In our second post in our Ask the Expert Series, where we’ll be speaking with thought leaders and analysts from supply chain and transportation, along with leading carriers and shippers. Recently, we spoke with Adrian Gonzalez, analyst and strategic advisor to high-level executives in manufacturing, retail, third-party logistics, and technology companies. He’s also the founder of Talking Logistics, Adelante SCM, and Indago. Previously, he was an adjunct instructor for Northeastern University’s Executive MBA program.
We asked Adrian 5 questions about key industry challenges and he expressed how the solutions aren’t as simple–or obvious–as many would think.
1. In your opinion, what is the biggest, most, underrated development that’s currently unfolding in the logistics industry?
“We talk a lot about the explosion of data that’s taking place in supply chain and logistics because of the internet, mobile technology, and so forth. However, we still have a data quality problem in supply chain management. Technology is beginning to help on that front, but I think a lot of companies are still not investing in the energy, the focus, and the resources to tackle this data quality problem.
And you know, it’s the classic garbage-in, garbage-out scenario until companies and their trading partners get serious about putting in place the processes, the technologies, and the resources to really address this issue. It’s only going to get more challenging with all of this data that we’re generating today.”
2. The driver shortage is also something that is receiving lots of press these days. What do you make of that? What impact is it going to have over the next decade?
“Great question. The funny thing is that people have been talking about a truck driver shortage for over 20 years and when I talk to shippers, they’re often skeptical. Many of them view the shortage as a kind of a negotiation tactic by carriers and they think, ‘well, if I can get my product from point A to point B, why does it matter?’ And, of course, we both know, it does.
I think if you look at the demographics and trends, certainly you’re having a lot more drivers that are the baby boomer generation retiring and you’re really not bringing that younger generation into the industry. You’re seeing trucking companies raise salaries and provide more benefits to retain and attract drivers. But I think at the end of the day, it’s still going to be challenging when addressed from the talent angle.
In my opinion, I think we really need to have a plan B for this. We really need to be thinking creatively around this and really change the structure of the industry. One idea I put forth–and it’s just an idea, but what if drivers became a shared resource? So instead of drivers working for a particular trucking company, they are assigned to a geographic region and they drive a certain amount of distance. When they arrive at a drop off point, another driver would pick up, take that load and continue the journey, and then that driver that brought it there originally takes a load back toward their home and they get home every night. So, you know, is that a viable model? I’m not sure, but I think it’s those types of ideas we have to start brainstorming and considering.”
3. That’s smart, out-of-the-box thinking. But who, in your opinion, is responsible for leading the charge to change the industry at a macro level?
“Ultimately and unfortunately, there’s got to be some catalyst to make this work, and I don’t we’ve gotten to the point where it’s become an emergency. We’ll have to reach a point where rates go up significantly because carriers are not going to be able to add more capacity since there aren’t any drivers out there.
When we reach that point, the leading players in the market will need to form some kind of association to think through an industry-wide solution. Right now, everyone’s still just competitors, but if we get to a breaking point, they’re going to have to start collaborating in a pressing, serious way.”
4. Speaking of shippers taking the lead, how do supply chain enterprises become best-in-class? Specifically, how do they plan and decide for the right kind of innovation? With all the noise out there, how do they decide which technology investments are truly worthy of their time?
“Ultimately, the most important thing for companies to do is not to become enamored with technology just because they see it in the headlines of some magazine or on a blog post. They need to clearly define a business problem or opportunity that they’re looking to address. Any kind of investment in technology or initiative really has to be tied to a business opportunity or a business problem that you’re trying to address. You have to clearly define what that is and put some metrics and objectives around that.
And I think the same is true with a lot of enterprise systems companies have–transportation management systems or warehouse management systems or similar solutions. In many cases, they’re really only using you know a fraction of what those systems provide and have never taken the time to really explore what those other capabilities are. So, look in your existing technology investments and tools and see if they can help you address those opportunities and problems. If the answer is no, then shippers should explore new solutions that close those gaps, or provide new efficiencies.”
5. Finally, there seems to be a big talent gap in the industry for shippers as well as logistics companies alike. How do we solve for that talent gap?
“Certainly, the type of skills, knowledge, and educational foundation that’s required today to succeed in supply chain and logistics is changing. It’s different today than it was 20 years ago, when I first got started. But in order to really bring in and retain the right people, I think two things need to happen:
One, there needs to be better collaboration between the supply chain function within companies and their human resources function. I think a lot of times, HR needs to be better educated about what supply chain is and what skills and capabilities are required, so they can better than do their job in promoting their company and finding the right candidate. Vice versa, I think supply chain needs to work with HR and understand how HR processes works and how to better define and communicate what capabilities they’re looking for.
I think the second [factor] is collaboration between companies and universities. We’re seeing more of that over the years but I think a lot more can be done. Folks are coming out of college or university for supply chain but they’ve never used a transportation management system before. They’ve never used or been exposed to some of the solutions that folks will need to know once they get into the workplace. Companies should help universities better tailor their curriculums to create that exposure earlier on.”