Blind spots remain in visibility supply-chain tracking systems, shippers say

by Jeff Della Rosa ([email protected]) 960 views 

An ArcBest logistics operation.

Visibility tracking systems allow shippers to see real-time views of where their goods are in the supply chain, and trucking companies are especially good at letting shippers know where they are in the chain. But some systems don’t offer a complete picture of shipments from start to end, particularly when the goods are at container terminals, according to a recent survey of shippers.

Shippers want these systems to monitor the location of their assets and to identify problems before they arise, said Doug Voss, associate professor of logistics and supply chain management at University of Central Arkansas. If a shipper can see that a truck is going to arrive late, the shipper doesn’t have to wait until the shipment is late to do something about it. Visibility tracking also gives the carrier “another touchpoint with the customer” and offers another way to “build relationships,” said Voss, who’s also a board member for Arkansas Trucking Association.

According to American Shipper, 39% of shippers use carriers’ visibility systems to track shipments in the supply chain. The following are other sources for visibility:
• Third-party logistics, 13%;
• Shippers’ transportation management system, 11%; and
• Standalone system from a software provider, 9%.

“Visibility is no longer a luxury. It’s a necessity,” said Eric Johnson, research director and IT editor for American Shipper.

Johnson recently spoke in a conference call, hosted by transportation analyst John G. Larkin of Stifel, on supply chain visibility and transportation management systems after conducting a survey of shippers in the second half of 2016.

Transportation companies J.B. Hunt Transport Services of Lowell and Fort Smith-based ArcBest, holding company for less-than-truckload carrier ABF Freight, offer a visibility system that can be accessed on their websites or via mobile apps. J.B. Hunt 360 Shipper offers shipment tracking “with real-time data for real-time decisions,” according to J.B. Hunt’s website.

“It’s no longer necessary to question the status of your load,” the company touts.

ArcBest’s shipment tracking tool includes “live updates” so shippers can check on shipments anytime, and AutoTrack allows shippers to “automatically receive real-time pickup and delivery notifications,” according to the company’s website.

The biggest blind spots in the supply chain are when the shipments are in the container terminals, according to the American Shipper survey. The least amount of blind spots are when the shipment is in the truckload or airfreight legs. Only 6% of survey respondents reported having real-time visibility, meaning there is no latency in the data provided by the visibility system they use. A total of 70% of respondents saw “moderate latency” in the system.

“Visibility latency is emerging as a real concern,” according to Larkin.

Data available through the Electronic Data Interchange “can be hours or days late,” but Application Program Interfaces offer real-time data.

“Carriers and third-party logistics services providers (3PL’s) are increasingly understanding the value of having access to that real-time data which can drive better load balance, better capacity utilization and lower transportation costs, as a result,” he said.

If the savings are shared with shippers, they “may soon come to appreciate the real-time advantages associated with API’s.” Johnson expects it will only “take a handful of big shippers to turn the tide.”

The transition from EDI to API systems will address a “key demand from customers to technology service providers: greater supply chain visibility,” according to transportation and logistics analysts Benjamin Hartford and Zax Rosenberg, both of Robert W. Baird & Co. The analysts reported this as takeaways from SMC3’s Jump Start 2017 Conference in Atlanta.

“Cloud-based API-connected programs should drive both operational efficiency through the automation of existing manual processes, and over time create opportunities as fleet automation capabilities develop.”

The transition to APIs will also create “share-gain opportunities for freight brokers with scale.” As demand for visibility increases, it will also create “demand for mode-agnostic service providers with a broader array of services — which in our view creates the potential for consolidation among logistics service providers as the barriers to entry rise, and share gains favor the freight brokers with both scale and integrated IT capabilities.”

One of the issues related to visibility systems is that third-party logistics don’t have “a real good sense at which it costs them to provide visibility,” Johnson said. Two-thirds of 3PL’s in the American Shipper survey didn’t know the cost to provide visibility.

“Shippers also don’t understand how valuable visibility is to them,” he said.

A total of 56% of the shippers in the survey use visibility for monitoring a shipment, while 39% use it for decision making.

“A more sophisticated approach to visibility is that it can help positively impact in-transit goods but also that the data that you can pull from a visibility tool can be leveraged to make better procurement and planning decisions down the road in the next cycle,” Johnson said. “If you see visibility as a monitoring system you miss out on those sorts of second order benefits.”

The importance of visibility depends on the shipper, Voss said. Most shippers are happy to know when their goods are loaded onto a truck and to receive daily updates. But some need hourly or more immediate updates. For example, if the shipper is shipping pharmaceuticals, which are prone to theft, visibility is very important. If the drugs are temperature sensitive, the visibility system might monitor temperature, whether the door seal is secured and if “light intruded into the trailer.” It could also monitor GPS trackers that might be installed on a pallet of goods.

Most large carriers already do a good job at visibility tracking, but as customers demand more visibility, smaller trucking companies might be expected to start offering it, too. The ELD mandate is leading more trucks to have GPS tracking on their trucks, and this would allow for determining the location of a shipment. But they would need to be equipped to share that information.

A “great emphasis” has been put on making the supply chain visible in the past 15-20 years, said Rolf Wigand, distinguished professor emeritus in the Information Science and Business Information Systems departments for University of Arkansas at Little Rock. Major developments in visibility have been accomplished with software. For example, a person who’s purchasing a vehicle with white wall tires requires a supplier to ship the tires to the vehicle manufacturer and reach the assembly line for it to be built and delivered on time.

“To me that’s almost a little miracle that it works,” Wigand said.

Before visibility systems, someone would have to make a phone call to determine the location of a shipment. As the systems developed, Wigand had worked on a project for Heineken observing its beer supply and distribution chains and the GPS tracking of the beer on the Atlantic, from the Netherlands to U.S. harbors, as well as its shipment in trucks. In the first shipment of the project, a truck that was scheduled to leave Friday didn’t leave until Monday, and with visibility tracking, he could “really see what’s happening.” The truck didn’t leave as scheduled and was still in Amsterdam.

Unless there’s an accident, visibility systems “are quite accurate,” Wigand said. Shippers typically have two or three alternate suppliers in case a shipment issue arises with the first one.

The accuracy of real-time data is based on “how much you want to pay,” Voss said. “True real-time” data would require a satellite system as opposed to a cellular device and “near constant pinging.” The cost of visibility systems depends on what features are included.

“A very basic system doesn’t have to be any more than a cellphone,” he noted.

But more expensive systems include “all types of hardware. Tracking assets in real time — it can get very, very expensive.” But carriers who are willing to pay the price know how much is at stake based on the value of the shipments they carry.

As for the future of visibility systems, Voss sees it to be “more and more advanced.” He expects the cost of tracking hardware will decline and its use will rise. It will start to become more evident on the consumer level with tracking devices placed on individual packages. Wigand sees stability in the future of visibility tracking.

“Maybe the fax machine no longer plays a role.”

He said 20% of last minute orders are made by fax, not by email.

“It dates back to the old days.”