Penske Logistics

Beyond Technology Table Stakes: Executive Insights for Tech-Enabled Supply Chain Management

Technology is transforming the supply chain, bringing greater visibility, increased efficiency and more control. As a result, shippers and their logistics providers are becoming more agile, flexing to meet shifting supply chain needs and reducing operational costs.

The type of technology used in supply chains is changing rapidly, and shippers have varying levels of sophistication and needs surrounding technology adoption, configuration and implementation. However, it is clear that technology is serving as a competitive differentiator and boosting supply chain performance.

Nearly all respondents in the 2024 Annual Third-Party Logistics Study— 87% of shippers and 94% of 3PLs — agreed that adopting emerging technology is critical to future growth and overall success. The study found that the main reason for investing in technology is to improve process efficiency and productivity followed by reducing operational costs and improving visibility across the supply chain.

Andy Moses, senior vice president of sales and solutions at Penske Logistics, said it is essential for technology to solve specific problems. “You don’t want to waste a shipper’s time on a shiny new object if there isn’t a practical application short- or near-term,” he added.

The 3 Main Areas of Focus

Three key areas technology addresses are supply chain optimization, resiliency and efficiency.

1. Optimizing Supply Chain Performance

The stresses impacting logistics networks today are significantly different and more challenging than five years ago, and overall improvement is a priority for supply chain professionals. Data, advanced analytics and intelligence are some of the most important emerging technology areas shippers and their logistics providers are using to optimize performance.

The Gartner for Supply Chain report The Top Eight Supply Chain Technology Trends found that the majority of supply chain professionals taking part in the survey said their organization is improving technologies to support end-to-end processes and has benefited from improved data rationalization and process integration capability.

Shippers and their logistics providers can optimize supply chain performance in multiple ways:

Network Design

A network’s overall design directly correlates to its efficiency. Modeling software can draw on shippers’ supply chain data — such as varying levels of inventories, costs, modes of transportation and sourcing locations — to model the most efficient scenarios. Shippers and logistics providers can also use data to pinpoint the weakest links in the supply chain and establish ample workarounds in anticipation of disruptions.

Real-Time Decision Making

Supply chain technology can leverage real-time data and analytics to provide insights into performance metrics, inventory levels, delays and potential disruptions. This allows businesses to make informed decisions, identify areas for improvement and proactively respond to shifting conditions. The Council of Supply Chain Management’s 2023 State of Logistics Report found that 3PLs are nearly twice as likely to provide real-time data on items in transit compared to their shipper counterparts.

Automation

Artificial intelligence and machine learning can automate tasks and decision-making that have historically relied on human action. Shippers participating in the 2024 Annual Third-Party Logistics Study reported that they see the most value in automating supply planning, demand forecasting and inventory management. Additionally, almost half of respondents said they have plans to automate decisions, with 25% of shippers and 27% of 3PLs saying they’ve already started to automate low-risk decisions.

2. Resiliency in the Face of Supply Chain Disruptions

Resiliency in the supply chain has become a cornerstone principle as shippers work to keep up with consumer purchasing patterns, global unrest, transportation challenges and potential supplier shortages. Increased visibility, greater access to data, artificial intelligence and machine learning are enabling shippers to see what is happening across their supply chain at any time, helping to reduce and mitigate disruptions.

“With disruptions, there is an inverse relationship between when you become aware of the disruption and when you react, which impacts the availability and cost of the solution. The bigger of a surprise and the shorter amount of time you have, the more it will impact you,” Moses said.

When there is a risk of disruption, real-time visibility allows for a rapid response and enables shippers to make data-driven decisions. For example, systems can overlay weather patterns and traffic information to identify potential disruptions, allowing shippers to pull materials ahead or reroute shipments.

Among respondents in the 2024 Annual Third-Party Logistics Study, 74% of 3PLs indicated that using predictive analytics — the leveraging of historical data, statistical algorithms and machine learning — had the greatest potential for their organization. Additionally, the Top Eight Supply Chain Technology Trends report found that through 2024, 50% of supply chain organizations will invest in applications that support AI and advanced analytics capabilities.

“It is clear that this merger of man and machine is going to do great things for the business community,” Moses said. “People can’t sift through millions of data points like sophisticated tech algorithms can. On the other hand, the tech itself can’t make a final determination. It is figuring out if there is a problem to be solved or not.”

