Over decades transportation is undergoing major disruption and striving towards to become more organized sector. To succeed and sustain, organizations will not only need to monitor their current ways of working and competition landscape however need to understand and adapt to fast-changing ecosystems, focusing on customer-driven market, reflexive supply chain and multimodal value chains. Transport being the backbone of the entire value chain has to be robust and resilient to market fluctuations. The growth of any organization lies on the agility, adaptability and alignment of its distribution model across the globe. The entire economy is struggling today due to ‘COVID’. The COVID-19 outbreak has led to blank sailings and a reduction in imports which translates to less container volume for intermodal businesses. The COVID-19 outbreak is expected to impact both the supply (factories in China and elsewhere) and demand (shopping around the world) ends of the supply chain. On the demand side, Moody's is now forecasting the automotive sector will see a 2.5% decline in sales for 2020. As shippers see demand for their products shrink, this will be passed along to carriers in the form of decreased demand for freight. However, looking at the brighter side, it is the right time when organizations can ideate and develop ‘Collaborative model – COBOT’, a starting towards Industry 5.0 and more resilient supply chain, to be future ready and withstand these pandemic events. Industry 5.0 is the revolution in which man and machine reconcile and find ways to work together to improve the means and efficiency of production, warehousing, distribution and logistics.
Brief & quick understand on ‘Multimodal’
In simple words, Multimodal transport refers to interlinking of multiple modes of transport (Buses, Metro, and Feeder services, Bikes, Taxis etc.) to create a more seamless end to end transport from source to destination with low cost and better convenience. The main objective to go for multimodal transportation is as follows –
- Agile and shared mobility with low asset utilization
- Seamless connectivity and end to end visibility : The connected experience
- Unified payments system basis last mile delivery concept
- Institutionalizing ‘One Transport’ concept, thereby contributing in reduction of carbon footprints.
Current scenario: Transport 4.0
Today, Supply Chains are bound by a myriad of factors that call for consideration when offering the best transportation solutions. Multimodal, however is the need of an hour to meet the everlasting demand and address to the dynamic bull whip. Despite of managing the inventory at granular level by TOC (theory of constraints), DDMRP (Demand driven) and other best practices to forecast, still achieving 100% accuracy level is far too go. To support and achieve the desired service levels and OTIF’s, organizations are relying heavily on multimodal transportation. Multimodal networks are an important issue for infrastructure developers. For e.g. in India, Government initiatives like the Sagarmala program, Inland Waterways program and coastal shipping will provide the much-needed fillip to infrastructure development in the country.
Transport 4.0 (Automation revolution) is characterized by the level of automation that we have achieved, where modes of transport can often largely govern themselves, in many ways by using internet technologies, or “the Internet of things.” Other features of Transport 4.0 include the use of cloud technology and the importance of big data.
Certain challenges that industry faces –
With globalization, logistics is expected to play an increasing role in driving the global economy.
- Infrastructure - It is one of the biggest hurdles that has paralysed the growth of the logistics sector. It gets reflected in inadequate and low-quality modal and terminal transport infrastructure.
- Information Technology – Slow adoption of new technologies has been another big constraint. Awareness about the economic benefits of using digital technology is low and collaboration among stakeholders far from satisfactory.
- Skill Development - Availability of appropriately skilled manpower remains a challenge
- Regulatory Hurdles
- Performance standards - With a diverse customer base, consumer behaviours and expectations are also diverse. Both individual and corporate customers demand personalized services, flexibility and faster services. Hence, baselining and benchmarking is cumbersome task.
- The technology to create seamless or connected multimodal transportation exists, but the majority of services are still being delivered to the end customer in a disconnected, piecemeal way.
Every transportation company, regardless of vehicle type, is dealing with network saturation. New solutions are necessary to advance transportation methods, particularly when it comes to capacity. (Source: Generix)
- Ocean freight makes up for more than 90% of international trade and is the cheapest mode of transportation today. But it is losing touch with current trade challenges due to a capacity crisis causing delays which themselves entail negative consequences.
- Increasing the capacity of container ships is no viable solution to the problem because it also limits port capacity to receive larger volumes of cargo. It is rare to find infrastructure that caters to jumbo vessels with adequate installations for loading and offloading freight.
