Published by American Shipper
By Philip Spayd, Luca Urciuoli and Stephen Miles
Kudos to Eric Johnson for his insightful article in the October 2015 American Shipper, asking if there are new and better ways of communicating essential data among the participants in international supply chains—“A New Communications Pipeline?”
Substantial progress has been made in recent years in supply chain management as it has emerged from a disparate set of functions—logistics, transportation, warehousing and a host of others—into a more coherent set of supply chain practices that are recognized as a key strategic aspect of a firm’s overall performance. But much work remains to be done. EDI, which has served as the information technology infrastructure for automating international trade transactions, may no longer have the capabilities to underpin the dynamic needs of disseminating real-time information in effective supply chain management.
As a corollary to Johnson’s observations about the limitations of EDI, the executive summary of the American Shipper study, Import Operations and Compliance Benchmark Study: Eyes Wide Shut, finds that most firms are fixated on limited cost metrics, and that compliance departments in many firms tend to be small, and “It is clear that compliance personnel are underutilized assets in a company when it comes to leveraging their expertise across other departments.”
These topics and many others are the subject of research under the EU-funded “CORE” project—Consistently Optimized REsilient Secure Global Supply Chains. CORE, supported by about 50 million euros, has 77 partner organizations from academia, government and industry. CORE covers a wide range of logistics scenarios divided into 22 work packages relating to supply chain security, efficiency and resiliency. It is driven by the requirements of:
- Customs, law enforcement authorities, and other agencies nationally and internationally to increase effectiveness of security and trade compliance, without increasing the transaction costs for business and to increase co-operative security risk management.
- Business communities, specifically shippers, forwarders, terminal operators, carriers and financial stakeholders to integrate compliance and trade facilitation concepts like green lanes and pre-clearance with supply chain visibility and optimization.
The Zaragoza Logistics Center (ZLC) of Zaragoza, Spain, is one of the participants in the CORE project. ZLC is working with other organizations in the CORE project to develop Automated Programming Interfaces (APIs) driving the exchange of data in the form of micro-services and fine-grained processes that organically mimic true business-to-business and human processes through which dynamic supply chain data from a wide range of less-than-truckload carriers in a firm’s international supply chain enter and receive dynamic data such as shipping rates and shipment status at any point in time, etc. Within a shared API architecture we envision common sets of risk management criteria that will allow firms to improve risk assessment within supply chains. Access to shipper information via APIs by the customs administration may obviate the need for the filing of specific customs documentation for each shipment, and thus greatly reduce the uncertainty related to customs release times.
There is an important architectural shift in the way we communicate in the “Internet of Things” that offers a way to address the inconsistencies caused by incompatible or inflexible data systems created at an earlier, pre-Internet time. The concept of the secure data pipeline, where SDOs (Standards Data Organizations for specific industries) require advance notice of “who wants to communicate what,” is being supplanted by XML or JSON common data models that are extensible so as to accommodate individual supply chain variants that can be queried via APIs.
In terms of improving cargo arrival forecasts, our approach builds upon the identification of risk management solutions for improving supply chain visibility and the identification of risks involved, and create APIs to alert the shipper of potential problems so the company can take mitigating actions: in a preventive manner, by improving risk visibility and situational awareness, or reactive, by enabling real-time detection of unexpected events.
These concepts developed under the CORE projects will be applied and tested within a series of “Living Labs.” A Living Lab is a test environment where complex and innovative technologies are developed and tested in real-world operational systems. This allows the participants to thoroughly test the new processes before decisions are necessary for long-term investments in new technology are made.
Philip Spayd
principal,
Global Trade Systems,
Virginia Beach, Va.;
Luca Urciuoli
Zaragoza Logistics Center,
Zaragoza, Spain; and
Stephen Miles
Cambridge, Mass.
