Harbours Review: Born Digital

“Computers are incredibly fast, accurate, and stupid; humans are incredibly slow, inaccurate, and brilliant; together they are powerful beyond imagination.” This quote, often falsely attributed to Albert Einstein, was said at a time when computers slowly started to find their way into the logistics industry. By modern standards, computer hardware and algorithms of the early 1990s were far from powerful. Back then, if a PC was fed with one of the best algorithms available to try to solve a logistics planning model, one would still be waiting for the result. If the same model was given to a standard PC today, using the latest Linear Programming algorithms (one of the most important classes of optimization techniques), it would take less than a second.

The digital economy is gaining momentum and the shift to data-driven planning in maritime logistics has turned old and familiar practices on their heads. With the rise of new technologies, the digital logistics workforce is now using tools and processes based on real-time information and automated decision-making to drive productivity. As an industry, we’re now at a tipping point and how we manage this transition is going to define us. But it is not only about how we implement new technologies, but more specifically how we attract a young, millennial-aged workforce that has the new skills needed to drive our digital future.

Formula for Failure

As an industry, we’ve identified the value of digital technology to drive business results. But when it comes to actually putting them into motion, most companies pay lip service to digital transformation. Many believe it is about using shiny new technology to keep doing the same thing. In the worst-case scenarios, this may mean doing the wrong things – just faster. The simple formula: “old process + new technology = expensive old process.”

Today, many digital transformation projects are focused on the “digital” and not so much on the “transformation.” Instead, the real digital transformation requires change at a much deeper level. It calls for action that cuts across every aspect of how container terminals operate internally and engage externally. This process is less about technology and more about cultural change. It includes elements of understanding how to interpret data and leverage technology so that it shifts every corner of the business, but, equally important, it involves an understanding of how to implement those shifts so that the organization can evolve.

Why Millennials Matter

On the whole, the maritime logistics industry, of which container terminals are a key element, is comprised predominantly of Baby Boomers with a small proportion of Gen X and Gen Y (millennials). In short, we have an aging work­force problem. Attracting millennials is as much about attracting skilled workers as it is about attracting young workers.

By 2025, millennials will make up 75% of the global workforce; i.e., the generation of “pen and paper” operators is a dying species. Millennials have grown up with instantaneous communication and “high tech” is woven into all aspects and areas of their lives. Millennials will not only penetrate the logistics workforce in the maritime industry, but also be the ones who drive demand on the customer side. “On-demand” and “digital” is their way of life – anything else will not be accepted.

If It Isn’t Broke, Don’t Fix It

Change is often resisted, as is summed up in this adage. It is estimated that only 54% of major change projects are successful. Those that fail are plagued by higher-than-expected costs and lowered employee morale. Studies also show that when employees see major projects come to nothing or fail to deliver major elements, cynicism sets in, which in turn further undermines adoption, utilization, and worse – company culture.

Change management is a well-researched branch of social and business science with many models and techniques that can be implemented. Of the many available, there are some common elements, such as making the effort to involve every layer of your organization throughout the entire process, working from within your culture to implement change, and continuously assessing and adapting your project to suit the combined technological and cultural needs of your organization.

Only Some Like It HOT

A common implementation mistake many companies make is to label digital transformation an IT project. It is seen as the responsibility of the IT team to take the lead, while the necessary business inputs are provided halfhe­artedly or not at all. As a consequence, the project takes a wrong turn at an early stage and the finished product eventually falls short of expectations.

So before pinpointing all software and hardware vendors on the roadmap to transformation, decision-makers should plan to have two internal stopovers and address the human and organizational aspects of this change process first. The sequence of the HOT approach (Human, Organization, Technology) ensures “transformation readiness” before technology moves in. Many leaders underestimate the consequences of inadequate readiness and, at the same time, overestimate the current capabilities and culture of their own organization. Fully understanding the impact of this process on business and people helps to avoid the pitfalls that so many repeatedly fall into. Let’s take a look at some of them.

Talent Management

Equipment for the maritime industry must be designed for demanding environments. Similar standards apply to any person working at a container terminal, even if it is just office work.

Moreover, many container terminals are located in non-central areas close to the harbor, which are generally far away from the urban centers with their deep talent pools. In the race for talented millennial staff, neither working environment nor location qualifies as a good starting position.

Digital transformation offers organizations the ability to centralize planning and operational support teams. Instead of planning independently at a local level, centralization unlocks synergies across the entire network of terminals, depots, and, of course, organization. Further, a centralized office can be located close to any urban hotspot, offering easy access to a high density of top talent. Instead of a remote and foreign environment, a centralized urban office offers a working environment that will not only attract millennials but also allow them to prosper.

Human Maintenance

Container terminals face unscheduled downtime due to failing equipment. To mitigate the effect, proper maintenance and repair procedures are common practice and mostly in place. In order to speed up the ramp-up phase for millen­nial staff and smoothen the effects of fluctuation, proper and permanent training schemes need to be in place.

Again, the focus here is not on technology. Millennials are quick to adapt to new software and devices. Instead, the focus of the training needs to be shifted to how work is delivered and by whom. It is all about processes, master data management, service-level definitions, understanding and using the same KPIs across the organization, etc. Creating a professional, standardized training scheme ensures that new staff receive identical training that can also be optimized over time. Instead of clinging to aging processes and tools, transformation is needed for container terminal operators to survive and prosper in a digital world. It is not a question of “if” but “when” to start the journey.

Enjoy the Journey

Digital transformation is a journey, not a destination. And there is more to observe when taking the digital turn. Terminal operators considering an in­vestment in digital technologies don’t have to change everything overnight. But they should keep in mind that the rate of technological change will never be as slow as it is today. Tomorrow, it will be faster and the pace of change will only continue to increase.

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