The air cargo business never had a reputation as a technological pioneer, and years after most businesses have switched to APIs, holdouts in the business still use electronic data interchanges (EDIs), a technology first developed in 1948, to share data. But with rising demand for full visibility and the promise of e-commerce traffic, that disposition is changing fast.
DXC Technology is a technology and consulting company that has worked with airlines such as Lufthansa designing and implementing open API. Air Cargo World talked with two DXC executives – Michael Deittrick, chief technology officer, and Adam Roark, offering general manager – about optimizing supply chains for freight and logistics providers, and how logistics companies can identify technology deficits and structure their response.
In an industry marked by boom and bust, they said, logistics companies must make better use of data to make strategic choices that can carry them through downturns, and position them to take advantage of new trends.
Q: How can freight forwarders identify their technology deficits?
Michael Deittrick: Freight forwarding companies should begin by asking themselves, “Have we embraced a 21st-century microservice design and delivery model, or are we still running monolithic applications?” Because today it’s all about reducing your run costs by implementing agile practices and increasing your investment in both growth and transformative technologies.
Leading industry analysts estimate that many freight and logistics companies now spend as much as 80 percent of their traditional IT budgets on day-to-day “run the business” types of operations. Instead, they need a shift in strategy to achieve a roughly 60-30-10 [60 percent run, 30 percent grow, 10 percent transform] funding allocation to both meet mainstream expectations and avoid future deficit through continuous growth and transformative investment.
In contrast, many of the world’s leading platform companies operate at 50-30-20… Our clients are adopting what we call pluggable architectures. These “containerize” the business by decomposing the business process into discrete and manageable service compositions and process automations. Rather than installing systems and applications, our clients are building and participating in platforms.
Adam Roark: Many freight and logistics companies are struggling to onboard new customers while simultaneously trying to innovate and operate profitably. They’re so busy with onboarding, in fact, that few have created a technology vision for the future that’s tied to their business strategy.
Q: How can logistics firms better use data to make smarter choices in the cyclical world of cargo?
Roark: One big challenge arises from the fact that many logistics companies work with customers in different industries, each of which may have different cycles happening at different times. Today, very few logistics companies are able to use their data to understand and predict those cycles. Now they can. Plus, they can now start to operate their businesses in a predictive fashion, rather than simply reacting to the cycles.
Deittrick: Logistics companies can do this with industrial machine learning. Using rules-based machine learning, companies can feed heuristic data into the system about their past contracts and associative data relationships. The system analyzes past cycles and then produces recommendations on how the company can handle new cycles in the coming year. The same applies for markets that are uneven. First, you can take data from both internal and external sources, and then combine it with your company’s key performance indicators. That way, the rules-based engine can analyze data from the past to make recommendations for the future. Then, on an ongoing basis, it can actually adjust those recommendations by monitoring real-time events.
Q: What sort of cloud solutions promote data-sharing along the value chains?
Roark: Cloud, autonomous data and machine learning change the entire way the industry looks at technology. The cloud and related platform services allow companies to focus on new, important questions: How do I drive value? How do I improve my margins? And how do I fund innovation?
The cloud also helps freight and logistics companies stay current and fend off startups. And startups are something the industry should worry about. Startups lack legacy technologies, so they can simply buy into services and start running right away.
Deittrick: In a way, the cloud is nothing more than the enabling context of the data play. It’s basically, “Do I run my own infrastructure, or do I let somebody else do it?” That said, what’s truly great about the cloud is all the services. The cloud enables us to deconstruct the monoliths into discrete services, and these services let us promote data-sharing across every silo and engage across the entire business-value chain.
For more on the role of data in air cargo, join us for Session Six: Best Practices for Data Usage in Air Cargo at Air Cargo World‘s ELEVATE conference, where Michael Deittrick will participate on a panel with other global executives. ELEVATE takes place at the Ritz-Carlton South Beach in Miami, Oct. 2. Click here for registration information.Like This Post