NETWORK OPTIMIZATION

Transportation Management Providers Look to AI Solutions 

AFTER WEATHERING THE storm of the pandemic and container crises, supply chain businesses are again looking to the future. What’s the best way to manage international networks, freight transport and the cost of doing business? One area getting more and more attention is the application of artificial intelligence (AI). Over the past few years, AI has moved from being an abstract idea to a technology with numerous real-world applications.

Although most of the recent AI news has been focused on groundbreaking software such as ChatGPT, there is a quiet AI revolution happening across supply chain management systems. One of the visionaries in this space is nVision Global, a leading software vendor for transportation and freight management.

nVision’s Senior Vice President of Supply Chain Services, Stewart Dunsmore, is focusing on optimizing transportation networks for logistics providers, the value of a best-in-class team and best practices in managing cultural resistance when introducing AI solutions.

This starts with how customer requirements, and the systems that support those needs, are evolving. nVision is building AI solutions that look beyond simple transportation management systems. Instead, they are developing software around the central concept of global freight management — applications that can bring together transportation, cost management, freight audit, business intelligence, claims and other key areas. These tools change the way supply chain businesses control their transportation networks. Instead of a one-way focus based purely on moving freight from A to B, integrated software can balance cargo management, orders, inventory, forecasting and business intelligence. Optimization is key to all these areas.

Freight and logistics providers are moving on from the shocks introduced by the pandemic, container availability, pricing and inflationary pressures. They want to know what to focus on next to drive growth and improve stability.

Dunsmore says that the key sectors where he’s seeing greater customer needs are across regional and global cost management, freight consolidation and shipment visibility — all areas where AI can help.

“Customers want to optimize their global supply chain across all cargo types, and they’re looking for software and AI to help them optimize. They want to reduce the administrative overhead of their activities and find tools that can help them be dynamic,” he said.

This need for an agile and dynamic response to rapid changes isn’t surprising. One of the core lessons to come out of COVID-19 and its downstream impacts is the need to react quickly, get early insight into risks and issues, and have contingencies in place. Pricing is a particular concern. The length of fixed-price transportation contracts doesn’t always align with rapidly changing costs and charges. How can freight providers,

carriers and customers use AI to give them an advantage in a volatile pricing environment?

nVision says that with increasing demand pushing up rates, the answer is greater visibility of costs across cargo types. Dunsmore sees this with nVision’s customers.

“They have had to deal with adapting to dynamic rates moving on a regular basis across a good amount of cargo types — particularly in the sea freight side. They want to analyze their freight span and costs across all cargo types. They’re looking for AI to help them optimize pricing,” he said.

Data and business intelligence are starting points for understanding pricing, but it’s AI that does much of the heavy lifting. As costs change, shippers and carriers must adapt their pricing strategies — they need tools that can match those needs. Spot auction tools and automated bidding are taking center stage, giving closer visibility and control over rapidly changing rates, especially for LTL and specialty trucking. “

Our global auction tool manages pricing and currencies across the regions of our customers. That’s important because global contracted rates are still moving on a rapid basis. Before the pandemic, they would have contracts that would be locked in for 18 months on, for example, air and ocean,” Dunsmore said.

Strong cost control and network optimization feed into several other critical areas for supply chain businesses: Cash-to-cash cycle times; revenue interruption; increasing interest rates; and financial management across countries, currencies and regions.

The principle of managing rates across multiple currencies and regions is vital. Increasing globalization and consolidation means that more businesses are operating across large, international supply chain networks.

Buyers and sellers must balance country-level pricing and transport with overall corporate requirements for cost control and budgeting.

UK companies working in British pounds need to effortlessly report their expenditures to a US parent company in dollars. The US parent company needs to provide its British business with autonomy while ensuring strong budgetary controls.

nVision solutions use machine learning and intelligent systems to lower transportation costs, provide detailed visibility into rates and allow for regional and corporate financial control.

Business intelligence and visibility make it easy to see the value that AI

provides. Data collection, and insights into that data, are starting points for better forecasting and predictability. nVision uses broad, deep information from across its operations to suggest ways clients can optimize further. Dunsmore believes that one of the strengths of global freight management is being able to understand data across various operations and regions.

“Our diversified customer base gives us access to freight data across all cargo types and global lanes. AI can use that diversified data to provide greater predictability. The interpretation of that AI output is key, and it’s a great avenue for customer conversations,” he said.

