In our last post, we discussed how the adoption of ISO standard 18000-7:2008 by the US DoD and NATO as allowed interoperability between different active RFID manufacturers for the first time.
What we didn’t really address is the “so what” factor. Where does this standard deliver value in the supply chain and who is the recipient of that value? After all, a technical standard that doesn’t save money or generate a capability that makes a supply chain more efficient is just an interesting intellectual and technical exercise.
Perhaps the best way to show this value is through an evaluation framework that incorporates the business value drivers for one or more stakeholders in that market, describes the technical and functional solution set necessary to deliver those values, and also addresses the roles of international, national, and/or business standards. The specific market being discussed is the movement of shipments internationally, either in ocean containers, over the road trucks, or by rail. The air freight market is specifically excluded because systems and processes exist that allow the realization of these business values.
This framework describes a total solution and is not limited to a perception that all components are the result of the efforts of one provider. In fact, the reality is the opposite. This framework presumes that multiple players/stake holders in either a formalized alliance or a loose confederation are involved in providing the solution that drives the value to each stake holder. The actuality is that this framework REQUIRES a network of players to be successful; thus allowing a heterogeneous solution with multiple solution provider sources.
Business Value Drivers
There are three key business value drivers for most stakeholders involved with international supply chains.
The first is Shipment Integrity Assurance. Shipment integrity assurance is the determination and presentation on demand of information that confirms that since the shipment originated at the shipper’s (consignor’s) location, it has not been tampered with, and that key environmental aspects important to the shipment’s contents have not strayed beyond pre-determined limits (e.g. temperature, humidity, shock, etc.).
The second is In-Transit Visibility (“ITV”). In-transit visibility is the determination and presentation on demand of information about where the shipment is and where it has been,. Quite simply, ITV answers the question, “Where is my stuff when it has wheels on it?”
The third driver is Cross-Border Regulatory Compliance and Enhancement. Cross-border regulatory compliance and enhancement is all about helping a shipment cross international borders as quickly as possible with minimal delays for inspection, shipment manifest verification, and customs, duties, and regulation compliance.
There are at least four key stakeholders involved in international supply chains; shippers, port or border crossing operators, carrier or transportation providers, and government agencies (e.g. customs, border clearance operations, etc.).
Shippers have the most to gain from each of the three business value drivers. They want their shipments to move through the international supply chain as quickly as possible, but even more important than speed is reliability. They need to minimize the variables that alter a shipment’s transit time. They also want to minimize the costs associated with that movement. Delays for inspections that were not anticipated may add storage and handling fees that were not expected.
Port operators benefit because anything that helps them move a container through their port more quickly than competing ports helps them gain new customers and higher freight throughput.
Government agencies can benefit from having shipment integrity assurance and more automatic communication of the information to their systems. However, they seem to be the slowest to adopt and incorporate the new technologies. Several previous initiatives will be discussed that had government sponsorship but still are yet to take off effectively.
Carriers and transportation providers, except for air freight, are definitely laggards in adopting systems that can benefit from these technologies and processes. They typically have small margins and want others to pay them to incorporate new methods or solutions.
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