‘We don’t intend to lose a single sock’

From the London Olympics to the publishing industry, new technology is rewiring business supply chains, as James Silver reports


From table tennis balls from Uzbekistan to the 18,000 flat-pack beds shipped from Malaysia and China, the supply chain underpinning this summer’s London Olympics is daunting for the company tasked with handling the logistics, and positively mind-boggling for the rest of us.

“The Olympics are the biggest logistics event in the world, followed two weeks later by the second biggest - the Paralympics,” says Alan Williams, director of London 2012 sponsorship and operations at UPS. “People don’t realise the amount of inventory involved. In total, we will have a throughput of about 30 million items.”

Warehousing alone comprises a total of 850,000 sq ft at two sites, from where the aforementioned inventory is fed by a 1,000-strong logistics team into 150 vehicles and delivered to the 34 venues. “If you turned all the venues upside down, we’re responsible for every single item that would fall out, apart from people and horses,” he says, echoing a phrase that’s used on the company’s website.

UPS, whose brief even stretches to couriering athletes’ doping samples, claims to have had a “zero failure rate” at the 2008 Beijing Games and confidently declares that it doesn’t “intend to lose a single sock” this time either. So that pledge does not return to bite them, a raft of new technology is being deployed. UPS’s delivery information acquisition device (DIAD), which electronically captures delivery information, has been upgraded so it can scan multiple mobile channels simultaneously, in case of expected network congestion.

The company will also roll out telematics in its fleet for the first time in the UK, which will be used to decrease engine idle time and provide real-time data on vehicle and driver performance. A dispatch planning system (DPS), meanwhile, will analyse data such as driver delays and automatically create a new plan for the next day.

People can contact a supplier in China they would never have had any way of getting hold of before, because they’re connected to them through LinkedIn

But it isn’t just one-off, monolithic events such as the Olympics which are seeing the supply chain rewired for greater efficiency and visibility. Across industries, soft-ware solutions, alongside increasingly familiar digital technologies such as 3D printing, QR (quick response) codes and RFID (radio-frequency identification) tagging, are allowing companies to create leaner supply chains and strip out costs.

Chilled food and drink distributor NFT is one such firm. In 2011, it introduced new information systems and processes, based on leading warehouse management system Red Prairie and Microlise telemetry, which have been integrated through a Microsoft platform and offer “complete visibility” of orders via the cloud. “Through a single secure log-in screen, customers can access inventory, order status, points of delivery and all information associated with their supply chain,” says Andrew De’Vere, NFT’s director of warehouse operations. “Our vision is to enable complete end-to-end tracking with cost-to-serve and key performance indicator metrics for our customers.”

The push towards ever-greater visibility is a growing trend, says Mr De’Vere, who claims that, next, customers will expect third-party logistics providers to give not only flexibility but also complete visibility. Of other technologies, he considers QR codes to be more futureproof than RFID, in this sector at least, because “RFID requires specific hardware, while QR printing remains a much more cost-efficient option as it is essentially paper, ink and low-cost scanners.”

Although NFT doesn’t yet use social media, there are clear signs that social networking platforms are on the rise in the industry. First, social media influences consumers; a 2011 YouGov survey revealed that 60 per cent of 25-34 year olds are swayed by comments posted on social media sites. Second, according to Michael Lewis, professor in supply strategy at the University of Bath, social media “is already having a profound impact” on the supply chain itself. “People can, for example, contact a supplier in China they would never have had any way of getting hold of before, because they’re now connected to them through LinkedIn,” he says. “We’re seeing more and more people shaping the supply chains around them in that way.”

There is also evidence that supply chains themselves are being shaped around individual sector’s needs. Bespoke or tailored solutions, particularly in niche areas such as publishing, are rapidly disrupting existing models. Tony Leach, director of Virtualized Logistics, the consultancy arm of SBS Worldwide, points to the way his firm reconfigured publisher Wolters Kluwer’s entire supply chain, creating visibility throughout by adapting its own eDC (electronic distribution centre) technology.

“We bespoked our software so the data that we fed Wolters, their distributors, the bookstores and Amazon became very specific to that industry,” says Mr Leach. “I don’t think anyone had ever done that with publishers before. When we looked under the skin of their business, we realised the data they required and the integration of their ERP [enterprise resource planning] systems was very different to traditional retail.” Mr Leach is convinced bespoke, digitally-driven logistics solutions are a trend whose time has come. “I do think aligning to a customer’s strategy and business, which means they can utilise the supply chain as a competitive advantage, is the way forward,” he says.

Having adapted its own technology to Wolters’ requirements and saved the firm an estimated $400,000 in the process, Virtualized Logistics then took its bespoke service to other publishers. It now has a contract with Harper Collins, which alone suggests that Mr Leach may well be on to something.