Taking on flexibility and variability at Maersk

Innovation. We’ve been exploring supply chain innovation in Supply Chain Management Review through MIT’s Innovation Strategies column for the past eight years. At times it seems like a buzzword that, like AI, every organization defines in its own way. Yet, it goes hand in hand with digital transformation and has become a muscle that every supply chain organization that I can think of wants to develop.

One of the things I’ve noticed over the last three or four years is how much supply chain innovation is happening in the 3PL industry. More importantly, just how willing 3PLs are to talk about it. That makes sense. At most companies, supply chain is a business process; at 3PLs, it’s the whole business. If a 3PL isn’t innovating, there’s not a lot of reason to utilize its services. The other thing I’ve noticed is how many of the world’s best 3PLs have centers of innovation that are devoted to taking their organizations into the future.

Focus on innovation

Enter Maersk, which just opened an innovation center in Jersey City, New Jersey. I think of Maersk as one of the world’s leading ocean shippers, but today, Maersk is a provider of end-to-end global supply chain management solutions that include all modes of transportation along with warehousing and distribution capabilities. It has also put innovation front and center in its business, where it highlights the use of autonomous lift trucks, multiple robotic solutions, autonomous yard dogs, IoT sensors and analytics to build a digital twin and a dynamic routing tool developed with MIT to minimize the variability in cargo transit times.

The person behind many of those innovations is Erez Agmoni, Maersk’s global head of innovation. He was at Gartner with Tive CEO Krenar Komoni to discuss a cargo visibility solution developed in partnership with Tive, but we had a chance to talk about the broader role of innovation at Maersk.

One of my first questions was about Agmoni’s personal journey to become Maersk’s innovation leader. He began his career in supply chain engineering in the commercial airline industry, where he worked for 12 years, including as a cargo manager in Asia. He had other roles with firms in Asia that involved moving cargo before joining Maersk 13 years ago. Earlier roles included air freight, supply chain development and warehousing and distribution. He became the senior vice president of innovation and strategic growth in 2021 before assuming the global innovation leader in March of 2023. “In every role I’ve had, I tried to change the game,” he said.

Driving forces

Global innovation is focused on the end-to-end supply chain, or “anything related to moving goods,” Agmoni said. It is guided by four pillars.

• Automation innovation, or the autonomous and mechanized side of the business, which would include robotics, autonomous vehicles and materials handling automation.

• Digital innovation, which is the non-mechanical side of the business. This could include creating digital twins for transportation and warehousing.

• Data innovation or utilizing data for prescriptive and predictive analytics.

• Service innovation, which includes new processes such as dynamic routing, which enables a customer to make real-time decisions about the allocation of cargo and inventory.

One of the projects Agmoni’s team is working on now is how to take the variability out of the transit time from the factory to the DC, which can vary from 30 to 120 days. Some of that variation is caused by factors such as weather events, strikes or system capacity shortages that are hard to predict, Agmoni said. But some are also the result of the nature of ocean shipping, which can involve many partners utilizing disconnected systems that aren’t talking to one another. To that end, Maersk is addressing systems to automate and streamline each of the handovers in the process. They have also partnered with MIT to develop a solution for dynamic routing that would give customers the ability to make near real-time decisions about where to send their cargo once it lands at the port.

Still other delays can be the result of the path that cargo takes once it hits the port. As an example, when there are multiple routes available to get from Los Angeles to Memphis, which is the best route for a particular shipment? Answering those questions involves both visibility and analytics.

Moving cargo faster

The project Maersk is working on with Tive addresses that problem. Maersk receives 40-foot containers from the port at its warehouse locations in Los Angeles and transloads the cargo onto 53-foot trailers. Those loads then head to Memphis, among other locations. There are two main routes to make that trip, a northern route and a southern route. The question is: Which route is the fastest? “If you put the locations in Google, it will tell you to take the northern route because it’s shorter,” said Agmoni. Shorter yes, but is it really faster?

To answer that question, Maersk installed a few thousand Tive cellular tracking devices in the field. In addition to location, which Agmoni says “is very accurate,” the devices can also monitor important shipment attributes such as humidity, temperature and shock. Maersk picks up a trailer at the port and adds the trackers at its transload center. It is then able to track the trailer to its final destination. After analyzing the data from shipments for three customers, Maersk discovered that the northern route typically takes 4 to 8 days, while the longer southern route typically takes 4 to 6 days – as much as two days faster.

When they looked deeper, they learned that while the northern route is shorter, there are also more trailers competing for parking spots. It’s not uncommon for a driver to pull over one or two stops before they actually need to stop to ensure that they don’t go over their allotted hours. On the southern route, drivers stop fewer times because it’s easier to get a parking spot. “Now, multiply that across all the legs of our supply chain and not just the route to Memphis and you can see the opportunity,” Agmoni said.

Agmoni added that his team is also engaged in addressing the labor challenge in Maersk’s distribution centers with solutions like container unloading robots from Boston Dynamics, remote-controlled lift trucks and robot-to-person picking.

“Our catalyst is taking out variability and building in flexibility,” Agmoni said. “Those are the most important elements.”

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