Collaboration in Transportation and Logistics…and sometimes the lack of it!

Let us walk through a typical end-to-end process for exchange of goods, highlight the opportunities for collaboration and understand whether these opportunities are being seized. And if not, what are the reasons for this not happening

Scenario:  A Buyer needs something, and he has ordered this ‘something’ from a Seller. So, the Seller here is also the Shipper- the consignor of goods. He needs to send some stuff to the buyer- the Consignee. He uses some Service provider who will pick up the goods from the origin and get it across to the destination. Maybe, there’s a halt somewhere along the way in this journey. The Service provider will figure out how many vehicles and which vehicles to use.  The flow is illustrated below.

Now, let us look at all the opportunities that exist for communication (and collaboration) in this scenario.

Before even the process of physical movement of goods begins, here are a set of interactions that can happen:

FromToDocumentPossibilities
BuyerSellerBuyer needs to raise a Purchase Order indicating his need to buy 1. Buyer calls via phone
2. Buyer sends information via email/ WhatsApp
3. Buyer logs in to a ‘portal’ provided by the seller to raise this P.O
4. Buyer and seller systems talk via EDI and Buyer sends Seller an EDI850
5. Buyer’s ERP interfaces with Seller’s ERP (possibly with API calls)
SellerBuyerBuyer needs an acknowledgement that Seller has received the Purchase Order1. Seller confirms PO details on phone
2. Seller sends acknowledgment via email/WhatsApp
3. Sellers ‘Portal’ accepts the order
4. Seller sends EDI855 acknowledging the PO
5. Seller’s system sends an acknowledgment signal via interface

Let us understand the ramifications of each of the 5 scenarios listed under ‘Possibilities’:

Scenario 1(phone): There is no systemic record of the conversation having taken place and the transaction requires a high degree of trust in order to fructify.

Scenario 2 (email): There is a digital record of the conversation, but there is no systemic linkage to the buyer’s or seller’s ERP systems which need to record these purchase/sale details. Additional manual effort is required in order to seed this information into such systems.

Scenario 3 (Portal): There is a digital record of this conversation, but this is only on the Sellers system. Also, would a buyer be willing to log on to a Sellers portal? Consider the fact that such a buyer might be interacting with multiple sellers. And also, the fact that the buyer still has to put in additional effort to capture this information in his own system. This can however work if the balance of power is heavily in favor of the seller.

Scenarios 4 (EDI) and 5 (API based interfaces): These are examples of conversations between relevant systems. Such conversations will ensure that there is a digital record of the conversations. Also, there is a possibility for downstream actions at either end to be driven automatically by the system. (For e.g. the Seller’s ERP could auto-trigger replenishment orders to a contract manufacture for the material to be sold to the buyer!). What this means is that more entities (other than the buyer and seller) can also be pulled in towards collaborating in the supply chain.

Taking this shipment scenario forward, once the products ordered are ready to be shipped, it is obvious that the Logistics Service Provider needs to be pulled into the collaboration game.  A typical flow could include the following:

  1. Shipper reaches out to a bunch of possible service providers to ask if they can fulfill this shipment. (This is an indent or a procurement request to procure the shipment service).
  2. The list of possible service providers who have been reached out to, respond to the shipper with a ‘Yes’ or a ‘No’.  If ‘Yes’, they also typically provide a quotation and payment terms for the Service.
  3. From among the responses, the Shipper will select a suitable service provider based on various possible factors- cost of service, quality as understood based on their past experiences with this provider, speed of service etc.
  4. The Shipper will now formally engage the selected Service provider to effect this movement.

It is fairly easy to see that steps a., b. and d. require conversations between distinct business entities.  You can imagine the conversations happening through any of the 5 scenarios listed in the table above.

Now, start to add in the other players who usually come into the mix: The diagram below is illustrative of such a network.

Clearly, the number of conversations that need to happen among all these entities is quite substantial.

Also, understand that every player in this ecosystem is not even remotely at comparable levels of technological maturity. Some players will have mature systems with the ability to build API based communication, while others will rely on the old-faithful xls.

Now factor in the overheads imposed by things going wrong in the field- vehicle breakdowns, traffic delays, regulatory hold-ups, consignment getting damaged etc., you will appreciate that collaboration is clearly non-trivial, and very often will be sub-optimal.

This is one of the big problems that we must attempt to solve in order to unlock significant value in Transportation and Logistics!

Protocols implemented across the Transportation and Logistics World

Talk. Talk. Talk… All Blah!

As we discuss collaboration among human and non-human entities, let us understand the evolution of the non-human entity a bit more.

A quick scan of Wikipedia reveals:

The word “corporation” derives from corpus, the Latin word for body, or a “body of people”. By the time of Justinian (reigned 527–565), Roman law recognized a range of corporate entities under the names universitas, corpus or collegium. These included the state itself (the Populus Romanus), municipalities, and such private associations as sponsors of a religious cult, burial clubs, political groups, and guilds of craftsmen or traders. Such bodies commonly had the right to own property and make contracts, to receive gifts and legacies, to sue and be sued, and, in general, to perform legal acts through representatives. Private associations were granted designated privileges and liberties by the emperor

Going further back, it is widely accepted that private corporations (separate from individuals) were also in existence during the days of the Mauryan empire (320 to 300 BCE) of Chandragupta and Chanakya!

Thus, a non-human entity has possibly been a part of human society for around 2400 years! And surely, this entity has been interacting with both humans and other non-human entities for at least as long!

Now, let us look at the evolution of communication and collaboration protocols among these entities.

