Identifying and Maximizing Logistics Capacity in Times of Disruption

Over the past few months, supply chains have been stretched to the limit as demand for medical equipment and consumer necessities has exploded.

This is compounded by the capacity constraints of the distribution network responsible for delivering the goods.

Global Logistics Challenges

In recent times, companies have tried to strip cost out of the supply chain through lean manufacturing to minimize inventory carrying costs, outsourcing of production to contract manufacturers, and offshoring to cheaper parts of the globe. COVID-19 has highlighted the risk associated with this globalization.

Now, with ports either closed or at best running at reduced capacity, and shipowners struggling to change crews to minimize the spread of the virus, we have less seafaring capacity.

This issue is compounded when we look to the air for a solution. Due to travel restrictions and lack of travelers, airlines have grounded thousands of planes which has reduced air freight capacity.

Local Distribution Challenges

At a local and regional levels, we have seen roadblocks at borders and labor shortages that have seriously disrupted supply chains.

As stay-at-home recommendations and orders and are issued, this completely changes the logistics challenges in the way goods are delivered to customers. As well as bulk deliveries to distribution centers and stores, there are now thousands of individual orders to satisfy and deliver to the doorstep on a daily basis. And these are no ordinary orders; to the customer they become lifelines, and we must ensure the safety of the supply chain, the delivery team, and the customers at all times.

Discover Available Capacity, Connect, Collaborate, Repeat

More than ever shippers are looking to ensure their goods are where their customers need them and when. But how can they react or even predict spikes or drops in demand?

As logistics capacity drops and demand for key items become critical, having visibility of the capacity that is available is needed in a simple and repeatable ways to:

  • Discover new trading partners, communities, and business opportunities
  • Connect with logistics business partners anytime, anywhere, and on any device
  • Collaborate seamlessly across inter-company and multi-modal scenarios
  • Balance capacity constraints and freight costs in times of crisis
  • Guarantee freight coverage and competitive pricing
  • Gain insights and competitive advantage with real-time alerts, notifications, analytics, and benchmarking

Value of Collaboration Across a Logistics Network

The process of tendering a load from a shipper to a carrier has changed very little over decades. While new technologies have emerged to better digitize the many contracts and rate agreements that shippers and carriers have in place, visibility into the market prices or availability of trucks has remained elusive, and shippers often do not leverage the flexibility provided by digital players, ultimately paying higher prices to cover their freight needs.

The key to success is to create a central place to connect and service members of a logistics network. A common platform where shippers, freight forwarders, carriers, and other logistics partners can easily onboard, collaborate, exchange logistics information, and share insights.

The value of a network is amplified by the members and partners connected to this network.

Once everybody involved has improved visibility and access to all relevant network members, everybody wins:

  • Shippers get more choice of carrier options and guaranteed shipments, which enables them to exceed service levels and reduce costs.
  • Carriers can improve their utilization and profitability through improved visibility and collaboration. They can better manage their time and better optimize their trips.
  • Customers get improved service and on-time deliveries at a reduced cost.

Networking is Key

To help achieve these goals, SAP recently announced the integration of service offerings from InstaFreight with SAP Logistics Business Network to help ensure fast and efficient handling of road shipments in Europe. This enables direct access to 12,000 carriers and the associated capacity — saving time, improving flexibility, and better managing costs through competitive offers across Europe.

To learn more about the news, see “SAP Logistics Business Network Increases Efficiencies in European Shipping with InstaFreight.”


Richard Howells is vice president of Marketing for Digital Supply Chain at SAP.