Predictive analytics assesses risk factors that may impact the supply chain. Early identification of potential risks allows companies to develop contingency plans, diversify suppliers and make informed decisions to mitigate the impact of disruptions on the supply chain.

Visibility and analytics also enable better decision-making around inventory, which is expensive. The 2023 State of Logistics Report found that $759 billion of the $2.3 trillion in business logistics cost is now associated with inventory management. The goal is to hold as little inventory as possible, but enough so it stays in stock.

Visibility allows shippers to source critical stock from the right locations, make data-driven decisions about moving products, and avoid out-of-stock items. Similarly, predictive analytics can improve demand forecasting and inventory management.

3. Increasing Efficiency

Optimizing networks, streamlining processes, increasing visibility and utilizing data to make critical business decisions all contribute to increased efficiency. Solutions like supply chain control towers that combine people, processes, data and technology into a single, panoramic view of supply chain operations can streamline communication and uncover opportunities for improvement.

On a tactical level, data can drive strategic decisions on a weekly or monthly basis. For example, greater visibility could show there are two shipments of the same items scheduled just two days apart. Systems that allow logistics providers to run what-if scenarios can help shippers determine what would happen if they held the first order.

Information can also be used more granularly for increased efficiency. Route optimization (the efficient sequencing of stops) and dynamic routing (changing delivery schedules on the fly based on the current conditions) reduce transportation costs, enhance delivery efficiency and minimize delays, contributing to a more reliable and cost-effective supply chain.

Efficiency improvements also contribute to supply chain sustainability. The greenest mile is one that isn’t taken. Route and network optimization improves utilization, eliminating miles, decreasing fuel consumption and removing carbon emissions. Software can also help companies match backhaul capacity with available loads, filling miles that otherwise would have been empty.

In today’s operating environment, stakeholders, including consumers, seek specific details on how companies reduce their carbon footprint; technology can help shippers and their logistics providers measure and quantify improvements.

Finding the Right Solutions

As consumer expectations and business demands increase, the importance of supply chain technology will only intensify. Leveraging the latest supply chain technologies creates a more agile, responsive and efficient supply chain, reduces costs and improves service. It is essential to utilize solutions that provide value, and supply chain leaders need to thoroughly identify, research and evaluate solutions.

Moses said 3PLs get to see technology play out across multiple industry verticals, which gives them valuable insights. “There are many different emerging technologies in the space. What customers really value is someone knowledgeable across the spectrum that can point them toward something commercially viable today versus something that may have promise two to three years from now,” he explained.

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Emerging Technologies Are Shaping the Future of the Supply Chain

Technology is advancing at a rapid pace, and supply chain leaders are investing in emerging tech solutions to improve business operations, optimize processes and enhance sustainability. As a result, supply chain models are undergoing a profound transformation, and logistics providers and shippers agree that several technologies are not only changing operations today but also hold significant potential for their organizations.

The 2024 Annual Third-Party Logistics Study found that nearly all respondents — 87% of shippers and 94% of 3PLs — believe emerging technology adoption is critical to their company's future growth and success. They are also aligned on their top reasons for investing in technology — improving process efficiency and productivity, reducing operational costs and improving visibility.

Predictive Analytics

Predictive analytics bring a sophisticated, data-driven approach to the supply chain, allowing supply chain leaders to shift from historically manual processes to automate and inform core supply chain functions. Analytics are improving processes and decision-making related to inventory management, demand forecasting, network optimization, efficiency, risk mitigation and resilience.

In the Annual Third-Party Logistics Study, 74% of 3PLs said predictive analytics has the most significant potential for their organization. Andy Moses, senior vice president of sales and solutions for Penske Logistics, said the technology helps 3PLs mitigate supply chain disruptions, which is essential to their work.

“Shippers are looking for 3PLs to perform at a high level every day, particularly how they perform on out-of-the-ordinary days when there are disruptions in the supply chain or volume surges,” Moses said. “Predictive analytics that help a 3PL get out ahead of those are invaluable.”

