3Cs of Logistics
Explaining the fundamental components of any logistics service
Context
This thesis plays out in hindsight. But, when the work and idea of Pipehaul started in 2018, it was very high level.
My work as a product designer involved working with organisations in the space of logistics. I was tasked with digitising their work environments. Multiple projects I worked where the leverage would be faster execution through digital collaboration running their operations.
The work involves being with participants of the organisation and mapping the process flows. Then go about creating taxonomy, design systems and interfaces that could replicate the work being done.
In supply chains, logistical chains are segment where movement takes place. When I went about designing these supply chains at Pipehaul. I understood the importance of constraints, capabilities and skillsets that are required to execute a supply chain.
The work of 3 years with Pipehaul led me to a coherent phrasing of what we wated to do with Pipehaul in commodity supply chains .
We at Pipehaul are in the business of Commodity Supply Chain Logistics.
We focus on approaching the logistical challenges of a commodity to further it along the Supply Chain.
We are focused on commodities to induct a market based approach to logistics. This is in contrast to the dominant approach of being service oriented.
Targeting an outcome
Market based approach to logistics is far fetched idea if you ask a practitioner in this space. It’s like asking a taxi driver about autonomous cabs.
Logistics has structurally and economically developed as a services industry. There is a problem that the client needs and a logistical company will invest capital and human resources to resolve it.
When I say market based approach, it means defaulting to standards of movements and increasing the throughput.
Let me walk you through an example. The Apple MacBook Laptop that we order from Apple Store comes in a box. Similarly, across the world, cargo is moved in containers which are often called box. Both at a level of package resemble the same type of movement. In the Apple MacBook Laptop’s case, once you open the box, you will have the laptop. But, when you open the container, you further get smaller boxes carrying 1000s of Apple products in them.
So, when we are talking about movement of cargo. We are talking at standarised layers. In the case of ocean shipping, the flow of how a container is shipped from origin country to destination country.
The entire containerisation movement started with an attempt to create a default mode that could speed up loading and unloading of ships. I have written about it in “Epic story of containerisation” post. Similarly, when you are viewing the supply chain of commodities like cement, steel, produce and grain, you start observing possibilities of standardisation that could evolve to change the way cargo moves.
Bringing those changes and opening it up for more entities irrespective of their size engage with it was the thesis behind starting Pipehaul. It is similar to a shipper with 1 container and an another with 100 containers shipping cargo overseas are moving the cargo similarly. Now, the access to export cargo is just 1 container.
Outlining the Concept
Most services in logistics are compound of 3 fundamental components. We can break any type of physical service in to these components.
- Developing the Competency: The aspect of learning and designing a physical aspect of the service we need to provide as logistical provider.
- The process of moving electronic cargo to moving scrap(Yes! Scrap)is very different. The design and process know how are defined in this step.
- Building the Capability: The function of implementing the physical activity of the service according to the design and recording the output of our resources while doing so in order to make it better further.
- For example, not every port can handle scrap imports. They need to install a scrap scanner to check for any hazardous waste that is being shipped without being disclosed to the custom(govt.) authorities. The answer as to why we import scrap, it’s out of scope for this post but it’s an interesting supply chain in itself.
- Expanding our Capacity: The process of expanding the coverage of the service in volume, scale and people involved in it.
- So, the next aspect is how many scanners in one port. This is about possibilities in quantity that can processed by the port.
How to approach it as a Market?
By breaking them down into fundamental components we are able to combine them in a manner which fits the needs of multiple companies moving same commodities across regions.
This process allows us to take the concept of software development or design systems of using fundamental components to make new components.
By viewing your services as a combination of these fundamental components. We will be able to create a market where multiple companies can use the services via a marketplace.
Example: Produce Marketplaces fulfilling Subjimandi.app
The commodity we picked was produce starting with onion and tomatoes at Subjimandi.app. By standardising the commodity through grade. We were able to make an individual retailer with a requirement of 100 Kgs order from sourcing region compared to a trader who orders a truckload(25000 Kgs) from sourcing Mandi.
The competency we picked was about understanding grading, bagging and handling damages that could occur to produce during transit. We developed the capability of executing it by deploying a set of local service providers for skilled labour, first mile pick up and long haul transportation. The capacity that we built could simultaneous 4 field procurement on the sourcing side and deliver to 40 retailer shops on the consumption side.
Conclusion
These components can be defined for different supply chains in more granular manner but the end result of it will be in a similar functionality. The configurability of means of terms is inherently the decision we take to define complex supply chains.
With the same components we could break down freight forwarding businesses serving multiple shippers. We could also understand how vessel owners serve the ports. And , we can also unpack how quick commerce people deliver groceries to your doorstep.
The level of abstraction in defining these terms in left to the practitioner. Instead, I wanted to focus on constraining the terms and functionality that is universally applicable.
Signing off till next time,
Vivek, completing 7 years in logistics.