Logistics Technologies: Five Issues to Consider Before Digitizing Your Supply Chain – Part I

Logistics technologies (Logtech) are all the rage. They’re today’s answer to tomorrow’s problems. Call it the Logtech moment.

Increased global competition, random cyberattacks, and pandemic-induced disruptions all have hastened the drive for solutions. Now, everyone seems to be rushing headlong to technology for solutions.

That’s clear when you when read the latest headlines about how Logtech has the answer to all the industry’s issues. The promises of Logtech proclaim a connected, streamlined, optimized, zero defects, data-driven, real-time future supply chain.

It almost sounds like a magic bullet.

But is technology a magic bullet? Or is it a sinkhole investment?

As you might surmise, this post suggests technology may not be the panacea it’s advertised to be. At the same time, this post doesn’t discount the value or benefits of Logtech.

Rather it seeks to dig deeper into issues impeding a smooth transition to Logtech. The industry is definitely in a transition to a more digitally driven world. And that’s a good thing.Before buying into those bullish promises, you should be aware of the potential issues, pitfalls, and obstacles. A sober view of the challenges will help set expectations. Doing so prepares you for success rather than disappointment.

Logtech definitely seems to have the capabilities to drive change. More streamlined and efficient operations are not a bridge too far. The promise of improved performance seems attainable. But getting to the Promised Land of a lean, mean supply chain presents many challenges.

Let’s pull back the curtain on these to get a better idea of the challenges involved. Then you can better decide what works for you… and what doesn’t.

 

  1. Change Management

The first issue you must consider in digitizing your supply chain isn’t about technology. It’s about management – change management in particular. Many companies vastly underrate and overlook this aspect of planning a digitization project. And they do so to their detriment.

Change management lays the foundation on which to build change. Yet it’s the number one issue causing IT implementation failures. It prepares employers (users) for impending workplace (organizational) and business (workflow) changes. Yet many companies overlook this crucial step.

Omit this basic step at your risk.

  1. Business Process vs. IT

This comes up as a persistent question when considering supply chain digitization. Some argue business processes take precedence and technology follows. That supports the rationale that technology is an enabler. More recently, along with the surge in digitization, some now claim Logtech takes priority.

Let’s step back for a moment and drill down into this issue.

First, in the greater scheme of things, logistics industry is changing its focus. The industry is becoming more customer focused. As a result, innovative, creative, customer focused solutions call for examining existing business processes.

Thus, discovering improved solutions results from a study of current business processes. With that done, the role of technology is to support those new business processes.

That makes designing, developing and implementing technological solutions easier and more user-friendly. The solution revolves around the business – not the technology.

  1. ROI & Time to Recover Investment Costs

This one seems like a no-brainer. Yet many IT initiatives are undertaken without doing due diligence of total costs. That includes not only ROI but also the recovery of investment costs.

Many implementations litter the graveyard of failed implementations. And the consequences can be disastrous as well as terminal. Some companies recover, but many do not.

So, as you head down the path to digitizing your supply chain, ensure you consider all costs. Specifically, you must consider ROI and the time it takes to achieve profitability. If the numbers don’t support your initiative, there may be other, missed alternatives.

  1. Integration

This is a bugaboo! In digitizing your supply chain, integration must be top of mind. It must be a top criterion you consider before launching a full-blown digitization program.

To determine your integration needs, you must look at re-engineering your business processes. Opportunities for integration will make themselves evident. This process will make clear who needs to share data with whom and when.

Once business processes reveal that, you should check for vertical and horizontal data-sharing. You should look for internal opportunities to share data. And you should also look at opportunities to share data outside your organization.

In the end, you should have robust data flows that support your business processes. To be useful, integration should support frictionless, transparent, and secure data-sharing.

  1. Enterprise vs. Non-Enterprise

Another issue you must consider is whether to use an enterprise solution. If not, then you might decide to take a piecemeal approach to an enterprise solution. That approach can be more costly than tackling the enterprise from the start.

That said, this issue is thornier than that. The real answer is…”it depends”. That might come across as a non-answer but it if you stay with me, you’ll find it’s spot-on.

Your business’ needs should drive the type of IT solution best suited for your business. You might need a total overhaul. Or you might need only a few adjustments.

You can easily answer this question by peeling back your business processes. The answer about enterprise or not will reveal itself. Your particular situation should inform your ultimate decision.

Before You Embark on Digitizing Your Supply Chain…

Be aware technology – Logtech – is coming, and it’s coming fast to the logistics industry. Before jumping headlong into any solution, it’s wise to take a step back and assess your needs. Once you’ve assessed your needs, you can determine the best option(s) for your business.

You should understand the features, the benefits, and the disadvantages. Knowing the full scope of each potential solution will avoid investing in a sinkhole.

Instead, it will improve your chances of success in transitioning to a secure, stable, reliable, proactive operating environment.

It will give you a competitive edge and leave your competitors behind, struggling to catch up.

Unsure about your next steps? Talk to us. Let’s set-up a mutually agreed upon time discuss your next steps. You can call 1.404.480.4593 to set up an appointment.

Or you can contact us here, and we’ll call you.

Either way, take a step in the right direction. Contact one of our experts at American Global Logistics today.