Business models are changing and as a result the way a business measures its performance and understands its business processes need to change, a group of leading logistics CIOs and business technology leaders in the Netherlands discussed. The CIO roundtable debate, moderated by Horizon for business process leaders Integration Matters, brought together CIOs from ports, rail, retail, parcel delivery and chartering to discuss business performance monitoring.
The transport and logistics industry is on the cusp of major transformation from a number of different angles. The World Economic Forum (WEF) predicts that large global players will become platforms and in doing so increase the amount of specialised outsourcing they will use to specialist smaller local providers. Pollution in cities, as has been at the top of the news agenda, will see the industry create city logistical services that are in effect a shared service with a number of providers delivering into a central resource. Robotics too will challenge the logistics sector, The Economist recently reported organisations such as Vespa manufacturer Piaggio have begun to demonstrate working suitcase robots that can transport 18 kilograms of cargo.
CIOs from the logistics sector also discussed how delivery capabilities will be challenged by drones, autonomous vehicles, 3D printing of goods close to market demand and crowd-sourcing of services, all of which are issues the WEF believes will reshape their business in coming years. DHL, the German headquartered international logistics supplier, is already using drones in an experimental programme to provide services to remote island communities in the north of Germany.
“All of this will have an impact on how we monitor our business,” the CIO of a major parcel delivery company said. Other challenges the logistics CIO community will face according to the WEF are increased recycling demands and the need for the industry to increase the amount of capacity sharing it use to increase services as price margins decrease.
The CIOs discussed how they as information leaders will need to move to a position of publishing information to alert customers and partners to spare capacity in warehouses or vehicles that can be used. All agreed that disruptive businesses like AirBnB and Uber, the accommodation and taxi services, are in effect publishing companies and that CIOs will need to enable their organisations to become publishers.
For logistics CIOs to enable their organisations to adapt to new challenges will require increased visibility of the business process and the ability to react to failures in the service. This in turn will mean that technology suppliers will need to become increasingly aware of the demands of operating a logistics business.
“Suppliers are not aware of their impact on the business service levels or on business process,” a technology leader expressed. A number of the attendees said they had service level agreements with their suppliers that measured the impact of outages.
“We measure an outage by shipments lost,” the CIO from the parcel sector said.
“There are a lot of gaps in the integration layers in businesses,” says Abdelghani Faiz of Integration Matters.
Although the community openly agreed that cloud computing and software-as-a-service (SaaS) offered great potential, the adoption levels in the room were below 20% of the enterprise estate amongst the attendees. The group cited how cloud and SaaS tools had the potential to increase the disconnect between a technology supplier and the quality of business outcomes.
“With SaaS they are so far away from the business processes that they have no idea what can happen in your business,” one attendee said.
With the community agreeing that greater analysis of the business is required, the conversation focused on the technology challenges logistics CIOs. “More and more services are being added to the CIO’s service portfolio and the services are coming from a wider range of providers,” a business technology leader expressed, adding this created “shadow data” across the organisation.
A CIO from the retail sector said he and his organisation were working to enable greater analysis and pro-active fixing of issues closer to the problem. “If you are too centralised you are losing time and knowledge” he said. The community also discussed how rollbacks have become problematic in the complex multi-service environment that the CIOs.