First published in Lloyd’s List on 1st March 2021
SHIPPING and logistics companies have adopted digital transformation more slowly than most other industries. This digital journey is still in its infancy, and many companies are struggling with manual processes, inconsistent data, and old, fragmented IT systems.
The reason why transformation fails is contested; some claim the shipping industry is ancient, conservative, and too complex to change — while others claim we have not yet seen robust enough innovation to empower the much-needed change.
No matter the reason, the fact remains that the industry is out of sync with the world’s technological advances and now is the time for this upgrade. The method is integrated IOT solutions built bespoke for shipping.
Large shipping and logistics companies all place digital transformation at the top of their agenda, but their progress has been too slow.
Internal actors try to make their mark by challenging the status quo and driving change. They invest in corporate venture capital structures and fund digital ventures to get ahead of the competition, but they are often met with the massive challenges that come from automating a fragmented and variant ecosystem. (Venture capital funds injected $20bn into the logistics sector between 2017-2019, a 76% compound annual growth rate since 2014).
Most shipping and logistics companies have accumulated technical debt since their inception. These businesses often run their operations on decades-old IT systems with an overlay of new software solutions that add complexity rather than drive efficiency.
Day-to-day decision-making suffers when data is incorrect, and this results in lost revenue and an inability to drive real operational excellence. Inaccurate inventory information is estimated to cost the shipping industry billions of dollars every year, and this is a costly negative in this highly competitive, low margin business where every dollar counts.
Digital change must be driven from the top of these organisations. This will bring much change to tightly coupled processes and since change brings risk, it must be mitigated.
It is therefore the responsibility of our leaders to push the digital agenda. Failure to do so will result in some shipping companies falling further behind competitors that are embracing change and reaping rewards.
It seems many modern leaders understand this, but exactly how to go about that change is what is most challenging. Therefore, the ability to choose the right digital transformation partner is the difference between success and failure.
Success will be achieved by putting the end-customers’ experience before an organisation-wide agenda of status quo to “keep things the same, so the system is stable”. Success is also not only about fixing the technology but about changing the technology in combination with workers’ operating procedures. Driving change takes time, focus, and deliberate effort to reach the end goal.
To successfully embark on this journey, we need to support all the layers that interact with this efficiency upgrade, aiming to make day-to-day life more manageable for all involved. It is SparesCNX’s experience that successful digital transformation on the front lines comes from a seamless interaction between hardware, software, and improved processes simplifying the IT landscape.
The time for change is now. We are ready, and you are too!