Extracted from: https://www.businesstimes.com.sg/sme/digital-tools-helping-smes-to-handle-supply-chain-chaos
PHOTO: REUTERS
THE chaos in global supply chains caused by the Covid-19 pandemic has exposed inefficiencies and blind spots in the shipping and logistics industry, which still depends heavily on old-school methods of pen and paper, phone calls, e-mail and faxes.
At the same time, it has shown companies that have embraced digital tools to be more adept at dealing with the challenges that keep popping up.
In December, HEC Electrical & Construction started using a supply-chain digitalisation platform developed by local startup Trames to manage its purchases of items such as electrical switchboards and lights from overseas suppliers.
Previously, the company had difficulty tracking product shipments once they left the origin port. The procurement team’s e-mail and phone calls to suppliers for updates did not receive prompt responses, and physical documents were sometimes misplaced, lost or delayed.
The Trames platform meant that the firm could consolidate all documents in a blockchain-enabled repository and communicate with its partners on a single platform. Director Jarryl Hong noted that a useful feature is the notification sent to all parties involved in a shipment whenever any action is performed.
“Overall, reducing paperwork and the number of e-mail between our partners and us has not only been a great experience, but also improved our operations, enabling us to achieve greater efficiency,” he said.
Having all shipment information in one place also enabled Trames’ customers to quickly identify which of their shipments might have been hit by the Suez Canal blockage in late March and update their clients, said Kevin Lim, chief executive and co-founder of Trames.
He added: “A key lesson from the pandemic is that organisations that have technology deployed into their ecosystems were better able to deal with, manage and be agile to mitigate potential risks.”
Digital tools
The disruptions over the past year even prompted some of the more reluctant logistics players to adopt digital tools.
A mobile app launched in 2019 by Haulio, another local tech startup, experienced 25 per cent quarter-on-quarter growth in up-take in the past 12 months. The Haulio Connectivity System app connects container haulage firms and drivers directly to jobs in Singapore’s port; there are now 500 trucks in its network.
Not only did the app make it easier for the port operator to find truckers to move containers, but it also helped widen the traditional network of haulage service providers.
Haulio CEO Alvin Ea noted that the demand surge for trucks and trailers for port operations coincided with the pandemic-induced lull in construction, which uses the same types of equipment. Seeing an opportunity to use their idle trucks, several construction logistics firms joined Haulio’s platform to offer their services for container transport.
Haulio helped to match 50,000 trips over the past nine months and moved four times more containers for PSA in Q4 2020 than in Q4 2019.
“It helped in the unification of the industry, jointly helping the port to solve a real problem with port congestion,” said Mr Ea. “We saw this as something quite collaborative, not through our efforts alone.”
Despite these small wins, the shipping industry still faces unprecedented disruption that will take more time to resolve. While congestion and delays normally happen a couple of times a year when China’s economy shuts down for long breaks such as Chinese New Year, Haulio’s Mr Ea expects the current disruptions to persist at least until the end of the year; they could worsen if other countries face more lockdowns in response to resurgence of the Covid-19 virus.
The next two weeks will likely see significant congestion in Singapore, as it is usually the first stop in Asia for east-bound vessels and will soon receive the first wave of ships that made it through the Suez Canal.
Vessels are expected to “dump” some of their containers here, as they have already been doing over the past few months, in a strategy of skipping certain ports to catch up with their original schedules. This will strain the supply of space and equipment to store and move the containers, said Mr Ea.
While some of the shipping industry’s woes will persist until the pandemic is brought under control, getting more players to adopt digital tools would help to solve several issues currently faced.
Trames’ Mr Lim noted that the assorted modes of communication cause delays in sharing critical information, leading to scheduling issues and additional charges. Trames estimates that administration fees in international trade and transportation can cost a company up to 20 per cent of its actual freight costs.
To help more small and medium-sized enterprises (SMEs) digitalise their supply chains, the startup launched a simplified version of its software solution last Friday. The solution will provide SMEs with a blockchain-enabled digital-document repository, supply-chain visibility, a free-trade agreement advisor and cross-enterprise workflow and collaboration.
The cost of using the platform will be charged to the company that creates the shipment, while the rest of its supply chain partners can use it for free as guests. In the initial phase, early adopters will have their monthly subscriptions waived.
Getting all vendors and suppliers to use a unified platform will help to improve visibility for better planning and efficiency, said Mr Lim. In the future, the electronic documents could be used to obtain trade financing or conduct transactions without the need for paper documentation.
Trames is working with the Infocomm and Media Development Authority to make this a reality through TradeTrust, a project to set up globally-accepted trade process standards and frameworks so electronic trade documents can be exchanged in a secure manner on a public blockchain.
Transshipment hub
Haulio wants to get more hauliers to digitalise so they do not get left behind as the shipping industry evolves. Mr Ea noted that Singapore will need its local players to keep up with the pace of digitalisation in order to maintain its competitive edge as a global transshipment hub.
Haulio’s other projects include Internet of Things integration and a pooling concept for container trailers, so that the resources can be digitised, tracked and shared more easily within the industry.
“The challenge in the future would be (for Singapore) to stand out and continue to remain the global transshipment port of choice,” Mr Ea said.
“I see the potential threat that (neighbouring) ports pose to our country. We really have to move towards using digital solutions because that is the first way to start differentiating our services, to start to bring us from archaic to something that can value-add.”
Companies that do not adopt technology will miss out on opportunities to optimise their operations and will struggle to expand, said HEC Electrical & Construction’s Mr Hong. For instance, the rising cost of labour means that simply employing more staff to expand is no longer financially prudent.
“Digital tools will grow to become more a necessity rather than a luxury. As we continue to grow our business, operations will need to keep up – and this could mean inefficient allocation of limited resources within our company,” he said.
“Digital solutions will be important to ensure we keep our operations lean and costs low, while being able to scale unhindered. Most traditional industries have been slow or even resistant to digitisation, but to ensure continued survival and growth, we see the adoption of digital tools or solutions as a crucial necessity.”