WHY AND HOW BIG DATA IS A GAME CHANGER FOR THE SUPPLY CHAIN
In its 2013 report titled Big Data in Logistics, DHL proclaimed that “The logistics sector is ideally placed to benefit from the technological and methodological advancements of Big Data” and predicted “huge untapped potential for improving operational efficiency and customer experience and creating useful new business models.”
Today, the transformation of logistics to a data-based model is no longer a futuristic fantasy. The ability to create a digital ID, carry it through the supply chain, capture all transactions along the way and implement action against that data has now become a reality. Intelligent identification solutions exist to optimize item-level data captured at the beginning of a product’s journey, enabling full inventory visibility and accuracy, as well as enhanced routing speed for all partners along the supply chain. With product-level data, supply chain execs are empowered to analyze and make intelligent real-time decisions with the ebbs and flows of demand.
As a global industry, 3PL professionals need to understand the promise of identity solutions and the key benefits they offer. The first step for leaders across the enterprise is recognizing that the supply chain is not a set of standalone “links.” On the contrary, supply chains should be viewed holistically to leverage advances in data infrastructure that enable a total ecosystem of item + shipping specific information across each touchpoint of a supply chain.
The Importance of Accuracy
Among the many advantages of assigning digital identities to products is speed—and the key to speed is accuracy. Think of it this way: The utilization of item data throughout the supply chain enables speed with accuracy.
Consider a logistics scenario with an RFID-enabled intelligent label applied at the source of an item. As the item begins its journey, the data captured and carried in that label enables shipment verification. When the “intelligently” labeled products arrive at a facility or warehouse, the recipient can quickly confirm that what was received is precisely what was expected.
The data contained in the intelligent labels also allow outbound verification to the store or e-commerce retailer. In turn, the same label gives the retailer the inbound verification they need to move the items directly into inventory, with data that assures its accuracy. At the end of the supply chain the retailer has confidence that they can show the customer exactly what is available.
Shipping errors are another logistics challenge that can be addressed through accurate data. Currently, up to 4% of shipping errors are due to misrouted items that must be returned to the distribution center for re-routing. Legacy operations that rely on separate processes (with the six to eight touchpoints that a product moves through) increase the chance of such errors. Therefore, there is an operational benefit to routing solutions that are based on item- or parcel-level data to allow cross-docking optimization within the supply chain that enables greater speed accuracy. Put simply, velocity increases as accuracy improves.
Moving Toward Sustainability
As the supply chain becomes more normalized post-pandemic, back-burnered sustainability goals are re-emerging, driven by consumers, regulations, and cost—not necessarily in that order. The supply chain as an industry is being specifically tasked with sustainability.
A report from the management consulting group BCG stated, “By implementing a net-zero supply chain (the state in which as much carbon is absorbed as is released into the atmosphere), companies can amplify their climate impact, enable emission reductions in hard-to-abate sectors, and accelerate climate action in countries where it would otherwise not be high on the agenda.” This report also noted that “in most supply chains, the costs of getting to net-zero are surprisingly low.”
On the consumer side, a research study from Deloitte found that “concerned consumers are adopting a raft of different measures to shop and live more sustainably. One of the most prominent lifestyle changes is “shopping for brands with environmentally sustainable values.” In fact, over a third of consumers surveyed indicated that they value ethical practices in the products and services they buy.
The data captured and carried in intelligent labels provide real-world efficiency solutions for achieving sustainability in logistics. One of the areas in which supply chains can address carbon emissions is in the transport of goods. One factor that deters sustainability in 3PL is trucks not being loaded to their full capacity.
In fact, our own studies have shown that up to 14% more volume can be loaded into a truck by utilizing key data that consider size and weight of parcels, creates the most efficient delivery route and considers other variables such as perishability. Clearly, such sustainability initiatives have the potential to lower costs as well.
Caution: Hazardous Materials
There is yet another issue that is becoming more urgent and that is the prevalence of hazardous materials in the supply chain. First, it is necessary to define hazardous materials. These are substances or materials that the U.S. Secretary of Transportation has determined are “capable of posing an unreasonable risk to health, safety and property when transported in commerce.”
These materials include hazardous substances and wastes, marine pollutants, elevated-temperature materials, and other materials designated by federal Hazardous Materials Regulations.
In supply chain operations, the Federal Aviation Administration (FAA) requires these items to have “Hazardous Material” markings and/or labels. There are significant financial penalties for incorrect shipping identification, including accruing fines that can amount to more than $78,000 per instance.
Among the many items on the FAA’s list are the lithium-ion batteries used in many consumer products, each of which require the special markings and/or labels and have their own specific requirements for placement in cargo. Sorting solutions that use digital product identities currently exist to alert shippers where certain items, such as these batteries, should and should not be placed.
The importance of data in logistics will only increase over time. Deploying RFID intelligent label solutions at the source of an item will carry it safely, sustainably and quickly through all of the touchpoints along the supply chain—and beyond. The future of a data-enabled logistics eco-system is here.
Michael Kaufmann is director, Market Development, Logistics with Avery Dennison. The company recently launched its the atma.io connected product cloud platform that gives unique digital IDs to physical objects for end-to-end tracking from the source to the customer and even beyond to take part in the circular economy.
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