In response to:
The article does a very good job of outlining what a no show or overbooking is as well as the potential solutions many in the "log tech" arena have put forward as potential solutions. But, what seems to get lost in these discussions is the fact this is not solely a logistics problem, it’s an entire Supply Chain problem with logistics feeling the repercussions. Don’t get me wrong, as Co-founder of SimpliShip, I absolutely love the fact that there are companies out there trying to solve the no show/overbooking problem but I'd suggest rather than simply implementing new "fees" (does international shipping really need a new fee?) we tackle the root cause and use a combination of common sense and technology to bring us closer to a more efficient end game.
I've spent a considerable amount of time facing this issue from the BCO (Beneficial Cargo Owners) side for both large and small companies which is why I believe it's essential that those trying to solve the problem truly understand why this isn't simply a logistics problem.
In order to dig a little deeper let’s take a look at the potential solutions mentioned in the article:
- This is an ongoing joke on the BCO side when presented as a solution. Why? Because of course we need better forecasting, every shipper understands that. But there is only so much a forecast can do for an organization. The forecast starts with sales and turns into a production plan. Those forecasts and plans are continually revised, literally daily and therefore the logistics plan also needs to be revised. Forecasting is not a static process it's dynamic.
- A BCO isn’t going to ship product to a warehouse if they don't need it just because their forecast called for it.
- Large global enterprises spend enormous amounts of time and money every year tackling demand variability to gain efficiencies and reduce costs in their supply chain. Unfortunately, the information is just not accurate enough to solve the no show/overbooking problem especially in the FMCG industry. Anyone who has been on the BCO side will tell you that forecasting is just that, "forecasting".
- More accurate forecasting can certainly help the Carriers with equipment allocation but as a solution for the BCO's to eliminate no show bookings, I just don't see it.
Penalize the BCO or Carrier
- This is not the airline or hotel industry, Supply Chain planning is not nearly as straightforward, it's complex and messy.
- I’d love to take those that are in favor of this solution on a field trip around the globe to experience a real live end-to end Supply Chain. Had I not quit my comfortable job with a BCO to start a digital supply chain start up, I may actually be able to afford it, but I digress.
- An end-to-end supply chain is not just logistics and transportation. It’s not just booking a container and trying to make a cut off at the port. It's forecasting, planning working with T1 and T2 suppliers, manufacturing and so on. It's complex, it's messy and it doesn't begin when a container is booked and end when it's loaded or not loaded on a vessel.
Instead, the potential solution to the problem is for BCO's and their carrier partners to focus on mitigating the impact of ever changing shipping requirements and not simply cancelled bookings. Many enterprise shippers have a sophisticated ERP infrastructure as well as connectivity with their supplier and logistics partners. Over the last few years the enterprise companies I worked for had moved towards electronic bookings that were connected to their ERP infrastructure. The point is, the technology that can be used to improve the process exists, it's just not being utilized.
Let’s take an example, The BCO issues a PO to their supplier. The supplier in turn works with all their raw material (T2, T3, etc) suppliers to get delivery dates. The main supplier then goes into their supplier portal (connected to the BCO’s ERP) and confirms a ready date of 3/1. Let’s now fast forward to 2/22, the supplier electronically books a vessel cutoff of 3/4. During final inspection the supplier realizes there’s too many defects in their production and they must adjust the cargo ready date to 3/5. The software should be smart enough to cancel the booking automatically as the new ready date will not allow for the supplier to meet the booked cargo ready date. Obviously, this is just one of many cases where a cargo ready date would need to be adjusted but it can be played out in many different scenarios.
The bottom line is that the data is available and we truly believe that technology is the key to helping both parties mitigate a situation which impacts both the BCO and the Carrier’s profitability. We do not think that penalties are the solution but rather breaking down data silos and making that accessible and actionable.
I’d love to hear more thoughts and comments from the BCO’s and the other major supply chain stakeholders.