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Where Small- to Mid-Sized Logistics and Supply Chain Companies Struggle Most With Technology

June 9, 2020
Volodymyr Rudyi

In order for logistics and supply chain executives to use technology to gain a competitive advantage, company leaders must first understand where most companies like theirs struggle with technology.

Limited In-House IT Expertise

Now there are industry giants such as DHL, FedEx Corp, and UPS Inc. that face very different technology struggles.

For example, when you head over to LinkedIn, you’ll find that DHL Supply Chain has over 36,000 employees worldwide, with 630 employees in IT roles in the United States.

Between FedEx and FedEx Logistics, there are over 3,000 IT professionals in the United States.

And UPS Supply Chain Solutions employs over 500 IT professionals in the United States.

However, the average reader of this eBook is working within the opposite context. Your company as a whole has anywhere from a few dozen to a few hundred employees.

Your internal IT team -- if there is one -- is very small, with limited in-house resources for developing and maintaining custom software, or working on application programming interfaces (APIs) that are vital for integrating different systems together.

The internal team usually oversees routine website management and provides administrative support for existing lines of business software, such as G Suite and Microsoft Exchange. They’ll oversee basic network infrastructure, conduct data protection measures, add users, reset passwords, apply patches, and manage mobile devices that attach to the network.

Some smaller logistics and supply chain companies may have no internal IT staff and instead outsource to a company such as an IT managed service provider (MSP).

Wrangling Siloed Data from Multiple Systems That Don’t Talk to One Another

There’s usually siloed data concentrated in one system, accessible by only one company.

In an effort to modernize and remain competitive, a logistics and supply chain company may invest, for example, in an automated robotic warehouse system, designed to automatically move goods around the warehouse by specifying coordinates to pick up and deliver.

While this sounds great in theory, and is usually a huge leap forward, integrating this kind of system with other modern systems is, to put it mildly, painful and expensive. This integration almost always requires programming resources to configure, typically some kind of middleware or advanced integration.

Often, there are also product information management (PIM) systems and enterprise resource planning (ERP) systems with poor integration capabilities.

To eliminate this fragmented information, and make better decisions faster, logistics and supply chain companies generally need a more sophisticated configuration to bring together the data from multiple systems.

Rapidly Developing New Systems Without a Temporary Hiring Surge

While the upside to the business can be extraordinary, and a competitive necessity, integrating disparate systems can be a huge initiative.

To accomplish this work quickly, you need to hire a big team, which takes time. However, the problem is that once the new platform is built and integrated, and your team is trained on its usage, you no longer need most of that IT talent. You’d have to downscale.

Most companies don’t want to have to fire great employees after a project is completed. For starters, that approach takes a lot of time and money and is the antithesis of the company culture that most companies strive for.

Integrating for Hyper-Specific Use Cases

For example, a manufacturer of capacitors and battery cells wants to create reports and graphs on how the batteries discharge. They outsourced this work to an external testing company; however, unfortunately, their software doesn’t allow the company to export that data with the desired uniformity.

With popular, commercially-available SaaS applications, such as customer relationship management (CRM) or helpdesk management, your first thought may not be how to integrate with a battery testing system or automated robotic warehouse system. But when this need arises, it would be extremely difficult to find a commercially-available integration because the use case is so specific.

So, to improve decision-making processes and speed, logistics and supply chain companies often end up investing in custom systems development to help their most critical systems, housing siloed data, communicate with each other.

Again, solving this technology problem is often incredibly important to profitably scaling the growth of a logistics and supply chain company. However, unless you’re operating somewhere near the scale of DHL, FedEx, or UPS, or even a fraction of that size, you likely don’t have the internal resources to undertake this kind of complex technology integration initiative.

Where does your logistics and supply chain company struggle most with technology? Share your comments below.

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