Ivan Latanision JOC | Jun 16, 2014 4:39PM EDT
Recently, my company, INTTRA, hosted a two-day summit that brought together CIOs and sea freight and e-commerce thought leaders from the world’s largest ocean carriers and global shippers. Together, we took a hard look at obstacles in our industry’s business processes — and at what it will take to bridge them. Participants expressed a consensus around two overriding challenges: improving cost efficiencies and improving customer experiences.
The first challenge is finding optimal ways to reduce costs to improve profitability. A recent INTTRA survey illustrates why operating costs are an issue. Approximately US$14 billion in inefficiencies were identified in ocean transport business transaction processes (based on internal INTTRA research) — an issue that automation can resolve. Yet ocean transport remains mired in manual processes, and it’s clear that the industry is ripe for change.
The second challenge is the issue of our time: improving customer experiences in a real-time world. Customer expectations have risen, with e-commerce changing industries such as retail, travel, and finance for the better. With online evolution raising the benchmark on superior service, customers now expect the same level of experience in our industry. In fact, customers have a hard time understanding why ocean transport hasn’t kept up with the pace of sharper customer focus.
How can the industry address these two overriding challenges? After speaking with the CIOs participating in our discussion, I’ve identified four strategic priorities that we can take to drive costs down and raise customer experiences through new electronic shipping — or e-shipping — technologies. They are:
Priority 1: Automating Processes for a Digital World.
It’s well-documented that manual processes are inefficient and error-prone, often leading to unnecessary corrections, shipment disruptions and delays. Human error plays a large part in this, but even more damaging is the industry’s lack of an embrace of digital strategies. Large logistics companies like Kuehne + Nagel are upending the status quo, becoming early adopters of e-shipping-enabled processes, including global roll-outs of e-invoicing and dispute resolution tools, which enable a faster, more automated way of conducting business. Expect other firms to follow suit in 2014.
Automation also addresses other business processes, especially those that involve customer “pain points.” One example: With manual processes, a shipper booking a container shipment might wait hours or days before receiving confirmation from a carrier that both equipment and space are available and booked. Compare that to the experience of placing an online order with an airline or retailer, where one receives an immediate confirmation, along with details on what’s been paid, and a tracking number to monitor the status and progress of a shipment.
Automated processes are now a growing point of emphasis for carriers and transportation intermediaries that want to drive down costs, reduce errors, and deliver the experiences their customers increasingly expect. Those who fulfill these automated expectations will be a step ahead of the inevitable shift.
Priority 2: Improving Data Quality in the Shipment Supply Chain
Studies show that fewer than one in 10 logistics professionals have complete visibility into the transport supply chain (according to KPMG Global Manufacturing Outlook–Competitive Advantage: enhancing supply chain networks for efficiency and innovation. 2013, 335 respondents). The most common culprit: lack of quality data. It’s no coincidence that 63 percent of chief supply chain officers at best-in-class companies are targeting supply-chain visibility as a top management priority for improvement this year (Aberdeen report, November 2013: CSCO 2014: Top Three Supply Chain Execution Priorities).
Many data quality issues are driven by bill of lading errors caused by manual data entry or the “re-keying” of shipping instructions into operating systems. Automation will accelerate “straight-through processing” of these documents, which dramatically improves data quality and reduces redundant costs and excessive corrections. As C-suite executives evaluate the costly impact that poor data has on their bottom line, look for the ocean shipping community to invest more heavily in solutions that will improve data quality.
Additionally, using a standardized method for when data is captured and how it is structured makes data more consistent and actionable. To date, there has been little agreement around the critical points in the ocean shipping supply chain—mainly when data should be captured and recorded. Instead, carriers track hundreds of different events and milestones in different ways, using various formats and transmission methods. Has a container arrived when a ship enters port? Or when it is unloaded at the dock? Having a standardized way to track container event data is critical to driving consistency in data delivery — and gets us closer to the real-time transaction processing, tracking and alerts that ground and air carriers already use to their advantage. Increasingly, collaborative industry networks provide the platform for driving standardization, since they can bring together carriers and transportation intermediaries into a single location, where all agree to share operational data and visibility information. With this enhanced level of granularity, customers can gain an early look at the information that matters to them, and intervene in the event of delays or costly problems.
Priority 3: Ensuring Timely Updates
It’s clear we need to banish irritating information delays. Logistics professionals demand access to timely data, including rates, equipment and space availability, as well as immediate booking confirmations and ‘invoice to shipment’ tracking. They’re tired of checking multiple systems or making multiple phone calls to get answers. Instead, they expect critical information to be delivered directly and instantly to their desktop or mobile device through a consolidated interface.
These customer expectations will drive the technology investments CIOs make in 2014 and beyond as ocean carriers begin modeling what is working well in other industries. The online travel site Expedia is a great example of where we’re headed. Through a single web portal, Expedia consolidates and delivers online rates, instant bookings and confirmations; tracks trip details; and collects payments in a timely fashion—areas where the ocean shipping industry has been deficient. As data becomes more visible and standardized, expect carriers and shippers to consolidate, share and act on information in new, Expedia-like ways, using collaborative, cloud-based tools and networks.
Priority 4: The “Consumerization” of Technology
As new employees are hired into the industry, both those from a younger generation and those engaged in new consumer technologies, they bring expectations about how technologies should be employed in the workplace. Most demand the same types of mobile and collaborative capabilities used in their daily lives as consumers — from smartphones, tablets and mobile apps to networks that make information and people accessible from anywhere. With real-time access the norm, their multimedia, multimodal experiences will impact and change business dramatically.
It’s no surprise that those same pressures are making their way into ocean transport. The rapid interaction of social media has changed how global communications, brands and promotions are driven in the digital age. And workplaces that 10 years ago had never considered incorporating consumer-based technologies are now responding to “bring your own device” (BYOD) trends that equip team members to work while on the go. As e-shipping grows, with its emphasis on speed and simplicity, the broader use of mobile devices and apps is the next logical step, enabling industry employees to be more responsive to customers and colleagues.
Moreover, the industry is rapidly moving to adopt cloud-based models that smooth the shipping process as data becomes more complex. Offering the ability to view and track shipment information on a collaborative solution based in the cloud simplifies the process, while lowering the cost of doing business. In fact, according to Aberdeen, when it comes to freight -forwarding best practices, those classified as leaders are four times as likely to use collaborative multiparty cloud-based solutions for supply chain shipment visibility (Aberdeen Group report: Freight Forwarding Best Practices for Emerging Markets). This is a positive development that reduces the cost barriers to implementing the capabilities required for shippers and carriers to gain a competitive edge.
Urgency Accelerates Change
It’s clear that momentum is building and that change is on the way for the ocean transport industry. We’re seeing more CIOs focus on advancing the industry through investments in technology and by introducing exciting strategic roadmaps. Carriers and transportation intermediaries investing in new automated work processes will achieve a faster return on investments through new efficiencies, while shippers are selecting carriers who can deliver the rich flow of timely information relied on to elevate customer experiences.
The time to act is now. Although the rise of e-shipping has been slow, advancements in digital technology and networks have accelerated the benefits driven by a new digitized era. The opportunities for carriers and transportation intermediaries are game-changing, and those who don’t share a sense of urgency to “go digital” risk being left behind. Now is the time to establish a strategy for collaborating in a connected world, and incorporating industry-standard solutions that will benefit customers — and the bottom line.
Ivan Latanision is chief product officer and leads INTTRA’s global product management, software development, engineering, and infrastructure operations organizations. Contact him firstname.lastname@example.org.