This highlights a key point — AI isn’t just about data, algorithms and predictive analytics. The interpretation of these areas is what drives true value. This boils down to business analysts and data scientists seeing broad trends identified by AI, together with deep insight into a specific customer’s freight operations.

It’s that combination of software-driven insights with analyst expertise that helps carriers, shippers and others get the most out of AI. A team with myriad viewpoints and experiences helps to add nuance and context to customer conversations.

Dunsmore emphasized the importance of nVision’s analysts and their variety of strengths and expertise. This ranges from experience in specific transportation functions such as inventory or pricing, across knowledge of cargo types, through to understanding cultural touchpoints, country-specific norms and regional variations.

This creates a mutually beneficial relationship between analysts, AI tools and freight management customers. Analysts can feed their findings and concepts into the tool and the AI layer can learn from, analyze and validate those ideas. This provides conversational starting points with customers, focused on their actual data and contextualized with the business analyst’s experiences.

From a customer perspective, the ability to visualize and act on both operational data and analyst recommendations is crucial. This speaks to a larger point, that of configuration — freight managers are busy, data is complex, and AI can be a black box. Easy configuration is extremely important for nVision’s customers.

“Our software was built on its ability to adapt. We’re going to configure our software and demonstrate its value when it’s applied to our customer’s business processes and challenges,” Dunsmore said.

Alignment with customer business priorities is key. nVision holds strategic business reviews with customers on a quarterly basis, ensuring that their requirements feed back into software development, implementation and configuration. They support this approach with workshops, where the company and its customers can collaborate on regional business processes and configure the tool to support those needs.

Although AI has many upsides, it’s not all smooth sailing — as expected, there can be significant pushback on bringing AI tools into a business. While it can bring down operational costs and highlight future opportunities, AI can also be a threat to employees if their work is outsourced to an algorithm. Although it’s still too early to say what impact AI will have on the labor market, companies must be mindful of individual and cultural sensitivities when introducing these tools. Protectionism around AI can be a major challenge. Leaders, managers and employees could resist the introduction of new tools due to job concerns. Certain countries, facing their own economic uncertainties, are very resistant to change. Some are still on the fence, while others are ready to embrace the technology and the benefits it can provide. nVision sees a lot of different levels of pushback. Dunsmore believes in a sensitive, phased approach to introducing these tools, requiring strategies to minimize disruption. “You have to introduce software gradually. That means little projects that prove the value of these tools and easing people into the changes,” he said.

This also includes not going over people’s heads. “We’re not going to go straight to the CFO or COO and say that people are resisting opportunities. We’d much rather work directly with people who are resistant to these changes to understand and address their concerns. That leads to much better business relationships.”

A measured, sensible, small-scale implementation can provide considerable benefits to nVision and its customers. They have found that working closely with concerned employees helps to remove their fears and build confidence in the value of the tools. This helps turn resistant stakeholders into advocates, who then highlight the benefits of AI to their peers and managers. Limiting the original scope of AI can drive more positive experiences and build greater trust and use of the tools over the long term.

AI tools can revolutionize how freight managers do business. The opportunities are significant and touch on a multitude of areas including cost management, transportation networks, freight audit, claims, visibility and business intelligence. The combination of a diligent approach, innovative software and expert teams will help supply chain businesses optimize for the future.

Journal of Commerce, June 5, 2023, written by Paul Maplesden

Logistics originated in the military, where the ability to fight a battle was predicated on feeding and arming an army away from its home base. The result of a great logistics capability was an army ready and able to do battle. The alternative was a starving, ill-prepared army who could well be slaughtered. As Omar Bradly, one of the leading American military commanders in WW II stated, “Amateurs study strategy, professionals study logistics.” But professional logistics means managing a capability not just hoping it will deliver the goods!

Today the consequence of perfor- mance is the survival of a company, as only those that can satisfy their custom- ers with the right goods at the right time and the right place (product, place and time utilities of logistics) are going to be profitable and survive. The question is how does a company ensure the delivered goods provide this utility consistently?

Lord Kelvin, the physicist who developed the Kelvin International scale of absolute temperature in the late 1800’s, said “If you cannot measure it, you cannot improve it”. This is true today, as logistics requires that we continuously improve, or our competitors will erode our current competitive advantage and the company will struggle to survive.

