Effective trade data – from pipedream to pipeline
Jul 31, 2018
By Luca Urciuoli, Adjunct Professor at the MIT-Zaragoza International Logistics Program
The four-year, CORE (Consistently Optimised Resilient secure global supply chains) project has concluded. With 70 partners and a budget of about Euro 49 million from the EU 7th Framework Programme this has been one of Europe’s largest R&D projects, and ZLC has played a key role.
The aim of CORE has been to develop and demonstrate ways of maximising the speed and reliability, as well as minimising the cost of fulfilling global trade transactions while at the same time making supply chains more transparent, resilient and secure. At the heart of much of the work has been the concept of the ‘data pipeline’.
Global supply chains generate a lot of data. Supply chain actors need this for the efficient management of goods and assets. In a rather different way government agencies require the same and additional data for a variety of purposes from Customs assessments to assuring product safety, security and tax revenue collection.
Unfortunately, data is too often incomplete, contradictory, erroneous, or simply not available when and where it is needed. Additionally, cargos in transit often fall into a data ‘black hole’ so that important changes from shipping delays to events that may compromise the condition or integrity of consignments are reported late or not at all. This creates additional cost and inefficiency for shippers and their customers, and additional cost and delay because shipments that could, were all the data available, clear Customs and other checks swiftly, may be subject to detention and inspection.
Part of the CORE work has been to develop tools and services, including a Risk Management System (RMS), a Multi-method Threat and Vulnerability Assessment (MTVA) and a Global Supply Chain Visibility Tool (GSCVT) or dashboard. These and other innovative techniques and working methods have been trialled in ten demonstrator or ‘living Lab’ projects, three of which were coordinated by ZLC.
The first of these involved working with BSH Electrodomésticos España on the shipment of household appliances from China to Spain. There were two particular targets: creating the conditions to allow automated transit declarations; and collecting live data to create greater certainty around arrival and delivery times. The latter also involved improving the prevention, detection and recovery of risks and disruptive events.
The demonstrator confirmed the ability to improve prediction of vessel ETAs at Barcelona. This is particularly helpful since ideally goods are forwarded to Zaragoza by train, but there is only one service a week. Miss this, and either goods are delayed and incur storage costs, or less environmentally optimal road transport must be used. Other benefits demonstrated included an improvement in OTIF (on Time In Full) deliveries to customers (reducing penalties paid), significant savings from using an e-platform rather than traditional Customs brokerage, reduced burden on Customs resources freeing them to focus on higher-risk shipments, some reduction in the labour required to monitor traffic, and the potential for significant savings in safety stocks and in-transit inventory through decreased lead-time variability.
To fully benefit, there needs to be a dialogue between shippers and Customs administrations on the best way to exploit these methods. The demonstrator also suggests that Customs brokers may and should develop a new role, perhaps advisory rather than executive.
The second demonstrator with ZLC input involved DHL and a major supplier of aviation spares, particularly in the AOG (Aircraft On Ground) situation, between Spain and Poland. This is of course a very time-sensitive operation, but also one with rigorous security requirements. DHL have taken a ‘Security Control Tower’ approach, which itself monitors embedded devices within containers. These combine a variety of sensors and functions, from GPS to track location and route, to panic buttons and ‘door open’ logging. Statistical analysis of events is being combined in GSCVT and RMS with ‘expert opinion’ and with live data on weather, traffic alerts and security incidents to categorise and manage risk, leading to improved scheduling and planning, and a more effective response to occurrences en-route. All this has created a swifter response to costly AOG incidents.
Rather different in scope was ZLC’s third ‘Living Lab’. This involved working with Procter & Gamble to prove the efficacy of a new approach to temperature control and monitoring in deep sea containers where goods such as foodstuffs require close temperature control but not refrigeration.
A Canadian technology battery-powered rather than powered from the ship, truck or shore was tested. This should create a cheaper and lower-carbon solution than more conventional methods. Half-scale prototypes were constructed and tested, and from a technical perspective were highly successful – the technology coped with all the external temperature conditions, loading and unloading was satisfactory, and the equipment is resilient to the shocks and vibration inherent in container operation. The main challenges of this solution consisted of operating the solution in a closed loop with a suitable back-load as well as finding a significant business case that could justify the capital cost for the equipment.
Although the CORE programme is formally complete, the various Living Labs (including others in which ZLC has not been involved, for example IBM and Maersk working with blockchains) there are plenty of new research paths pointed out for further improvement. The BSH case suggests paths for quicker risk analysis, and also scope for the incorporation of machine learning elements. The DHL demonstrator suggests the need for further work in breaking down ‘silos’, and in ensuring that collaborating functions in the company are actually looking at the same data and making decisions accordingly. Generally, it is clear that there is a need for dialogue between business and Customs and other agencies on how to make the best of these new techniques. This is indeed happening, but we are not here yet.
Further information on, and results from, the CORE programme, can be found at www.coreproject.eu