We continue with our ‘Words of the Day After’ series with an emphasis on: Reinvention of Logistics.
The times we are living through are unique and sobering, they are also encouraging us to reinvent ourselves. Firstly, to respond to the current emergency, but also to think about redesigning tomorrow’s society.
We are offered the chance to paint a new beginning, and the challenge is to be ready to reset our society. Among the sectors affected by this crisis, the logistics sector is key. It is under intense strain and yet it is the lifeline of our country while in lock down. It is definitely one of the sectors that will undergo the biggest transformation throughout this period, and when this is over.
Goods which, pre-pandemic, crossed borders and territories unhindered are now parked as a result of the global disruption, impacting all links in the supply chain. The supply and logistics issues encountered by hospital services and the entire French economy are showing us just how volatile and how vulnerable our systems are. The race for masks and medical products demonstrates that logistics is key to support & supply people to endure this crisis, and beyond.
However, tomorrow’s logistics will not look anything like today’s.
Like this virus, it must be free of borders, in the broadest sense: geographical, health wise or technological. Every player in this field must be ready to face these challenges in order to survive.
Flexibility and resilience: the chess of tomorrow’s logistics?
Flexibility and resilience are becoming essential for all logistics.
Once this crisis is over, we will address the weaknesses tested over these past weeks.
Firstly, many companies will need to take back control of their chains of value. The lack of visibility and sharing with all direct and indirect players is particularly crucial. These issues complicate risk and impact analysis; slowing down decision-making and the launch of corrective actions. This lack of continuous monitoring of their supply chain, coupled with a lack of real-time visibility on alternative options, is slowing companies down. In addition, these flaws make them less flexible and inhibit the ability to anticipate such storms.
Secondly, there will be a need for companies to implement flexibility in their distribution systems, in order to be able to change both strategy and adapt network. This must become standard practice. For example, many players, dependent on their networks or without access to their end customers, must redefine the limits of their operational model. By reinforcing omni-channel operations or developing “Direct to consumer”, these companies will be in a position to strengthen their logistics systems and grow in new markets.
Lastly, this crisis has also highlighted the need for transparency and a flow of information throughout the supply chain. A reconciliation of all parameters such as supply and demand, storage, and real-time resources are virtually impossible within the current spectrum. This flow of information will allow companies to vow to better, guarantee supply chain efficiency, but especially the continuity of operations.
The three examples above merely highlight the importance of data and its role in our response to the problems encountered. This is the challenge of the logistics platform project studied by the government at the start of the year. If we take the example of borders, end-to-end tracking of products and their journeys, coupled with data sharing between carriers and customs, would make it possible to simplify border crossings while preserving the necessary level of security and control. On a daily basis, this would make the flow of goods smoother and would provide considerable productivity gains. In a crisis like this, the issue is all the more important because a discontinuity in product flows can have a direct impact on citizens’ health.
The need for a national data platform for logistics
A national logistics data platform would allow for a growth in efficiency, flexibility and resilience while reducing the sector’s carbon footprint.
The collection, processing, sharing and analysis of data must become essential for all decision-making. Only with this knowledge, derived from both data available in real-time and historical data to simulate and prepare forecasts, will it possible to meet challenges related to the flexibility of everyday operations, end-to-end performance evaluation and improvement of public and private investments.
In a competitive market, economic players have started to develop a number of initiatives based on data in order to carve a competitive advantage. Individual initiatives are essential for the sector’s transformation, notably due to their ability to be business-oriented and to efficiently leverage data. The multiplication of collaborative platforms is also a strong sign of the change in the mindset of logistics and particularly for transport players, who are increasingly aware of the potential for improvement to be found through data. However, these initiatives are not yet sufficiently widespread, and this sharing only concerns the different facets of one same company, or at most their direct suppliers.
We believe that the future of logistics will involve not only individual initiatives, but also and above all a collective agreement between players, private and public, to formulate tomorrow’s major trends. Consolidating data from multiple players, standardisation, sharing and comparison will be necessary for the deployment and success of numerous operations, such as the development of smart borders, investment, or the optimisation of operations and carbon footprint. Furthermore, only a collective initiative can leverage a reduction in the nominal costs of such an investment, allowing players, small or large, to participate in this transformation, multiplying both data and value-potential.
These collective initiatives, which will result in the emergence of open logistics data platforms, will enable major growth for the entire economy.
Australia, which is developing a similar platform, estimates that this will provide an improvement in productivity of 0.1%. In France, this would translate into a gain of €200 million per year (the logistics sector represents 10% of GDP).
To launch these platforms, there will need to be a close collaboration between private and public players. In particular, this will make it possible to provide grouped responses to issues such as implementing a common language, defining data sharing standards and identifying the granularity of the data to share, thus meeting the different business requirements of each player.
Thanks to this shared knowledge, the ecosystem could be managed in a sharper and dynamic way by developing smart networks. Among other things, the flow of goods at borders and in multi-modal hubs will be facilitated. Preventive maintenance of infrastructure will be more efficient and the carbon footprint of the sector will be drastically optimised.
In fact, the flexibility and resilience of the supply chain are key to its rebirth, but this rebirth must be linked to sustainability.
This crisis, unique in its magnitude, has the unfortunate yet beautiful opportunity of shorting all circuits and the local ecosystem. But once the crisis is over, logistics will distend again and this is why it is necessary to rethink them now, in order to endeavour for environmental responsibility and responsible distribution.
The public authorities can take on many roles in implementing this type of initiative. First and foremost, they are the accelerator, the trusted party deploying advice and grouping together the various private and public actors and international standardisation organisations, the role of which is to facilitate the definition and adoption of common rules and standards in the logistics sector. In addition, they have a vested interest, providing support to a strategic sector whilst ensuring the national sovereignty of France.
To make this transformation a success, it will be essential to use the wealth of experience from our global initiatives, to organise with a large number of actors/institutions that want to take part in this project, and in particular to focus on concrete business cases that will become the foundation of these platforms. France has a wonderful opportunity to become one of the best-in-class in logistics in a global economy.
This article is an English adaptation of a post initially created in French.
Principal – Digital Transformation – Operations Transformation
Head of Operations Transformations