Historically, the lion’s share of IT investments have focused on improving existing business processes or supply chain workflows, making them more efficient, with building programmes for internal teams. Taking different tech stacks with different information and connecting companies together takes this to a whole new level and creates a lot of change.
Slack is a great example of a tech stack with very strong APIs – the application programming interface is a self-enclosed programme with hooks or doors. Anyone can take the APIs and write their own programme depending on how people want to connect with it. They made it very easy for people to connect other programmes with Slack, such as Zoom. This is very much an external play, connecting more players through Slack, rather than improving the way that Slack functions.
APIs, meet global freight
Some of the bigger B2B SaaS (software as a service) platforms also use API integrations, such as Salesforce for managing sales, extending from software that users interact with to unseen technology that connects companies through different platforms. There were many customer relationship platforms before, but they can now connect to almost anything – so for supply chain, Salesforce is connected to transport management and procurement software.
This makes a lot of sense. Fintech companies, which used to be very insular, have also realised they need to embrace interconnected tech stacks. For example, Paypal’s integration with eBay was one of the primary drivers of its initial success.
It’s happening slowly in supply chain and logistics, as many of the players still don’t have their own internal technologies set up. CMA CGM recently set up their own API so shippers can connect into their system to book a container, all from within their own technology stacks. Maersk is now putting everything online, but it’s very early days. Freightos is building piping for freight pricing, booking and management, so that carriers and freight forwarders can connect with each other. This is a prime example of API’s potential; a freight forwarder could book cargo space across more than thirty airlines, while both the airline and the freight company book and manage then transaction in their own platforms.
This same power of integration extends to smaller companies as well. On the Freightos platform they can upload all their pricing by leg between any two points in the world. Shippers can connect with different suppliers around the world, see the freight prices and work out the best way of shipping their products. APIs can also be used to track goods and can, for example, identify congestion in ports, where transit time will take longer.
The fundamental change that APIs have introduced to nearly every industry is quite clear. However, for logistics professionals, shifting to this approach is challenging.
Internal tech stacks in the industry rely on complicated layers of commercial relationships between carriers, layers of resellers and shippers, even though it’s ultimately a box on a boat which must get to its destination on time.
When everything is opaque, with too many layers, how do you control anything? How do you hold people accountable if everything is done manually through multi-layer contracts? How do you untangle this? There are no cancellation fees, so how do you avoid overbooking? Without a cancellation fee there is very little visibility into the supply chain, so the carriers overbook to compensate, pricing is affected and the big companies win. If everything is traced back to the shipper, the government can start regulating it and the whole process becomes more effective.
In summary we need to get to the point where bookings are happening transparently and predictably, then we can start holding people accountable. Anything we can do to simplify the business environment around logistics will create massive change. Using interconnected tech stacks efficiently will have a big effect on reducing emissions in the logistics industry, as transparency is the first step towards any kind of sustainability.
Source: Foundation for Future Supply Chain, November 16th, 2021
Author: Julia Swales