Delivering the intelligent supply chain

The air cargo industry and smart data are a match made in heaven, with huge implications for the supply chain. Ian Putzger, in Toronto, Canada, reports on how some in the industry are preparing to reshape their business.

Deutsche Post DHL Group announced a partnership with communications technology provider Huawei Technologies in February to develop supply chain solutions using Internet of Things (IoT) hardware and infrastructure.

The logistics firm wants to harness this technology to “deliver a more integrated logistics value chain by providing critical data and visibility in warehousing operations, freight transportation, and last-mile delivery”.

Products that can communicate electronically are proliferating at a rapid pace. A survey published last year by BL Global Intelligence indicates that the number of devices that are connected to the IoT will climb from 6.6 billion in 2016 to 22.5 billion by 2021.

The ramifications for the logistics arena are huge. According to a White Paper on the relevance of data-driven insights into the supply chain, published by DHL, using data to sense demand, streamline networks, and improve responsiveness can lead to reductions of as much as 20–30% in inventory. DHL and Huawei estimate that IoT technology could generate up to USD1.89 trillion in additional value for the global logistics industry by 2025.

The industrial IoT is full of possibilities for the air cargo industry to further its data sharing efforts, remarks Ariaen Zimmerman, Executive Director of Cargo iQ, as it means that a shipment effectively becomes a piece of data itself. Sharing will become easier and faster, bringing about increased predictability and the ability to monitor and control shipments at the piece level.

Amar More, Vice President of Kale Logistics Solutions, noted that smart data is already being used to some extent for inventory management and other aspects of logistics, adding that he sees rich pickings in the air freight sector. “The air cargo industry and smart data are made for each other,” he declared.

Shippers are under pressure to create intelligent products and use highly integrated business processes, due to growing demand for individualized, customer-specific products, and the need for complex manufacturing equipment, he observed.

This does not necessarily mean that they are the ones who are driving the use of smart data in logistics, remarked Jonas van Stekelenburg, Head of Cargo, Amsterdam Airport Schiphol. “It can go both ways,” he said.

“We have trackers. Pharma companies want to know where their goods are and in what state they are in.”

Zimmerman stressed that the benefits of whatever innovations we arrive at should extend to include partners such as shippers and consignees.

“When data sharing solutions benefit all industry participants, they are much more likely to share the data they have, and collaborate in implementation”, he observed.

All innovation in Smart Data and industrial IoT should ideally result in increased control and visibility we have of shipments,” he continued.

Besides allowing users to track and control shipments at piece level, harnessing smart data also provides more detailed performance records of carriers, which helps pinpoint where problems occur, he continued.

One concern is that poor data quality could distort readings and lead to wayward conclusions. According to one technology company that identifies and repairs faulty data sets, data accuracy rarely exceeds 80% and can be as low as 40%.

However, the quality of data has been improving with the use of blockchain and IoT, noted More, adding that artificial intelligence and analytics can turn unstructured data into smart and actionable data.

This would be helpful to make the case for the necessary investment in smart data capabilities. Identifying a good business case to justify this is important, van Stekelenburg stressed. “We can all see the end play, but how to get there is the question,” he commented. He reckons that the pharmaceutical sector is the easiest starting point for IoT in air cargo. Schiphol has identified the establishment of an early warning system for temperature excursions as a promising way to move forward.

Standards

Besides questions about the best business case, the issue of standards is another factor that gives potential adopters pause for thought.

“We are all keen to get going, and the one thing the industry needs before that can happen is a standard by which to devise their tech and procedures,” remarked Zimmerman. “It makes much more sense for smaller companies to have this before pushing ahead with smart data projects.

“The industry has two options; we wait for this standard to be created for us, or we move to create this ourselves, in a way that involves the whole chain in its creation and implementation. At Cargo iQ we are working to do just that.”

Van Stekelenburg finds that industry bodies have a huge role to play there. “If we leave it to individual parties, we cannot get a worldwide result,” he warned.

IATA would be one logical conduit there, especially after it launched its ‘Simplifying The Business Cargo’ initiative last year. This focuses on five projects, which include digital cargo and interactive cargo. While the former aims to create a single-digital record, the interactive cargo push aims to “make cargo talk” to improve supply chain visibility.

Again, it will be important to aim beyond the air cargo industry and ensure that its users stand to benefit from what is established. Moreover, it might help to treat the concept of smart data in a broader concept of data management and utilization. Beyond the data itself looms the concept of predictive analytics, likely supported by artificial intelligence.

“The increase in data and devices such as global positioning system (GPS), remote frequency identification (RFID) tags, sensors, and scanners, is warranting a shift in the business model, fusing multiple data sources and integrating business judgement and complex calculations to provide real-time or near real-time insights for timely decision-making for operational efficiency,” commented More.

According to the DHL White Paper, predictive analytics will turn companies into predictive enterprises, and one of the most fertile areas for them to leverage these capabilities will be the supply chain.

Tough outlook?

The way there may be longer and tougher than many expect. More does not think that the industry is ready to embrace smart data and the avenues they can open.

“Apart from the necessary organizational set-up, successful smart data transformation requires relevant quality data, well-implemented systems and tools, analytical skills, and an understanding of processes and business concepts, and the ways to turn data and insights into a competitive advantage,” he commented, adding that apparent shortcomings in knowledge and skills across industry hamper the deployment of smart data capabilities.

“It must be recognized that the maximum impact of smart data transformation can be achieved when organizations align their responsibilities and processes to the areas where smart data transformation can make an impact,” he stated.

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The International Air Cargo Association (TIACA)

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The International Air Cargo Association. Our next event: Air Cargo Forum 2018, October 16th-18th, Toronto, Canada. #TACF18 http://tiaca.org/

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