoing major advances.

Introducing the “Smart Ship”

Think of a smart ship as a giant smart phone. Smart ships are being built with the ability to communicate with other vessels, ports and partners.

In 2015, Hyundai and its partner Accenture announced plans to design a ship that will include a network of sensors and analytics software to improve port logistics and maintenance, as well as reduce running costs.

Also in 2015, CMA CGM equipped one of its 18,000-TEU vessels with Traxens technology, which allows containers to communicate with the vessel by using built-in relay antennas.

The system collects data on location, temperature, humidity level and vibrations, and can report impacts, attempted burglary, and customs clearance status in real-time.

Furthermore, it can remotely control and adjust the temperature of refrigerated containers and will allow resource optimization for routine inspections.

In addition, Xvela has created a cloud-based vessel stowage and collaboration platform for ocean carriers and terminal operators.

In March 2016 it announced a pilot program in which Hamburger Hafen und Logistik AG, PSA International, DP World, Modern Terminals Limited, and Port of Tanjung Pelepas, along with ocean carriers Maersk Line, MCC Transport, Orient Overseas Container Line, Nippon Yusen Kabushiki Kaisha and Hapag-Lloyd have agreed to participate.

The purpose of the pilot tests are to provide visibility of stowage planning-related information for both terminal operators and shipping lines, and better connectivity between carriers, terminals and partner organizations.

Terminals will be able to access departure stowage plans as ships leave prior terminals, allowing them to allocate resources and resolve potential issues while carriers will have transparency of terminal operations and the ability to share in real-time with partners.

Book, compare and track ocean freight from the comfort of your living room

For users of ocean freight, the ability to book and track ocean freight has greatly improved. Startups such as Haven, Freightos, i-Containers and Kontainers all provide online platforms for users to compare rates, pick carriers, book shipments and track from origin to destination.

The bonus is that this can all now be done from the comfort of a home, office, coffee shop – literally anywhere and at any time.

By utilizing such platforms, the playing field between large shippers versus small shippers is levelled, thus increasing competition among ocean transport companies.

Virtual reality, drones and self-driving ships: the future is here!

The outlook for the ocean freight market looks to be something out of a Jules Verne novel. Imagine an autonomous ship transporting goods from Singapore to the Port of Vancouver!

The marine division of Rolls-Royce Holdings is actually working on this, and is said to be about 10-15 years from achieving this goal.

The company has already developed a virtual reality command center, a first step towards autonomous ships whereby captains can remotely control multiple ships from onshore.

Humans would still need to conduct maintenance and repairs when a ship comes into port, but even this could eventually be handed over to robots.

Finally, drones are already being embraced by the market and will likely increase in use. According to a Wall Street Journal article, Maersk is looking to use drones to cut the cost of supplying ships at sea.

According to its studies, Maersk notes it could save up to US $9,000 per ship in annual operating costs by moving items such as mail, medicine and spare parts by drone. The company is also looking at stationing drones aboard ships for other tasks, like hull inspections.

Disruption and innovation in how we conduct business, regardless of industry, is occurring at a rapid pace.

How we once viewed supply chains, the underlying basis of how commodity-based business is conducted, is changing dramatically thanks to many technological advances.

The ocean freight market is no different. Perhaps this emphasis on innovation and disruption has come at the perfect time as the ocean market struggles with overcapacity, declining rates and aging ports in need of efficiency improvements.

The result will be a very different ocean freight market, but one that is much more responsive and efficient.

The post Get onboard the “smart ship” – innovation and disruption in the ocean freight market appeared first on Trade Ready.

Increasing demand and improving technological capabilities are helping to boost trade in goods such as pharmaceuticals, foods, and other items that require temperature-controlled transportation.

Meanwhile, the spotlight on food safety is on the rise, with international organizations such as the UN’s Food and Agriculture Organization highlighting the importance of successful movements of food to market, particularly that of perishable produce such as fruit and meat.This eye-opening statement by the FAO has logistics providers and countries alike racing to build new infrastructure and introduce solutions to support cold chain transportation.

Where cold chains are lacking worldwide, 200 million tonnes of food spoil before reaching market every year.

