Guest Commentary: What Logistics Technology Providers Can Learn from Social Media

There is no escaping the social media hype in today’s press. While the platforms are not necessarily geared for logistics, there are important parallels in logistics to what has made the social media market so successful. Taking a look at some of the fundamental challenges in logistics shows how social media-oriented logistics solutions can address some of the most important challenges faced in logistics today.

Logistics is one of the most dynamic industries in the world, whether you are a service provider or someone who uses the services. Agility has become a critical success factor as companies try to exploit the arbitrage that exists in their supply chains.

Logistics is largely a multi-party exercise. Even the big integrated logistics providers and retailers rely on numerous parties to help move goods and “simple” truck load moves require coordination between buyer, supplier and carrier all the while the carrier is juggling other customer’s loads to maximize asset utilization.

There is not one supply chain for any enterprise or role for any company. All companies operate across multiple supply chains, and depending upon where you are, your role is different and the behavior and parties are too.

The logistics world is highly interconnected and at numerous levels. Information is shared ACROSS companies — even competing ones — and it’s more than transactional. Specialists collaborate to serve common customers or to determine how to address new regulations or acts of nature, like a tsunami. Information has to be shared throughout the ecosystems of large retailers and transportation modes to ensure efficient movement of freight.

If you boil down the previous statements, you start to understand that the critical success factors for logistics-intensive companies are flexibility, collaboration, the ability to connect to multiple parties, share common information, and exist in multiple ecosystems.

While social media has operated in a different dimension, it has demonstrated that technology can be viral, self-organizing, address more than transactions, work horizontally and vertically, and foster relationships that are temporal. However, most logistics applications today do not exhibit any of these paradigms. They are closed, assume static relationships, only handle fixed business models and do not facilitate more free-form or creative collaboration. Sadly, the users of those applications are trapped in their environment and either don’t know or cannot get access to other users to “network”.

Putting existing logistics technology or business processes in the “cloud” or being multi-tenant doesn’t solve this problem. Instead, a new class of community-oriented solutions is needed that provides visibility to all of the participants. The coming generation of solutions will allow groups of logistics organizations to self-assemble into sub-communities to collaborate on opportunities, share information and then evolve or vanish. These solutions need to combine free-form collaboration with structured information (the shortcoming of social networks) for community members to be able to work together and understand how the actions of one affects others.

Another critical dimension for community solutions is the ability for members to act as supply chain “shape shifters” and effectively participate in the many sub-communities where the company operates. For example, a freight forwarder operates in the air cargo industry sub-community to move goods for their customers through various air carriers. At the same time, that forwarder is moving goods into the U.S. and operates in the security filings sub-community to ensure that it is up-to-date with the customs filing regulations to ensure quick clearance and minimal fines. Obviously, the forwarder operates in its customers’ various sub-communities and, depending on how and what kinds of goods it is moving, it has its own sub-communities of partners too. Each sub-community has its own distinct set of members and the type of collaboration between the parties changes. It is a huge challenge for the forwarder to work effectively in all of these sub-communities at the same time – so it takes a specially-designed environment to meet the challenge.

Rather than providing a fixed solution, social media provides a flexible forum. A platform built for change. This is social media’s most fundamental lesson and the rapid adoption results are undeniable. The kind of change social media brought is significant and analogous to taking the keys of the car from the logistics technology vendor and giving it to the users. Are your logistics technology vendors ready to let you drive?

Chris Jones is the Executive Vice President for Marketing and Services at Descartes. He has over 20 years of experience in the supply chain market, holding variety of senior management positions including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group.