Three Track-and-Trace Techniques for Better Transparency
Shipping and logistics remain among the last industries to undertake digital transformation. The highly fragmented nature of international shipping, where a dozen companies (or more) each play a role in getting a product from concept to a buyer’s living room, essentially ensures that there will be a level of complexity beyond that of nearly any other industry.
These issues are augmented by the Amazon Effect; if a consumer can know precisely when a shipment will arrive on his or her doorstep, how is it possible that a massive company like Samsung can literally go days (or weeks) without knowing where a shipment of TVs is?
Today, there are three primary approaches to adding transparency to the supply chain.
1. EDI - Most of the major shippers globally have invested in some flavor of electronic data interchange (EDI) solutions. EDI is an older approach that’s probably best known as the standard that enables the secure sharing of information between doctors and patients; HIPAA compliance is based on EDI. At the time it was developed, EDI was among the most progressive and secure approaches to electronically sharing information. Today, it serves as the platform of many supply chain solutions. This is not, however, because it is the most efficient solution. There are two major reasons EDI is nearly universal. The first falls into “how we’ve always done it,” and the second is “because we’ve already invested so much.” It is incredibly expensive to declare “technology bankruptcy,” and start building a new platform from the ground up; even more so when the platform in consideration is powering the supply chain of a Fortune 50 company.
2. API - Application Programming Interface (API) is a more modern approach to connecting disparate systems. In the simplest terms, APIs enable programs to ask each other for information. APIs generally gained common acceptance around Salesforce, and serve as the basis for that company’s enormous partner ecosystem; the market cap for the partner ecosystem for Salesforce is six times the size of the actual company. The biggest value of APIs is the ease in which they can typically be incorporated, by themselves, or as part of a layer. One of the challenges with EDI is how many versions there are in production today (more than 2,500, few of which talk to each other). By using an API layer on top of EDI solutions, it’s possible to bridge those disparate solutions together and create a more seamless approach (note: it’s imperative to standardize API approaches for this to be successful).
3. Blockchain - The idea behind blockchain is to create a distributed, immutable ledger where multiple parties essentially share custody of the data that’s generated. There are two pervasive views of blockchain. The first is that it will replace a significant number of applications, databases and storage methods. The second is that it is largely a solution without a problem. There is, however, a less popular opinion; blockchain, like EDI before it (and Google Drive today), will ultimately be a strong fit for certain use cases, but not a one size fits all solution.
As we enter 2020, that last option should become more pervasive throughout supply chain decision-makers. There will be instances where EDI can perhaps be sunset in favor of APIs or even blockchain, but there may not be a reason to completely re-platform for a few years. Perhaps that’s the most exciting thing about the digital transformation of the supply chain today; there will be many approaches that can be successful, and with the right approach, they can be interoperable.