This is extremely unfortunate as the United Nations Food and Agriculture Organization estimates that about 805 million people worldwide are chronically undernourished. Almost all these people live in developing countries, so the need for cold chain solutions in such locations as Africa and South East Asia are of utmost importance.

Food and drugs are racking up the air miles

While there is currently a movement towards transporting with ocean vessels, air cargo is still the mode of choice for many shippers of temperature-sensitive goods. In fact, these goods have helped boost air cargo use, which has otherwise been in a slump.

According to WorldACD, perishables and pharmaceuticals were the best performing air cargo classes during the month of May 2015, due to their time-sensitive nature.

Furthermore, for the first half of 2015, the biggest gains in perishables air cargo tonnage were in the Middle East and South Asia (MESA), up 59%, while Asia Pacific air cargo rose 35%.

For pharmaceutical air cargo, Asia Pacific and MESA were also the largest regions, increasing 74% and 66% respectively.

An expanding middle class and growth in e-commerce is increasing cold chain demand

In the Asia-Pacific region, the rise in perishables and pharmaceuticals can be attributed to an expanding middle class and favorable changes in healthcare regulations.

E-commerce has further assisted in this demand. Some high impact examples include Alibaba’s Tmall marketplace, who partnered with retailers like Costco to sell fish and produce, and JD.com’s investment in FruitDay, a Shanghai-based importer of fresh produce.

These same providers are also growing their healthcare capabilities.

The Middle East has invested in infrastructure such as warehousing, ports and airports to promote its expanding middle class, as well as a transshipment hub linking Asia to Europe.

For many countries within this region, much of its food is imported. For example, the UAE imports 85% of its food, and this will likely increase as the government plans to develop farmland in other countries in order to secure food supplies amid increasing demand.

Innovation in remote sensors are decreasing waste and increasing control

So, where’s the innovation in all of this demand for temperature-controlled goods? It’s in the sensors – the ability to monitor temperature ranges and adjust as needed while goods are being transported.

While much of this innovation involves the air cargo market, it is also appearing more and more in ocean freight.

Logistics providers such as DHL, FedEx, UPS, Kuehne + Nagel and DB Schenker all provide solutions that utilize sensors, either based on GPS or RFID, for tracking and monitoring temperature and humidity levels throughout transportation. Web-based, real-time monitoring, including report generation, is also included.

Among these solutions is FedEx’s SenseAware, introduced in 2009. It is a multi-modal solution that provides location monitoring, as well as monitoring temperature, light exposure, relative humidity, shock, and barometric pressure.

With these services, it can provide near real-time visibility and insight into shipments. Since 2009, FedEx has adapted this solution, incorporating it into its other services and industry-focused solutions, including aerospace, manufacturing, oil and gas, healthcare and fashion.

Sometimes even the fashion industry needs to monitor humidity while in transit. It has expanded this service into Europe, Asia and South America as well.

DHL’s temperature-controlled solution is another example of innovation at work. In 2013, the company introduced DHL Thermonet, an RFID-based air-freight service which allows customers to track the temperatures of their goods throughout the shipping process.

In 2014, DHL followed this up with the introduction of its global ocean freight service, Ocean Secure, which allows customers to access real-time tracking and temperature data at any given point, and even take remedial action if necessary.

The benefits of cold chain innovation are about more than just profit

There are many significant benefits to this monitoring, including compliance with regulatory authorities, such as the US Food and Drug Administration, and allowing users to be proactive instead of reactive.

Furthermore, it allows for intervention when necessary, whether it’s re-icing cold chain shipments or inspection and repackaging of damaged goods.

On a broader scale, users are provided the insight needed to make better business decisions, resulting in a strong customer experience and often a higher profit margin.

Not only will these new technologies improve better customer experience and higher profitability, they will also reduce food and medicinal waste by allowing for proper monitoring and faster intervention.

This will maintain the integrity of perishables transport and distribution, particularly in regions where it is critical to health and survival.

What do you think is the most useful application or benefit of cold chain innovation, and why?

The post Innovation in global cold chain transport is helping to reduce food and medical waste appeared first on Trade Ready.