The Coordination Problem in World Trade
Supply chain participants struggle to act on data, but this is changing fast
Daniel MacGregor – Co-Founder of pioneering digital supply chain enabler, Nexxiot
Why have supply chains historically struggled to act on data? Where is value created when they do, and how can stakeholders across the ecosystem respond as the conditions for coordination begin to change?
World trade functions as a network of independent participants including asset owners, carriers, operators, shippers, freight forwarders, insurers, regulators and financiers, each seeking to manage their own risks, incentives and constraints.
Over the past decade, progress has been made in digitalization. More assets are connected, more data is available and multiple platforms promise visibility and the chance to optimize.
Yet the underlying challenge remains: data alone does not result in coordinated action.
Insight 2
Where Value Is Created: Processes, Decisions and Workflows
In the past 10 years we have witnessed a key shift. Hardware and connectivity became cheaper and more reliable. At the same time progressive operators understood that they need to get more transparency to fulfill their obligations to clients and partners. The result is that a large number of mobile, ‘non-powered’ assets have now been equipped.
They started by providing live ‘dots on the map’, then basic services around early intervention when something is going wrong. Instead of reacting to a delay or physical problem, the new systems detected deviations in transit. This included congestion detection and rerouting, security risk alerts and damage indicators. Clients discovered that value is created when data enables proactive changes to operational timing.
In the first insight, we reflected on the constraints around coordination and incentives of the various actors and participants. Now we move our focus towards operational mechanisms and where the value is generated today and in the future. Dashboards, apps and software tools can be leveraged as a basis for decision making and collaboration, but we really need to support the shift from visibility to intelligence and intervention. Live data gives users the chance to embed decision making into their business activities and increasingly drive automated actions. The alerts of yesterday turn into specific and defined responses today. However – this presents new challenges.
We face a widening decision gap. Who owns the action? Who is authorized to intervene? Which stakeholders need to be informed? Which systemic changes are needed most urgently to improve our collective workflows across participants in the ecosystem?
Considerable effort must be applied to integration into existing systems (TMS / ERP / booking platforms and other operating systems). Data-driven action needs to be embedded into daily work routines and support human processes. Ultimately, processes must be redesigned to take advantage of automation and reporting becomes ad-hoc and intuitive – based on data insights and emerging business opportunities and challenges.
Automation is enabled with maintenance triggers, rerouting logic, exception handling and customer communication. This brings in a new operational reality. To deal with this data-powered transformation – change management, training, decision rights and organizational frictions between previously ‘ring-fenced’ departments must be actively managed.
Conclusion:
These advances are creating value but new challenges also emerge. If data is to drive effective action, it must be trusted by everyone enough to act upon it. Read the next insight in the series to discover what this renewed focus on accountability means for the industry.
Watch out for the next piece in the Insight Series coming out next Wednesday.