All this leads to the need to measure the logistics provided to the customer. Logistics is the link between the customer and the source of the goods and, if done better than anyone else, is a source of competitive advantage. Without measurement, we have no knowledge of whether our service standard is being met, falling below the standard and losing customers or so far above the standard we are losing money on the service. Measurements of logistics performance allow the company to ensure the most economically advantageous level of service is chosen and maintained. The measurement of logistics performance is not as simple as it sounds. No one delivers everything on time without exception. The question is really what is accepted as the standard we expect for the majority of the deliveries, and what is the deviation allowed from this standard? The correct way is to use both the average of the defined compliance to this standard, and the deviation (usually the standard deviation for those of you who enjoy statistics) from this average. With these measures we can determine if the average is maintained or changing, and the deviation will show the extent of the variation. The company can use these two measures to maintain the delivery standard and perhaps improve it if economically valuable. While these are the two fundamental measurements for logistics, other measures must be part of the ability to measure and manage. Foremost in these is the order fulfillment accuracy and then the measure of any returns and the cause of the return.

Companies often suffer with limited usable data from the financial systems that the company utilizes. Logistics is a process that moves across many entities and many accounting codes. The capability to extract this information and use it timeously is not that common. Where then does a company turn for valid information? One of the most valuable sources of information is the billing invoice from the logistics service provider, which will include the order and its date, the source of the goods (warehouse or source of manufacture), the goods, the company that delivered them and to where, and the date of delivery. If the data can be extracted simply from the financial systems, this must be used. But for the majority of companies performing logistics, the simplest source for this data is the audit and pay (freight audit) function performed by third party companies. While the aim is to extract data to verify the goods were delivered and to pay the service provider, the same data can be used to measure and manage logistics processes.

Let’s look at an example for the use of this information. A company ware- housed and delivered consumer electronic goods to brick and mortar stores for one of the leading brands. It was a complete surprise to the brand owners that deliveries went up by 30% before sales promotions, and return volumes were up by nearly the same amount. As returns become discounted goods the brand was losing money in the value of the stock, and also paying to deliver and return the goods. The logistics service providers became aware of these peaks but realized something was not sensible. Data analysis showed the impact for extra deliveries and, with a little bit of financial data, the impact on the brand managers accounts. Rather than raise a complaint, the logistics providers provided data to show the financial impacts and the brand managers listened. It turned out the stores were significantly over ordering, so they had stock to secure the sales during the promotion. The brand managers changed the returns policy to preclude this behavior and saved significant costs. Data, not opinions, helped to define this and enabled the brand to manage the consequences with the stores.

With this understanding of the value of logistics measures we can delve into where data can be extracted and how to use it.

Why Global Shipment Visibility is Critical

nVision Global is the leader in global freight management solutions and services, specializing in Freight Audit & Payment, Order Management, Supplier Management, Visibility, TMS and Freight Spend Analytics.

Company Overview

nVision Global is the leader in global freight management solutions and services, specializing in Freight Audit & Payment, Order Management, Supplier Management, Visibility, TMS and Freight Spend Analytics.

As a leader or someone who is actively involved with the management and movement of shipments around the world, you need to know that shipment visibility is critical for several reasons.

Firstly, shipment visibility enables companies to have real-time access to information about shipments as they move through your supply chain. This means that you can track the progress of your shipments, anticipate any potential delays or disruptions, and take proactive steps to mitigate any issues that may arise. By having visibility into your shipments, you are able to make informed decisions that help you and those in your organization to opti-mize your supply chain, reduce costs, and improve overall customer satisfaction.

Secondly, shipment visibility allows you to manage inventory levels more effectively. With real-time information about the location and status of your shipments, you are able to adjust your inventory levels accordingly, ensuring that you have the right amount of inventory in the right places at the right time. This helps you to reduce the risk of stockouts, minimize the need for emergency shipments, and optimize your inventory carrying costs.

Thirdly, shipment visibility is critical for compliance and risk management. With access to real-time information about your shipments, you can ensure that you are in compliance with all relevant regulations and laws, and that you are adhering to your own internal policies and procedures. You can also identify and mitigate any potential risks associated with your shipments, such as security risks or environmental risks.

Finally, shipment visibility is essential for customer satisfaction. By providing your customers with real-time updates on the status of their shipments, you can keep them informed and engaged throughout the entire supply chain process. This helps to build trust and loyalty with your customers, which can ultimately drive repeat business and increase customer lifetime value.

In summary, shipment visibility is critical for optimizing your supply chain, managing inventory levels, ensuring compliance and risk management, and improving customer satisfaction. As the leader of a global company, ensur-ing that you have visibility into your shipments is essential for your success.