Experts recently gathered at a CEVA Logistics event in Dubai to discuss modern trends in supply chain optimisation.
Global Director of Logistics Studies, Heriot-Watt University Dubai, Dr Shereen Nassar, Global Expert, Leading Innovation Supply Chain Programs, Ekim Sahan Dinc, and CEVA Logistics VP Contract Logistics Operations – Europe, Jaco Knetemann, summarised their findings.
Change in perception of the role of logistics and supply chain in a business model
The experts claim there has been a paradigm shift in understanding of the role of logistics and supply chains from cost cutting to a key differentiator.
They say a decade ago cutting costs was perceived as an ‘added value’ option. Today, though, supply chain leaders are shaping strategies around pivotal operational customer-centric models that “improve inventory availability, resilience and speed of delivery” while also leveraging big data.
Understanding of one’s bespoke supply chain requirements
Thorough analysis and a health check of an organisation’s current supply chain is reported to be a crucial phase of rethinking a supply chain model.
Global benchmarking is reported to be another critical step in strategic supply chain planning.
“One can argue that Europe and North America have heavily invested in automation and AI, especially within warehousing operations,” said Knetemann.
“One of the driving factors behind this strategy is labour shortages.
“In the middle of the pandemic in the Netherlands, for every 140 job vacancies in the logistics and supply chain sector, there were 100 available individuals to fill the roles. Now, we look at places like Japan and ask ourselves if this is where we will be in the next 20 years and how do we optimise our supply chain models to remain responsive in the mid to long-run.”
Amazon is touted as an example of how a simple online book-selling business can be transformed into a major global e-commerce player by rethinking and redesigning the supply chain.
“Initially, it relied on traditional supply chain methods to source, manufacture and deliver products to customers,” CEVA Logistics said in a statement. “However, the company realised that their business was limited by the inefficiencies of this approach. To advance forward in the market, they invested heavily in technology, cloud-based businesses and data analytics that paved the way for them to become a leader in the market.”
Highly automated warehousing is still a people-focused business
The need for human labour persists despite investments in robotics, Artificial Intelligence (AI) and automated warehouses.
CEVA Logistics points to a 80,000-square-metre facility in Europe as an example which operates 24/7 with an output of 500 units daily, equipped with an automated shuttle storage system linked to a pocket sorter, packaging machines and kilometres of conveyor belts.
“On a quiet day, this warehouse is managed by 1,500 to 2,000 people and during the peak season, it nearly doubles for a 24-hour cycle,” said CEVA Logistics.
“The peak output exceeds 700,000 units per month. Given labour shortages across Europe, making the warehouse more automated with technology is inevitable given rising consumer demand and order volumes.
“Without improved automation, this particular warehouse would require a 1.5x (or more) increase in human labour and additional warehousing space to keep up with demand.”
Big data and simulations
Access to big data and related technologies is reported to be more affordable and accessible now more than ever before. The experts at CEVA Logistics said the transportation and supply chain industry has been slow to adopt these tools.
A few years ago, logistics service providers in the Middle East were reportedly tasked with designing solutions for multi-million-dollar investments with a single scenario-based approach because simulating multiple scenarios was not technically possible or financially feasible. This approach, according to CEVA Logistics, failed to reflect the operational reality on the ground though.
The questions that needed to be asked included topics like: ‘Should we automate a portion of the processes in one of our warehouses to benefit from cost advantage and leave another warehouse as a flexible buffer?’ and ‘How much stock should we keep in each facility in each region to reach our cost and speed objectives?’.
“The advanced modelling of regional supply chain omni-channel distribution network in the Middle East might require constant computation of up to +100 TB of data, and similarly up to +100 integrated data sources to ingest data from,” said Dinc.
“Just a few years ago, leveraging such models was limited to a few companies, whereas now, these technology solutions are widely available in the market for any interested player at an affordable cost. As such, organisations have now realised the potential of simulations and are heavily investing in these new technologies. I predict that they will continue to do so because the question is no longer ‘if’ but rather ‘when’ and ‘how much’ in today’s complex supply chains.”
Generational gap and labour shortages
The logistics and supply chain industry is transforming and becoming less and less of a truck-driver or forklift operator type of labour market according to CEVA Logistics.
The company’s experts are seeing an emerging trend where many roles in logistics require tech-savvy, engineer style profiles eager to pioneer new solutions.
“We are faced with an industry-knowledge-rich baby-boomer generation that generally lacks a deep understanding of new technologies and big data works,” said CEVA Logistics. “This generation is now working alongside millennials and gen Z workers who often have a different understanding of how processes should or could work.”
An approach here is to pass on industry knowledge to younger generations and allow them the freedom to reimagine supply chain optimisation with new tools and technology.
“Universities are working together with businesses to equip the new generation of logistics and supply chain leaders,” said Nasser.
“There is a need to establish robust communication channels among educators, industry leaders and other stakeholders. Universities need to reassess their educational programs which should respond to the employers’ demand and the development of the logistics sector.
“With the industry’s current projected growth, there is a big need for a large labour market that is educated, motivated and ready to take on challenges.”
Last month, CEVA Logistics unveiled an indigenous Australian artist’s design across multiple 42-pallet Super B-double trailer combinations manufactured by Vawdrey Australia.
In other news, trailer leasing and rental firm, TIP, is investing in its people to improve its service capabilities.