Warehouse Automation

3PLs also value the potential of warehouse automation, robots, wearables and mobile technology. Within the warehouse, technology can help boost quality, productivity and safety and plays a valuable role in maximizing labor, which has taken on greater importance as the number of warehousing jobs in the U.S. has increased. More importantly, technology can enhance the overall labor experience, handling repetitive or dangerous tasks while increasing safety and creating more flexibility in the workplace.

Warehouse technology has become more accessible as costs have decreased. At the same time, labor costs have increased, making it easier for companies to justify the investment. Additionally, more technology suppliers offer automation solutions via a robot-as-a-service (RaaS) costing platform.

Specific warehouse technologies that are proving useful include:

Autonomous mobile robots that automate the movement
Storage and retrieval of goods in a warehouse
Wearables, such as headsets and smart glasses that direct employees to pick locations
Radio frequency scanners that can be positioned throughout the warehouse to direct employees and ensure accuracy when stocking and selecting products

Supply Chain Control Towers

3PLs and shippers taking part in the 2024 Annual Third-Party Logistics Study aligned closely on the role of supply chain control towers. Of these participants, 44% of shippers and 48% of 3PLs listed them as one of the most important emerging technologies.

Shippers often have disparate purchasing, warehousing and transportation systems. Control towers unify all systems on a single platform, providing an in-depth view of the full supply chain rather than its parts so shippers and 3PLs can collaborate more effectively.

Control towers also play a critical role in the use of machine learning and artificial intelligence. Having comprehensive, connected data will help ML and AI predict workflows, improve decision-making, anticipate potential disruptions and offer solutions. “AI is going to transform a lot of things in trucking, fleet maintenance and logistics,” Moses said. “The merger of man and machine is going to do great things for the business community.”

The Need for Collaboration

The 2024 Annual Third-Party Logistics Study also found that logistics providers are investing more heavily in technology than shippers and have more scale to support heavier investments in technology. However, they work closely with their customers to determine their needs and introduce the most effective solutions.

Moses said 3PLs see technology play out across multiple industry verticals and can help shippers understand the possibilities and configure technology to meet specific needs. The Annual Third-Party Logistics Study found that 83% of shippers and 79% of 3PLs said they’re already working together on tech solutions or plan to going forward.

To learn more about how technology can drive down prices, optimize entire networks and automate decision-making, contact us.

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Data Integrity Drives Operational Excellence in the Supply Chain

In a supply chain, every decision depends on data, so data integrity is critical. Accurate and timely data ensures supply chain partners hit their targets, comply with internal processes, make informed decisions and streamline processes while controlling costs.

“Accurate and timely data allows you to make educated and smart decisions about your business. If the data is inaccurate, it portrays a different truth than the reality. In some cases, this can have a dramatic impact on results,” said Vishwa Ram, vice president of data science and analytics at Penske Logistics.

The Importance of Data Quality and Monitoring Tools

In the 2024 Annual Third-Party Logistics Study, more than half of respondents — 57% of shippers and 52% of third-party logistics providers — said they’ve experienced issues with data quality. Managing data is especially important for logistics providers, who often draw on their customers’ data but are significantly impacted if it’s incorrect.

The report found that third-party logistics (3PL) providers are more likely than shippers to leverage data monitoring tools, use IT staff to check and resolve data quality concerns and have built-in data monitoring capabilities that automatically detect and notify stakeholders of data quality issues.

Potential Setbacks in Data Quality

Without accurate and transparent data, a business can experience any of the following, which creates more work to resolve.

Lack of Trust

Errors and missing or inaccurate data all harm data integrity, and one of the most obvious identifiers of bad data is a lack of trust. “If you do not have confidence in the data and information generated from the system of record to make business decisions, then you probably have a data integrity issue,” said Rowland Myers, vice president of DCC strategy and support services at Penske Logistics.

Human Error

Penske Logistics has established key measurements to ensure data accuracy and has several methods to verify data, depending on the source. Myers said the validation process starts at the beginning. “From an accuracy standpoint, we can confirm that it was put into the source system correctly,” he explained, adding that some of the biggest challenges center around areas where human touchpoints are needed. “If a driver has to punch a data point into the phone, there is an opportunity for error.”

