Kuehne + Nagel exec: 3PLs shouldn’t fear supply chain disruptors

Turloch Mooney, Senior Editor, Global Ports | Oct 14, 2016 8:31AM EDT

Supply chains are too volatile for them to be reliably and fully automated and digitized, the executive said.

SHENZHEN, China — Third-party logistics providers have little to fear from technology solution providers seeking to disrupt traditional supply chain models, according to a senior executive with the world’s largest seafreight forwarder.

While technology solutions are important to help remove complexity and improve transparency, the digitization of supply chain planning and operations can only go so far because the nature of the business requires constant adjustments and intervention, Thorsten Meincke, senior vice president, global seafreight with Kuehne + Nagel told delegates at the TPM Asia conference in Shenzhen.

“A smart supply chain visibility front end is not enough on its own to deliver value,” Meincke noted.

High logistics costs and unreliable delivery are just the tip of the iceberg when it comes to the impacts from a lack of supply chain visibility, with lost revenue, longer cycle times, production downtime, and higher operating costs among numerous other negative effects.

However, Meincke said basic visibility was not enough to deliver value because information beyond shipment-level data is needed, the reliability of data can be questionable, and because for visibility to really add value it shouldcover more than the transport component.

“It starts with placing orders, managing suppliers and finishes with delivered and paid delivery orders to final customers.”

Effective management of supply chains requires the competency to manage up to 16 unreliable touchpoints and critical milestone management is needed to deliver as promised, he said.

“No customer has a fixed daily volume output and between 30 percent and 50 percent of shipments do not happen as planned, whether they are canceled, delayed, or moved forward.”

Line item visibility, milestone monitoring, dynamic estimated arrival time, and event management are the key components of critical milestone path management by the third-party logistics provider, Meincke said.