Five Ways Data Moves Through a Logistics Network | 2022-01-20

Data is the most important currency of any efficient logistics network. Today’s supply chains are more complex than ever, relying on the rapid exchange of immense amounts of data used to track goods, optimize operations, mitigate risk, and more.

The variety of data applications in contemporary logistics networks has also given rise to a number of networking technologies. Data flows through supply chains in different ways, each with their own advantages and disadvantages.

If you are looking to improve and grow your logistics network, whether in response to the supply chain crisis or simply to avoid common logistics mistakes, you will need to understand these data exchange technologies.

1. Email

It may seem odd to start this list with email. Surely contemporary supply chains and logistics networks are built on far more sophisticated forms of data exchange than email?

Well, yes and no. It is true that today there are faster and more “modern” forms of data exchange. But that doesn’t necessarily make them “better” forms of data networking than humble email. Indeed, logistics networks rely on a wide variety of data exchanged – not only data collected by Internet of Things (IoT) networks or those related to the operation of mainframes, but also data that cannot be collected, analyzed and shared by humans.

When it comes to this type of data, email has many advantages. It is easy to use and anyone can send data this way without having to undergo specialized training. When it comes to sharing a quick link to a data set, or even a spreadsheet of your supply chain KPIs, it really is hard to beat email. That is why e-mail would find its place even in the perfect logistics network.

2. IoT devices

IoT devices are also an important part of contemporary logistics networks. In fact, when building such a network from scratch today, the cost of IoT devices is likely to be the biggest expense. This means that when estimating working capital requirements for your logistics network, you will need to calculate the level of IoT functionality needed.

While implementing large-scale IoT networks can be costly, it’s an expense that most companies quickly recoup through improving the efficiency of their logistics networks. IoT devices can now be used to track the location and status of goods in real time and can automatically share this information not only with each other but also with centralized data processing software. This allows you to continuously optimize your logistics network to make it as reliable as possible.

Today, most IoT solutions are offered as all-in-one packages. IoT devices are designed to be modular and adaptable to a wide variety of circumstances and network types. They achieve this by relying primarily on Wi-Fi connectivity to exchange data. While this makes working with Wi-Fi devices simple and inexpensive, it also means that you need to ensure good Wi-Fi coverage throughout your network for it to work properly.

3. Transportation Management System (TMS)

TMS platforms are a more focused approach to data collection and analysis than IoT networks. A TMS is normally used to plan, manage and assess the physical movement of goods. TMS solutions are typically integrated into larger systems and can be used in conjunction with IoT devices and even more specialized IDEs and APIs.

The main benefit of a TMS is that it offers small and medium-sized enterprises (SMEs) a low-cost way to access the kind of advanced logistics functionality that was previously reserved for domestic companies. In an era of rising logistics costs, a TMS system can help small businesses reduce costs. These cost savings can then be passed on to consumers.

TMS platforms typically operate from a centralized, common framework of data and applications. This can make them easier to manage than distributed, heterogeneous IoT networks. Likewise, they are more general systems than the dedicated APIs described below. Because of this, they offer inexperienced businesses an easy way to start gaining some really valuable insight into how their supply chains work.

That said, SMBs should be aware that TMS platforms have drawbacks. TMS solutions require that all personnel can access and work from a single central platform. While this simplifies access and user management, it can also limit the flexibility of technical and software development staff.

4. Application Program Interface (API)

At the sophisticated end of data exchange in contemporary logistics networks are APIs. It is a custom way for a logistics application to send, receive, and transfer information with other supply chain applications, with little or no human intervention.

APIs have a long history – they have been the standard way for applications and other supply chain entities to communicate for decades. A few decades ago, custom-built APIs were pretty much the only way these entities could communicate. TMS and EDI platforms can actually be considered more generalized versions of APIs.

APIs have several key advantages over more generalized TMS and EDI systems. Because they’re tailor-made for your software and hardware, in most cases they’re a much faster way to exchange data than the competition. Data transmission is also more reliable, as APIs use automated data collection and analysis tools to minimize human intervention, and therefore minimize human error.

On the other hand, APIs have some disadvantages. These are complex, custom systems that can be just as complex to develop and manage. This, in turn, means they can be expensive to develop. You may need to employ highly specialized personnel to manage them. The risks of not doing so were recently seen in an incident where an Amazon Web Services outage caused a warehouse to shut down, in part due to a lack of AWS experts on site.

Still, for companies looking to scale, starting to build an API system can provide long-term benefits. By setting up dedicated, fast and reliable ways to work with your key logistics systems, you provide yourself with an excellent foundation for a highly efficient logistics network.

5. Electronic Data Interchange (EDI)

The IDE can be considered as an intermediate point between an API and a TMS. Like an API, EDI allows you to control the entities that are part of your logistics network. But whereas APIs normally rely on custom means of exchanging data with each other, EDI uses an agreed-upon standard to transfer information between supply chain companies and logistics applications. Like APIs, EDI is used for many types of logistics data and use cases.

This means that the IDE has some of the main advantages of the API: speed, reliability and control. At the same time, the IDE is easier to use than a fully customized API and therefore does not require highly skilled and specialized personnel. Many supply chain systems now offer standard integration with EDI. This can be an effective way for businesses to start building an effective logistics technology stack.

On the other hand, IDEs have some disadvantages compared to dedicated APIs and TMS. They are more expensive than the latter and less secure than the former. Additionally, at a time when businesses are investing in blockchain to reduce costs, EDI has started to lag behind in compatibility with newer technologies.

The speed, reliability and efficiency of data exchange is one of the most important factors contributing to an efficient logistics network. For this reason, managers and technicians must ensure that they understand the ways in which data can be exchanged across contemporary logistics networks to maximize their efficiency and effectiveness.

Bernard Brode is a product researcher at Microscopic Machines.

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