For example, if a driver needs to hit a button on their phone when they arrive at a location but fails to do so until well after their arrival time, it creates inaccurate information. “If something shows it is out of tolerance, it will flag it, and we can find out what happened. In some cases, the solution is better training to create habits that drive accuracy and timeliness,” Myers said.

Ram said machine data capture is always more accurate than human data capture. “We’ve done a number of things to turn as much of our data capture as possible into machine capture, but we’re always going to have humans involved, so we do have to focus on the human element,” he added.

Missing Data Elements

With information transmitted via electronic data interchange (EDI), Penske has created automatic message processing and business rules. “We look for missing data elements and flag those,” Ram said. “In some cases, we go back to the customer. In others, we are reviewing what the data should be.”

Missing data — a misalignment between what is needed and what is available — can be a process error or a case of something not being captured. “For example, if a customer doesn't provide data, it is hard for us to give them an accurate analysis on the cube of their trailer,” Myers said. “We may have to go back and understand the requirements to start tracking additional information, or we can quickly show how to improve the data through process rigor or additional training.”

Automation can also improve data timeliness, which is critical in supply chains. “If you don’t get it in real time, it loses its impact,” Myers said. “In our business, on time is one of the most sought-after compliance metrics to make sure we’re getting products from A to B. If we don’t have the timely data, you don’t have the visibility to give the customer information.”

Delay in Product Movement

More importantly, real-time data allows logistics providers to mitigate risk and keep products moving. “We want to be proactive and let the data predict an issue before it happens,” Myers said.

It isn’t enough to just capture information. It must also be transmitted to everyone who needs it. “If somebody is sitting in LA traffic and is going to be late in Denver, capturing that information in real time, sharing it to our various systems and sending a message to a customer isn’t something that is trivial,” Ram stated. “Even though we as a society have come to expect these things, it still remains a complex endeavor. We have invested millions of dollars in the right systems, architecture and analytics to make it all happen.”

Data Integration Barriers

There are countless data points in today’s operating environment, which is why architecture is critical. “We have to funnel that information into a single place accessible to all parties to get the single source of truth,” Ram said. “We have broken many of the integration barriers and integrated with a lot of vendors and technology providers over the years.”

According to the 2024 Annual Third-Party Logistics Study, integration barriers are among the top challenges shippers and 3PLs face when sharing data. “A lot of our customers have had those challenges, and one of the reasons they come to us is because we have expertise in integrations,” Ram said.

The amount of data generated within the supply chain continues to increase, and future success depends on having the right platform to absorb all data sources, including streaming data, which is also on the rise. “Getting streaming data is not easy if we’re not architected correctly. That is how we’re making systems future-proof,” Ram said.

The Future of Data Integrity

As technology changes, it will be necessary for systems to identify which data is human-generated and which data points are generated by artificial intelligence. “We also have a lot of data in an unstructured format. Being able to capture that and generate meaningful insights from it is a huge undertaking. From a technical standpoint, that is different from what we’re used to,” Ram said. “The key lies in developing an overarching strategy to integrate our processes and technical capabilities to unlock business value.”

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supply chain technology

The 3 Main Areas of Focus

1. Optimizing Supply Chain Performance

2. Resiliency in the Face of Supply Chain Disruptions

3. Increasing Efficiency

Finding the Right Solutions

Predictive Analytics

Warehouse Automation

Supply Chain Control Towers

The Need for Collaboration

The Importance of Data Quality and Monitoring Tools

Potential Setbacks in Data Quality

Lack of Trust

Human Error

Missing Data Elements

Delay in Product Movement

Data Integration Barriers

The Future of Data Integrity

Machine Learning and Artificial Intelligence

Supply Chain Analysis

Applying New Supply Chain Technologies

Advanced Supply Chain Technology Integration

The Future of Supply Chain Technology

Advanced Load Planning

Checks and Balances

Track and Trace

Load and Product Consistency

Temperature Monitoring

Documentation

Equipment Cleaning

Supply Chain Fluctuations

Penske is Here to Help

Penske Can Help

Overall Logistics Costs

The Role of COVID-19

Increased Safety Stock

The Role of Technology

Penske is Here to Help

On A Safety Mission

On A Safety Mission

Ramping Up and Down

Engineering Efficient Routes

Meeting New Requirements

Attracting and Retaining Drivers

Establishing Trust

Making the Move to DCC