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The complexity of logistics and treasury operations? It’s all automated by the tag on the bag!

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We treat our world very simplistically, and yet we have made our world incredibly complex. When you think we can land a spacecraft on a meteor hurtling through space, it’s amazing what we have achieved. What makes this interesting is the way in which humans have created incredible infrastructures, supply chains and logistics on Earth however.

For example, I recently met a head of logistics for Europe for a major overseas company. He was describing how they send a private plane over every night, full of goods ordered by their customers. The planes, as there are several, land in Madrid, Prague and Stockholm and are unloaded directly onto DHL lorries, who take the goods through the night to their various destinations covering 28 countries, including the UK.

I just cannot imagine the work involved in that process especially as, since Brexit, there are huge amounts of documentation details that need to be filed with customs and excise to bring goods into Britain. Add onto this that the goods are being sent from outside Europe, there’s another layer of documentation that has to be filed for that process. Then there are documents needed to ensure everything can be reconciled, such as letters of credit, bills of lading, packing lists and invoices.

Historically and, for many currently, we do all this on paper. It makes me just wonder how far we have come through this process to transform it to be digital.

According to my logistics contact, their company does this well … but then they are a digital company by nature. I guess I’m showing my age when you just sit back and imagine shipping goods around the world by plane and ship, with on-the-ground distribution by partners such as DHL, and the whole efficiency of those processes, where they are today and where they are going tomorrow.

For example, in conversation with the aforementioned head of logistics, he outlined how goods move from their distribution centre and, in just seven days, get millions of items to thousands of homes five thousand miles away … with zero failure.

It’s a little bit like catching a flight. I didn’t think about this until sitting waiting to fly and watching the process of loading the aircraft. There’s fuelling and refuelling. Bringing cargo into the hold. Loading the cargo and bags. Checking everything and delivering the paperwork approvals for take-off. Then the same the other end for unloading, not forgetting that every bag with its tag had to get to the aircraft and its destination correctly.

We take these things for granted, yet it screamed at me that the simplicity of such logistics that we see is stacked with a huge degree of complexity we don’t see. Going back to the logistics example, think of all the links between the physical movement of goods, the digital tracking of goods and the financing of those goods. The links between supplier, supply chain, distributor, customer and the financial suite that goes around all of these links. Nothing is simple. Yet we treat it as simple.

What intrigued me now is how we are digitalising all of these processes. I guess the simplest way to imagine this is to think of all those goods flying and sailing around the world, is just like your suitcase in cargo on a plane. When you get to the airport, your bag is tagged. Today, it’s with a barcode or QR code. Maybe tomorrow it is tokenized on a blockchain. This is how my logistics friend sees the world. Every item it tagged and tokenized.

Once it has a tag then that bag can then be sent through automation from to check-in to the back office to be loaded on the airplane or ship. From there it goes through the reverse process of being unloaded to the back office and back to the desired destination. It’s all automated and digitised by the tag on the bag.

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Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...

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