The Winning Leg in Supply Chain

The Winning Leg in Supply Chain: by Hussein Wehbi

Being in the logistics industry for the past 25 years, I have witnessed a massive evolution in the way that we do business in this vital industry.

Logistics and shipping are the backbone of almost every industry and this is an industry which will never stop or slow down to a critical level as long as trade is happening between countries and continents and also ecommerce and purchasing transactions are still taking place to generate package movements locally and internationally.

Looking at the different legs of a supply chain and logistics process, we can easily split it into the first, middle and last mile when it comes to shipping and then comes the warehousing part as a destination, which is a temporary hold process of goods before dispatching to clients' premises.

If we look into the evolution and developments of each of those legs, one of those legs wins the race while others still have a long journey in terms of innovation and development.

The First Mile:

In my opinion, the first and middle mile legs are somehow still behind when it comes to innovation and development compared to the final mile and when we say the first mile we mean the initial stage of the supply chain journey which involves the collection or pick up of goods, documentation, labeling, packing, and this part is usually a blind spot for the final consumer because it mostly involves bulk shipping from origin to destination where breaking the bulk happens and the last mile journey starts.

In the first mile leg, a lot of innovation can still happen to streamline the process and reduce the fulfilment costs maybe through automation, robotics, bulk scanning, automated and efficient packaging, and maybe AI powered documentation processing which depends on plenty of historical data and customs regulations and this is where also block chain can play a role in governing the preparation of shipping documents to ensure strict compliance and zero tampering in declaring the real origin of the goods.

But when we speak about the cost of automation and robotics at origin’s warehouses, the investment cost used to seem a bit on the high side compared to manual operations but today we have a lot of competitive solutions coming from the far east that can compete with the expensive ones coming from prestigious brands in other countries, and charge an arm and a leg for a solution which is supposed to improve operational efficiencies across the supply chain journey.

Barcoding and scanning technology today is available widely and very affordable, with one scan you can capture hundreds of SKUs for outbound scanning, and this can happen simply through a mobile phone with a mobile application, but it is still not widely spread in our region, and we still see single-item scanning process, which takes a lot of time and costs more money.

Packaging and palletizing also have their share of advanced solutions that can make the operation very quick and efficient, as AI can be used to optimize the way goods are packed and placed in the right size of packages, and with pallets, the way boxes are arranged can be linked to the packaging process to consume as much space as possible on a pallet, which in turn reduces the overall cost of shipping.

The Middle Mile

The middle mile is usually the costliest part of the process because it involves moving shipments in bulk from point A to point B, and we have only three modes of transport which are the Airfreight, Ocean freight, and Land freight Trucking Services.

This part of the supply chain is still behind, and in my opinion, I didn’t see a lot of innovation at least in the sea and air shipping modes.

The only tech advancement I have seen is in the trucking business, where a few companies have introduced innovative technologies that made operations more controlled; these technologies have helped address demand and supply through various aggregation models, with AI playing a major role in forecasting demand to ensure supply is met. In our region Trukker was the first to do this, though much more can still be achieved in land transport if we allow AI and technology to drive greater efficiency in truck loads and in the way pallets and shipments are stacked across all types of trucks.

Airfreight may not have much left to innovate on, but visibility and tracking of cargo can still improve, and AI could play a major role in predicting daily loads for every flight while providing customers with an online booking option that shows the remaining capacity and space in real time, much like how we can view available seats when booking passenger flights, and if the departure time is approaching and the aircraft is still not filled to maximum capacity, then a minimal spot rate could be offered for the last remaining space to avoid the flight operating below its full load potential.

Sea freight also hasn’t developed much, and the main problem we still see today is the lack of accuracy in departure commitments, as vessels often fail to load containers on time and those containers must wait several extra days to be loaded onto the next departing vessel, and while I may have to scratch my head to suggest meaningful innovation in the ocean freight industry, I will leave that to the experts since I am not in a position to do so.

Last Mile

In my opinion, the last mile leg is the most advanced part of the supply chain in our region, and this is the space where a lot of technologies were introduced and deployed to make it efficient, reliable, fast, and cost-effective for clients.

AI, scheduling, predictive, and route optimization technologies, out of home and omnichannel solutions, reverse logistics advanced solutions, and much more have redefined the last-mile delivery industry, and we have almost reached a maturity phase in this space, but still the whole supply chain process will not be perfect without the first and middle mile developments.

Maybe I have missed a very important part of the supply chain process, which is customs clearance, but I did this purposely because today, especially in our region, customs clearance formalities have evolved and become more digitized in a way that allows a shipment to be pre-cleared and its formalities completed even before it reaches the borders of the destination country.

Also, the missing piece of the puzzle that I personally need to research further is what types of new technologies and AI solutions exist to handle multimodal shipping operations and streamline processes such as Air to Sea, Sea to Air, Sea to Land, Land to Sea, and Air to Land, and here we definitely need smart IoT systems that can link all these shipping modes and streamline the process in a way that allows, for example, an Air to Land shipment from one GCC country to another to move smoothly with full integration between customs systems and seamless documentation switching, without complications or delays.

So if you ask me who is the winner, then definitely the last mile wins the race, while the other parts of the supply chain process will need more innovation towards creating a supersonic supply chain industry, which is also very cost-effective, and this will definitely make a positive impact on the economies and their vital veins, which are the trade lanes.