Supply chain disruptions, due to a myriad of reasons, will continue next year and into the foreseeable future. Navigating these constantly changing disruptions is often the key to a company’s ability to remain competitive. Fortunately, the continually expanding capability of technology offers solutions.
What solutions are needed for 2024 and how should companies structure themselves to address these concerns in the most efficient manner?
To find answers to these questions, MH&L talked with Frank Kenney, director of Industry Solutions at Cleo, a provider of ecosystem integration platform. A former Gartner analyst, Kenney is widely creditied as the creator of the term managed file transfer.
MHL: If you were to advise companies on the top technology investment they should make in 2024, what would that be?
FK: For next year technology’s top goal is to provide visibility.
The main reason for this is the change in business relationships. Business-to-business relationships are now starting to resemble the expectations we have seen in the business-to-consumer space. This is especially true when you look at the issue of tracking. Consumers can now track their products very efficiently on Amazon, or use air tags to track luggage for example. Consumers now expect this type of accuracy.
Well, the same is true in business. From both the sellers and shippers’ perspective, they need to be able to track products. But it is beyond the simple location of the truck. Business customers want visibility into specifics like the temperature inside the truck to know if the products are safe for consumption. Or how many times the truck was open to determine if products were stolen.
Visibility for companies needs to get to the level that Amazon has given us for the past 10 years.
MHL: In times of economic uncertainty, how can companies make the determination if and when to invest in tecnology?
FK: Companied need to realign the IT side of the house with the business side. Historically when we have asked IT to invest in something, it has been a reactive procedure. All the while the business side is telling IT that there is a business problem that needs to be solved. So, there is a disconnect between those sides.
While IT views technology as specific transactions that are moved into folders when completed and if things move a little slowly, that’s just the nature of it. While the sales side needs the technology to process orders to bring in revenue faster all the while satisfying customer needs.
This disconnect continues into how companies evaluate their investment in technology. From an IT narrative, risk aversion plays a larger role in lack of investment. The thinking is that IT doesn’t want to get involved in too many projects and wants a specific ROI. The business side is busy asking why the product didn’t get to the customer. It’s the goal of the business to make customers, suppliers and carriers happy to ensure continued revenue. Technology can provide the consistent perfect order. What needs to happen is for the business side to drive the technology investment.
MH&L: It seems that logistic companies are facing pressure from a lot of stakeholders to be more visible on labor issues, ESG issues and others. What role can technology play there?
FK: First companies need to be more strategic in their technology planning. Very often companies will say they have already implemented a number of technologies such as fleet, yard and transportation management systems, but they miss the human capital management. The drivers are their most important asset, not the trucks.
We learned this lesson during the pandemic. We had enough trucks; we just didn’t have enough drivers since it was hard to guarantee the safety of the drivers. So, it became part of the business strategy to figure out who to ship products and keep workers safe. Technology applications became a business imperative, not just not just an an IT project.
This change needs to move across the entire company so we can get away from the idea of being risk adverse when it comes to tech acquisitions. Too often it’s difficult to quantify the outcomes, or ROI, of technology acquisitions. One of the things our company does is to point out that having a perfect order each time ensures satisfied customers and a continual flow of revenue. Technology is the way to produce that perfect order.
MH&L: Will supply chain disruptions continue to be front and center in 2024?
FK: The best answer to that question is to point out that after being in this industry for 25 years, it wasn’t until supply chain issues occurred during the pandemic, that my mother finally understood what I did for a living. And that’s true for most of the population. Everyone is talking about it, even President Biden, (who recently updated his supply chain strategy).
It will be supplying chain execution and forecasting that feeds into supply chain agility that will keep companies alive. And this will be true in 2024 as it has been in the past.
While the economy is uncertain, as I talk to business leaders there is optimism that consumption will continue. With the consumer continuing to purchase, in whatever market, the supply chain needs to function properly.
Furthermore, geopolitical uncertainty also drives the supply chain to adjust to each specific condition. For example, as Ukraine is shipping less agricultural goods, then other markets, including the U.S. need to fill that void.
MH&L: How do see AI affecting the supply chain in 2024 and beyond?
FK: I see AI as the natural evolution from all of the information we have been getting but haven’t used. We have been getting buckets of data from the telemetry off of the trucks, for example, but have only been concerned about the location of the truck. We have been very selective about what we are looking at. We are not even putting this information into data warehouses.
But that real-time data can help companies make critical business decisions. This is where AI comes in. We can now feed the data into AI and make something of it. The 95% we thought was noise, will turn out that will be a differentiator for the margins in the business and build up brands.
