Singapore Manufacturing Consortium

Dedicated to Bringing Industry 4.0 to Singapore and Abroad

Singapore Manufacturing Consortium 

A collection of only the most technologically advanced, industry proven, tested and deployed members dedicated to bringing Industry 4.0 to Singapore and abroad.

The ad hoc Industry in Manufacturing

The ad hoc Industry in Manufacturing

Growing emphasis on increasing visibility.

In recent years, with the advent of globalization, the logistics industry has undergone drastic changes in its management due to the various technological innovations, making the supply chain management more tech-savvy.  This is coupled with the surge of ad hoc B2B logistics services required by various companies. In other words, an increasing number of companies require shipment to be procured on the spot.

With a rise in on-demand production, including just-in-time production, fluctuations in demand and supply, as well as irregular shipment requirements, imposes a significant challenge to planning, which is the primary concern for supply chain management. This concept of ad hoc freight is gaining popularity due to more complex products, shorter product life cycles as well as more supply chain nodes in remote locations.

According to Seabury, in 2013, international express airfreight has grown by about 5%. The US$50 billion industry includes service modes such as hand-carry, priority airfreight and regular airfreight, where the top 20 Air Freight Forwarders handles 42.3% of it.  In addition, the market is dominated by intermediaries, primarily because customers lack awareness of alternative solutions or do not have the resources to explore alternatives.

Facing this problem, the logistics industry is constrained due to the lack of innovation where majority of the providers are good at just a few routes while other routes are subcontracted to other providers. High prices, service failures and poor communication are few of the many problems that the ad hoc freight industry currently faces. A case in point is General Motors who spends about US$1 billion on ad hoc freight despite being aware that they are paying too much. This is coupled with many other companies, such as International Rectifier, that are not aware of their freight location or arrival date. 

As a result, the logistics industry has placed much emphasis on increasing visibility in terms of real-time tracking, allowing companies to trace their orders at any given moment with great accuracy and efficiency. This is essential in reducing response time and ensuring superior customer satisfaction, optimizing the entire value chain. Moreover, increasing visibility brings about better insight into the operations as well as cost savings. For this reason, although end-to-end visibility has become more complex given that shipment is no longer limited to a single country, companies strive to improve their supply chain visibility by investing in additional IT.

However, despite technological innovations, such as real time flight data, where information is readily available, visibility is rare for ad hoc freight as it is conducted out of the system. As such, the market has now provided companies with a few cost effective solutions in response to the growing trend of ad hoc freight and companies have a vast amount of value to gain from these avenues.

In today’s logistics market where on-demand planning is increasing in prevalence, ad hoc freight is inevitable for many companies and with greater visibility achieved, operations will be more efficient. With the right execution strategy, companies could achieve cost savings as well as gain a competitive advantage in the industry.

Author: Wiebe Helder. VP Global Sales Strategy & Development at Cargobase. To contact the author please email press@cargobase.com