- As for door-to-door deliveries, road transportation is by far the go-to option for flexibility and cost-effectiveness. A shortage of truck drivers in both Europe and North America is, however, hindering development opportunities in the sector.
- Rail freight has also reached its peak with high damage rates due to disparate infrastructure across Europe. A trade route world war is currently at play, backed by substantial financial investment.
Issues to be harnessed on priority: Transformational challenges and opportunities for the future of Transport with respect to Transport 4.0
- Customer Satisfaction: Rethink the 360° experience for customers
- Collaboration, agility and reliability: Operational efficiency
- Visibility on the connected movement from origin to destination
- Technological advancement
- Safety, security and compliance
Paving the way to next gen multimodal transport: A step towards Transport 5.0
Succeeding in tomorrows’ multimodal transport will be a collaborative game. From the start, organizations must think about ecosystems and multi-sided platforms. The prima facie the factors need to critically evaluated and focussed are as follows –
- Workforce (Skill development) : Shift to lighter and smarter work load and handing strenuous workloads to machines
- Technology and IT infrastructure
- Flexible supply chain to address dynamic and vulnerable consumer trends
- Business strategies, models and tailored supply chains
- Future readiness i.e. scalability
The last 100 years have brought multiple innovations to the transport industry. Each day, a billion people take a car, bus or subway, around 11 million passengers fly and nearly 200 million parcels are delivered. Everywhere, new entrants are challenging existing transport practices. Online providers leverage mobile to create new relationships with travellers. Marketplaces exploit peer-to-peer to move from a world of vehicle possession to one based on usage. New players use the power of real-time data to offer personalized door-to-door travel and logistics services. (Source: ATOS)
Today’s changes represent immense opportunities for organizations to place themselves at the heart of next-generation multimodal transport ecosystems. Opportunities and focus for 2020 to next five years are more towards collaboration working and knitting people, processes and technology in one basket. More disruptive technologies will emerge. While some may only appear as dots on the horizon today, they will turn out to be transformational in the years to come. Digital technologies that are reshaping the logistics space in time to come –
- Robotics Process Automation
- Quantum Computing / Cloud Logistics
- Augmented Reality & Virtual Reality
- Block chain Technology
- Control Towers (SCM Cockpit view)
- Cognitive Analytics platform
- Autonomous vehicles
- API Platforms
- Prescriptive Security
- 3-D printing
What could Multimodal look like in next 5-10 years to come?
The mantra going to be ‘Mobility-as-a-service’ or ‘Commuting-as-a-service’
- Putting a strong focus on Omni channel and multimodal customer experience 540°
- To attract consumers, transportation will have to be more personalized.
- Streamlining punctuality, serviceability and reducing costs
- Not only transportation, rather the entire supply chain model has to be multimodal
- Hyperloop trains/submarines and autonomous robot-taxis.
- Building platforms and marketplaces for multi-sided collaboration (Cloud concept)
- Enforcing trust & compliance (cyber securities, fraud reduction etc.)
A global organization having presence across the continents. Maximum focus is on imports as there is zero production in business country. Previously, the supply chain is inventory driven and distribution of goods to customers is warehouse function specific. This led to siloes and decentralised working. As a result lead time in increasing and subsequently dip in service level, finally leading to customer dissatisfaction.
A CONCEPT SHIFT: BRING IN THE CONCEPT OF ‘SUPPLY CHAIN MULTIMODALITY’: RAISING THE BAR
Hereby, organization is looking not only logistics from multimodal transportation to fulfil last mile delivery and meeting OTIF’s but also the entire supply chain function on multimodality. The components of transformed multimodal supply chain organization consists of – workforce, technology, business model, strategy and flow of information. This concept bring in more synergy. The benefits –
- Achieved more than 98% service levels
- Inventory accuracy rate ~ 85% - 90%
- CSAT ~96 – 98%
- Inventory turn improves to 4
- Better visibility across value chain & collaboration across functions
The article has been authored by Vibhore Khandelwal, Manager – SCM, Hafele India Pvt Limited