Transform your supply chain logistics
5 June 2018
Jeroen Eijsink, President Europe, C.H. Robinson
At C.H. Robinson we believe in accelerating global trade to drive the world’s economy. Using the strengths of our people, processes and technology, we help our customers work smarter, not harder. As one of the world’s largest third-party logistics (3PL) providers, we provide a broad portfolio of logistics services, fresh produce sourcing and managed services through our global network.
In Europe, C.H. Robinson is one of the leading road transportation and freight forwarders with a dynamic network of offices across the region. Our team members there are multi-lingual, skilled at building relationships and focused on serving their customers. The company, our foundation and our employees contribute annually to a variety of organisations around the world. Headquartered in Eden Prairie, Minnesota, USA, C.H. Robinson (CHRW) is publicly traded on the NASDAQ.
Hello, and welcome to Business Reporter's The Future of the Supply Chain Campaign. I'm Alastair Greener.
According to Goldman Sachs, artificial intelligence will bring an additional $25 billion US in profits to supply chain operators over the next decade. AI can process much more data than humans about almost anything, from the weather, geopolitical disturbances, and so on.
By collecting billions of dots, it's empowering decision makers to respond quickly. It may sound like great news, but the flip side is that if this astronomical number was correct, we would be losing $25 billion today, which is unacceptable.
Why are we suffering this loss? How can we turn this challenge into an opportunity? Well, this is what we're talking about today with Jeroen Eijsink who's joining us from CH Robinson in Amsterdam in the Netherlands.
What are the burning issues? Why are we losing so much money today?
I would rather not talk about losing money because I think we're not losing money. We're missing out on opportunity to eliminate waste out of the supply chains, which is a fascinating and interesting thing for us to talk about. Supply chains have always stand for the challenge to synchronise supply and demand, and making sure that we bring the product to the customer on time, and in the quantity of needs at any given time. That is a challenge that we've had forever.
And I think the opportunity that we have is with the new technology, is we can A, predict much better what the demand is going to be, and B, we have a better visibility of where our supplies are so that we can surface it at the right moment at the right time.
OK, could you give us an example of the losses that we've suffered recently due to unexpected disruptions?
I guess what we saw recently in the United States, for example, where we had these horrible hurricanes affecting thousands of other inhabitants and people in the south of the United States. You could see that it had a dramatic effect on multiple supply chains.
A, obviously these people were in need of a lot of goods to make sure that they could make up for all the challenges they were facing. They had to be brought in at a very high pace unexpectedly. And obviously, it also took capacity away from the regular markets that were still trying to flow.
So we, as a logistics industry, stood for a huge challenge of making sure to make capacity available-- on the one hand, to service those people in need. And on the other hand, also making sure that the economy was not necessarily directly affected by these events to keep moving and keep turning. And that within a very, very short period of time without much anticipation.
You're talking about the unpredictability of the environment. Let me challenge you on this. Is the environment unpredictable, or are we failing to do enough with the information that's actually out there already?
I guess it's a bit of both. I think natural events like these-- and these are, obviously, as you mentioned earlier, very spectacular. These are very difficult to predict. However, at the same token, there are a lot of events out there that we do have information about, but we struggle to put that information together and combine it with what we know about our current supply chains, and then decide what effects it would have on it.
Simply because there were so many data points that we had to connect that weren't always in the format that we needed to pull the data together to a form which we could use. We didn't have the computing power to plough through all of those data. So whilst the data points were out there, we were just simply not being able to use them.
Today, with the new technology, we are. The computing power has given us the ability to plough through an enormous amount of data. And our systems getting more and more harmonised in the sense of the way they store data and make data available. So we can use now multiple data sources from various sources, and pull them together to make some sense out of that.
And that is a huge opportunity where we cannot prevent or predict every event. But we can obviously utilise data to in a very short period of time process those information, and draw conclusions on what to do when events occur. And that, I think, is an enormous step change for supply chains and for the logistics industry in particular.
How can we turn invisible into visible? How can we protect the disruptions in opportunities in logistics and the supply chain?
I think the biggest challenge and opportunity is to bring data from various sources within your control so that you can utilise them. And that means you have to open your technology platform up for various sources of data, and share those sources of data. And I think, in an industry that traditionally wants to keep data and intransparency as a competitive advantage, that is a cultural change as much as it is a technology change, I would say. So that would be the first big thing.
The second big thing is that we need to embrace computing power as helpers for making decisions. We have very, very skilled people on our desks that everyday take decisions on the basis of data that are at their fingertips. And now, we can even give them more support to do that. As we say in our company, let smart people take smart decisions by utilising all that information.
And we should see that as a friend, and not as a foe that has basically threatened to take our workplace away. I think we need to embrace that in a positive sense. And that is, I think, the second biggest thing. And again, that's probably more of a culture than a technology change in itself. So those are the 2 biggest things that I think every company has to think about when it embarks on this journey.
Let's talk about CH Robinson now. How do you help industry? And what does your technology actually do?
So I think one of the competitive advantages that we have is that we operate on a single computing platform and a single database globally across all of the transportation services that we provide to the market. That gives us a lot of data to work with. On one hand, it gives us data availability because we have it within 1 source. And that is obviously an advantage that we can use for our customers, so to service our customers in a better way.
The platform is also open, so we can have multiple sources of data feeding our system. And we are also able to feed our systems with our data in order to do that. So that seems a pretty good place to start this journey on.
That's great. But can you give us a few numbers that actually talk about and describe this advantage?
One of the most exciting case studies we have is Microsoft. We work with that company to get full visibility on the global supply chain of their hardware products. And what that really means is that you can basically imagine a big digital map where you can see where the product is, whether it's in the inventory in a warehouse, whether it's in the production facilities, or actually on the ship, an airplane, or with a parcel carrier. And you can basically drill down at stock-keeping unit level, where that particular product actually sits.
We also feed environmental data in, such as the weather or traffic congestion, to start predicting whether the product is actually moving towards its destination on time, or whether it will get a delay. And that information can be used to take decisions to reroute the product or to inform the customer that we have a delay, or any of such kind. Now, we're embarking on a journey to perfect this as much as possible so that Microsoft can give a better service to its customers they're servicing with the hardware products.
Big data, AI, cutting-edge planning and navigating technologies are conquering literally every corner of the economy. So what do you think will happen over the next few years?
I think it is a very exciting time for us going forward. It will accelerate the development of our industry at an enormous pace. Everybody knows what to do in theory. The challenge is to really take it on and embrace it.
That means having an open platform. That means collecting data. That needs processing those data to get to decision making, and have the computers to support us in making those decisions. And we will see with that implementation the efficiency of the supply chains going up fast. And that will be felt with a lower cost base, a higher productivity, and a better service to the customers that are felt.
And if you take the example of the parcel industry, for example, the fact that we can now order in many big cities today, and we got delivered today, and we can actually see when the product arrives at our doorstep is just giving us a feeling on the quality of services that we as customers can expect going forward. And I guess we will see much more of that. And that's really exciting.
Well, that's absolutely fascinating. And thank you for giving us a real insight into the future of the supply chain, and some of the things that we can expect to happen. So hopefully we won't be making quite the same losses that we talking about at the beginning of the interview. Jeroen Eijsink joining us from CH Robinson in Amsterdam, thank you very much, indeed.
Thank you for having me.