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Digitizing the supply chain requires standards to succeed
In this Q&A, Vector's Brian Belcher discusses why interest in digitizing the supply chain has soared recently and why standards are needed for wider use of digital technologies.
Business has embraced digital technologies for years, but one area that's lagged behind the rest is the supply chain.
The trucking industry, for example, still depends on manual processes and paperwork like bills of lading that drivers use when picking up and delivering loads. The continued use of paperwork is inefficient, but also requires physical interactions that are difficult during the pandemic with fewer workers on site and strict social distancing requirements.
Technologies available for digitizing the supply chain and logistics industry exist. But if adoption is going to be successful, the logistics industry must come together and agree on standards for digital technologies, according to Brian Belcher, co-founder and chief operating officer at Vector, a mobile transportation management platform provider for trucking companies, shippers and receivers.
In this Q&A, Belcher discusses the challenges of digitizing the supply chain and explains how technology standards can help.
Why is digitizing the supply chain so difficult, particularly in the trucking industry?
Brian Belcher: The business is often dictated by the shipper -- in some cases the receiver -- and when you go to pick up certain freight, they assign that bill of lading and that paperwork to you. If the shipper is not interested in going digital, it stops there. If the shipper is going to go digital, there needs to be an agreement that the receiver is OK with it. Everyone needs to be in alignment, and that's the hardest thing.
Has that changed due to the pandemic?
Belcher: This year we've seen a massive shift in the business environment to where companies were coming to the table together to agree on these new standards, and eBOL has finally been seen as a way to combat the safety concerns of drivers showing up at facilities to pick up and deliver. So eBOL is very much back, with all of the efficiencies that everyone always wanted, and the pandemic brought it back to the table.
What are some of challenges in digitizing the supply chain beyond the BOLs?
Belcher: In the longer term, there will need to be integrations between the ERPs and the WMSes [warehouse management systems]. We're seeing certain companies make those investments now and are looking to allow SAP or Oracle to connect with their receivers. There needs to be a more frictionless way for companies to test digital BOLs. But there's more [paperwork] beyond BOLs during the pickup and delivery. When a driver arrives, there's a lot of paperwork outside of the BOL that's not generated out of SAP or Oracle. You come into contact with several people at any pickup facility, you're going into offices, you're turning in a check-in form, you have to get approved by the security guard inbound, so there's a lot of interaction. First and foremost, it's about helping these shipping and receiving facilities go digital in their own processes.
Why are standards important in advancing digitization?
Belcher: In some ways, the physical BOL is a standard because it allows you to interchange data and acts as a container of that data. As we look to bring the industry onto new digital standards, we know it needs alignment and agreement across the industry. That's really difficult. But, if you look at the industry historically, this has happened on the mechanical side of things such as with pallets or with shipping containers. The process of standardization allowed the industry to come together and agree on those [standards], and the industry must go through that again.
What are some of the ways that the industry is developing standards?
Belcher: There are number of task forces that are helping promote this and bring standards to the industry. For example, Vector is a technology advisor to the CBA [Consumer Brands Association] which includes about 35 of the leading CPG [consumer packaged goods] shippers and receivers that are trying to identify a new standard on how to use eBOL for contactless pickup and delivery. But the challenge is, if companies don't all come together and agree on that standard, then you go the route of Blu-ray, which is what happens when companies don't open up and agree on one standard.
Is interest in digitizing the supply chain growing even without these standards?
Belcher: Digitization is big trend right now, although any given shipper or receiver will do things its own way. However, shipping facilities do some things similarly, and we're starting to see where certain workflows can be standardized. But for a given facility, you can digitize the process that enables the driver to stay in that cab and not have to come into the shipping or receiving office, or know what door their trailer is latched to or where in the yard they need to drop, but that process is unique to that facility. The largest companies -- FedEx, Coca-Cola or General Mills -- all have very paper-intensive processes. But digitization is a huge initiative now for the supply chain leadership at a lot of shipping and receiving companies.
But digitizing the supply chain is being held back because every company has its own processes?
Belcher: That's where technology can help because good technology allows for best practices and standards to be adopted while also not requiring [a company] to conform to a standard when it comes to facility management. It can still allow for some configuration or customization of how your process needs to run, whether you're hauling poultry or delivering the COVID vaccine. So there are standards that should be adopted across the industry, but there are also very specific ways of handling things.
Has the past year made the digital supply chain an imperative?
Belcher: Very much. In Q3 and Q4 of last year, we saw shippers adopt and implement contactless solutions for safety, but we're seeing conversations change and supply chain teams are looking at all the other benefits that digitization brings. The KPIs for going digital that were discussed five years ago are now back, such as looking at time spent in the yard from check-in to check-out of the gate. It's getting to the point where the KPIs are just as much of a priority as safety. For example, eBOL was a trend, but it just didn't get large adoption. Now it's become a trend again because of the pandemic, but even when things are better and safety is not as much of a concern, contactless digital paperless solutions will continue to be a trend because of all of those possible benefits.
Editor's note: Responses have been edited for brevity and clarity.