Paper Logistics
Over 50% of companies use pen and paper to manage logistics. What can replace the pen?
In 2017, an organization called the Blockchain in Transportation Alliance (BiTA) formed that wanted to fix inefficiencies in logistics with distributed ledger technology. Members of BiTA included companies like Anhesuer-Busch, Bridgestone, and Target, as well as logistics providers like FedEx, J.B. Hunt, and Werner.
In total there were over 450 members of BiTA and the future of blockchain in logistics seemed bright. But there was one problem: 50% or more of industry professionals were still using pen and paper or spreadsheets to manage logistics and their supply chain.
I don’t know about you, but I’ve heard this percentage cited frequently — especially in podcasts — but never alongside a source, so I did some digging.
Here’s what I found:
Fifty-five percent of ecommerce professionals said they still rely on pen and paper to manage logistics (Freight Waves, 2018).
More than half of transportation and logistics professionals still use pen and paper to manage their supply chain (Business Insider, 2019).
Fifty percent of the largest importers in the United States still use spreadsheets to manage complex international supply chains (McKinsey, 2020).
These surveys and reports are a little dated, but they foreshadowed the demise of BiTA. As I’m writing this to you, the BiTA website is shut down and the last tweet and LinkedIn post were published three years ago.
Blockchain was simply too much too fast for this industry. While part of the mission of BiTA was strong — “to digitize analog and legacy data” — they went a bridge too far in wanting to move that data to the blockchain.
First, data must be captured. This mission is large enough for an alliance in and of itself.
Replacing the pen
The Freight Waves source cited above also states that 72% of companies use barcode scanners for inventory management. This data input method is superior to pens and pencils but we need to capture more information than just a barcode. We need to capture handwritten text, QR codes, and codes specific to individual companies and industries.
To capture this data, we need consumer grade tech across the supply chain with devices everyone knows how to use and uses every day.
Where do we find such devices?
In our pockets.
Smartphones are easy to use and come with a variety of applications for universal label scanning. They also let you run multiple on-the-go logistics operations versus a barcode scanner that only does one thing. For example, a smartphone can scan a barcode on package #1, take a picture of damages on package #2, and digitize information from labels (shipping or otherwise) on package #3.
Some logistics technology used in smartphones even has complementary OCR APIs that can be used in other devices — think scanners on fast-moving conveyor belts. Whether captured from a mobile device or fixed scanners, data is ingested into the same system automatically.
In addition to standardizing data, this technology impacts how you track logistics operations which affects three things…
Visibility
Logistics involves partners — many of them — and partnerships are stronger when each partner has visibility around the status of a package in the custody of another partner.
According to the McKinsey paper cited above: “A normal crosscountry trade has to go through more than ten parties, each of which has multiple touch points. And shippers and consignees need to interact with up to 25 different entities (customs, terminals, shipping lines, forwarders, authorities, etc.).
Without tracking packages at each touch point in a digitized, shared format, the strength of partnerships in logistics operations deteriorates. However, wIth smartphones and OCR technology, strength can be regained in an economical way.
“The logistics industry has always needed to accommodate the lowest common denominator medium for communicating information anywhere in the world, which in many cases is still paper documentation, phone, and email.” - BVP
Data visibility is also important for internal teams. Think ecommerce teams, merchandising teams, and customer support teams that benefit from access to accurate data in a shared system. They all need to know when something comes back into inventory, when a shipment is delayed, and when to order more products to reduce stockouts and increase customer loyalty.
Productivity
Our industry has a small margin for error yet many supply chain managers still make complex decisions based on gut intuition. While gut decision making is fast, it is not always productive. Data visibility that feeds automated decision making improves the productivity of managers in a scalable way.
Automated decision making also improves employee productivity. For example, if an employee at a dark store or micro-fulfillment center is falling behind on an especially busy day, the same smartphone used for inventory management can recommend fulfillment priorities based on delivery time instead of order time. Additionally, any data captured on the smartphone is less prone to error than pen and paper.
Employee retention
The logistics company that uses smartphones will retain more employees than the one that uses pen and paper or spreadsheets. We don’t need a survey or report to tell us this is true. Nearly everyone uses a smartphone. Not so much pen and paper, and hardly ever a bulky barcode scanning device.
A smartphone is comfortable and, well, smart. If you can increase the comfort level of employees while making them more productive, you’ll never have to compete for hiring again. This is a great experience.
We don’t need injury-prone gamification in warehouses to retain employees and improve productivity, just like we don’t need blockchain to digitize data and improve logistics operations. What we need is simple: a way to capture data at every touchpoint in the logistics journey that’s better than pen and paper and spreadsheets.
Replacing the paper
If smartphones and scanners replace the pen, what replaces the paper and the spreadsheet? After all, you can have the best technology for capturing and digitizing data, but this is only step one (the input). Step two is making that data readily accessible to logistics partners (the output).
While the blockchain may be an idealistic replacement to paper and spreadsheets, there are more practical methods of sharing data in a simple, scalable, and secure way. I’ll get into this more next week.