It is safe to believe that any interaction that was necessary between such entities would largely have been done through human representatives through face-to-face conversations and also through the written word. Scrolls/letters and finance would have been carried by humans and delivered to humans, who were not within speaking and touching distance.

A rudimentary postal system can be traced to the early 1500s and was reasonably well established by the 1650s across the world. The next quantum jump in communication technology can thought to be the wire-telegraph based on Samuel Morse’s work in the 1840s. By the 1860s, a fully functional trans-Atlantic cable is laid. Multiplexing- the ability to send multiple signals at the same time- is a reality by 1915, making wired communication much more efficient. Wireless communication also evolves in the same time frame and trans-continental telephony is in place by 1920. By 1960 telex is a reality.

All this communication still requires some ‘human’ starting the process, and another being at the receiving end to ‘get’ the message.

It is in 1965 that Trans-Atlantic Shipping manifests sent by Holland-American Steamship line using telex, are first converted to tape and loaded onto computers. Even though there is a human as the recipient, the ultimate recipient is a machine or ‘system’. This is a new revolution in communication. Now, this story gathers steam and there is rapid evolution in ‘communication protocol’. In 1973, FTP (File Transfer Protocol) is established and in 1975 the Transportation Data Coordinating Committee (TDCC) releases the first EDI standards. In the same year, the first VAN telenet is established.

EDI can be thought of as the first real ‘system to system’ communication mechanism and this opens up the world of collaborative commerce. This rapidly gains ground and by 1985, the EDIFACT EDI standard is established.

While EDI remains an incredibly effective and popular system-to-system collaboration mechanism, the ‘next big thing’ in this is the evolution of the API-based systemic interface mechanism as technology service providers start to architect their products to collaborate in this manner via secure transmission of data over the internet.

Meanwhile, the ‘person-to-person’ communication also evolves to include additional channels such as email (which becomes commonly available starting from the mid-1990s) and social-media (WhatsApp from the 2010s).

Businesses also start to exploit these channels and create a new communication paradigm of ‘system to person’- where the originator of the message is a machine and the recipient is an individual.

This is encapsulated in the figure below:

Having gotten this overview, we are better positioned to understand how these protocols have been adopted across the Transportation and Logistics World, and what some of the resultant problems have been.

Stay tuned…

Multi-Enterprise Collaborative technology platform for the Transportation and Logistics vertical

Let’s start at the very beginning.

It’s a very good place to start!

We proudly state that ShipX is a Multi-Enterprise Collaborative technology platform for the Transportation and Logistics vertical.

OK, so that sounds like a mouthful. But what does it even mean?

Let’s start really, really at the beginning!

Humans in their early evolutionary forms perhaps began their communication journey through sounds and gestures that acquired common meanings for the sender and recipient. It is easy to surmise that this would have been an iterative process and would eventually lead to the spoken word and language as we know it.  (And this spoken word/language continues to evolve!)

The need to ‘communicate’ among entities who were not in visual or auditory range would also have been felt with human evolution. Etching of pictures and symbols would eventually lead to the evolution of written language as we know it, thereby significantly expanding the scope of communication. (And this written word continues to evolve!)

As the human race continued to evolve and moved from the hunter-gatherer to the agricultural/pastoral age, onwards to the industrial age and subsequently to the tech-pervasive digital age of today, there has been the emergence of non-human entities in the form of companies/organizations- which though comprising people, effectively have a ‘life and a purpose’ of their own- when viewed through an anthropomorphic lens. These entities have always needed to and will always need to ‘interact’. The spoken and written words that serve for humans does not quite work, here!

So why is this Interaction necessary? Is this interaction the same as ‘communication’?

Individual humans have as a part of society evolved by honing certain skills of theirs at the expense of other skills, leading to them playing increasingly specialized roles in the world today. I do not grow my food, make my clothes, build my house, make all the million other things that I deem as necessities by myself.  The same specialization argument holds for a non-human entity such as a Company too. Thus, for any entity (human/non-human) to exist in society and thrive, they need to rely on working with/ interacting with an incredibly large number of people/entities.

Clearly two entities will want to interact only because they both benefit by doing so! This is a fundamental economic reality. It is this economic basis of mutually beneficial interaction that we term as ‘collaboration’.  Thus, collaboration is clearly more than just communication!

With this definition in mind, let us look at what we mean when we say ‘Multi Enterprise Collaborative technology platform for Transportation and Logistics’.

Breaking this phrase down, helps us understand that this is not a collection of nice-sounding buzz words. Here goes:

  1. Multi-Enterprise: Who is participating /collaborating with one another? It is not individuals but Enterprises or Companies. (Yes, these companies are staffed by individuals, but the collaboration is in the context of benefits to Enterprises). So, this is a B2B platform
  2. Collaborative: Enabling collaboration. Every entity that participates on this platform does so only because there is economic benefit to itself. It is not coerced into doing so. When an Entity collaborates with another, both stand to benefit. Collaboration is NOT a zero-sum game.
  3. Technology Platform: A technology ‘platform’ is like a weapon-system (but with a constructive end in sight!). You can arm this platform with different types of weapons that will achieve different Enterprise objectives. These weapons are -in-a-sense- solutions to different business challenges.

And what are these business challenges? Keeping in mind our whole discussion around Specialization by entities, we (ShipX) as an Entity, have specialized in understanding the narrow worlds of Transportation and Logistics and world-class technology product building.

Let us keep one thing in mind as we go along. What is today deemed to be ‘mutually beneficial’ will possibly become ‘unavoidable’ tomorrow!

In the next blog we will discuss the all-important dimension of collaboration a little more….some history, some current practices, and some ‘looking ahead’ – especially in the Transportation and Logistics business!

Stay tuned!