Apr 13, 2022

Why your 3PLs Tech Stack is Important to Your Business with Muhammad Imran Tahir

“We’ve been in business for many years, and we would handle our own logistics from ground zero. When I say ground zero, meaning sourcing, trucking, packaging. We would do the whole nine yards to deliver what we have for our end-users, our customers. But for a period of time, we were not able to see the economies of scale that we could achieve by what we currently do as a practice versus what the market would be using. And here, we decided to go with a 3PL model and use the services of freight forwarders who are actually greater subject experts on the shipping requirements and trade lanes. And they collectively have better pricing strategies because they use volumes of a lot of other clientele that they have more bargaining power.” -Muhammad Imran Tahir, Logistics Advisor at Aramco Americas

Full Transcript:

Francis Adanza

Welcome to the Down to Freight podcast, where we sit down with transportation, logistics, and supply chain subject matter experts to discuss digital transformation projects.

I’m the host of the show, Francis Adanza, and it’s a pleasure to welcome Muhammad Imran Tahir, logistics advisor for Aramco Americas. Mohammad, it’s great to have you here today.

Can you please tell a little bit about yourself, your company and what you’re responsible for at Aramco?

Muhammad Imran Tahir

Hi, Francis, and thank you for the opportunity. Yes. My name is Muhammad Imran Tahir. I work with Aramco Americas as a logistics advisor. I’ve been with the company for a little over 3.5 years, and I come from a supply chain in freight forwarding background. I’ve spent some time in the Middle East and been in the U.S. for a few years now. And the primary role of my involvement is to look into the supply chain feasibility of what we have currently and how we can improve on gaining economies of scale and getting the most benefit to serve our end users that are our customers with our parent company in Saudi Arabia.

Francis Adanza

Got it. So along those lines, for those of us who are not familiar with Aramco, could you please provide a little bit on what your supply chain looks like? You mentioned that your customers and your partners. Would it be possible to say what type of companies those partners and customers represent?

Muhammad Imran Tahir

Yes. What we do here, the primary role is that we are a service company where we address requirements of our parent company based in Saudi Arabia. So we have different divisions here from where we source material and services that are needed to facilitate the process for the parent company in Saudi Arabia. So this includes contracting, sourcing, standardization, procurement. And the logistics team, which is our department, helps connect all the supply chain elements so that we can procure on behalf of our parent company. And then we work with the different service providers to actually then ship the requirement of materials that is needed, process to our systems to send them overseas to Saudi Arabia so that they can, in real time, use them as in and when needed on onsite, on ground.

Francis Adanza

Great. Thank you for that overview. That was very helpful. So we’re here to talk about technology projects. Is there one that you recently completed or something that you’re currently working on that you’d like to share?

Muhammad Imran Tahir

Yes. So in fact, we’re very excited about this particular one. We’ve been in business for many years, and we would handle our own logistics from ground zero. When I say ground zero, meaning sourcing, trucking, packaging. We would do the whole nine yards to deliver what we have for our end-users, our customers. But for a period of time, we were not able to see the economies of scale that we could achieve by what we currently do as a practice versus what the market would be using. And here, we decided to go with a 3PL model and use the services of freight forwarders who are actually greater subject experts on the shipping requirements and trade lanes. And they collectively have better pricing strategies because they use volumes of a lot of other clientele that they have more bargaining power. So we decided to not only partner with a 3PL, but in fact, use their skill set in terms of shipping expertise, tracking traceability, having some level of sophistication and automation, where you have things at your fingertips, where you can check shipments coming in, going out, real-time picture snapshots, you’re able to track every step of your transaction before it actually reaches the end user.

And that whole visibility brings in a lot of value to our supply chain, which we really did not have earlier. And we are in a position right now. It would take seconds to log in into a platform and check, whereas a particular purchase order, what shipping stage it is at, if it’s already packed on order, if the pictures of the packing is available or not. And all this comes on the back end of using technology, using systems, using tools that would help us gain that visibility so that we can pass on the benefits to our end users, rather than having a very obsolete kind of a way that, like, let’s check some of our emails and let’s find out from the vendor or the buyer or what has happened. We can now independently log in to platforms and see and process and advise on what’s going on. That is a huge, huge change that we have accomplished.

We are into a couple of years of our change. We had some teething issues like any change model, but we are coming around to the fact that this model is here to stay, and we have added that value, and our end users get the most benefit out of that. Having fast responses, having complete visibility and ability to track and trace all steps is unprecedented. And we hope that we can continue to build on it and take it forward. For that particular reason, we are even integrating their discussions where we can integrate some systems together so that you don’t have to have multiple data entry points. So you upload or you update one data in one point and all the connected systems and processes get automatically updated to know what’s happening with the shipper or the order.

Francis Adanza

Got it. And just to make sure that I understand as well as the audience understands, this wasn’t one particular piece of technology. It was a combination of several pieces of technology that became available to you and your team to use through the partnership with a 3PL that you’re doing business with.

Muhammad Imran Tahir

Yes, that’s right. We kind of piggyback on our service provider, the 3PL that we are using, but the integration continues even at that. And I’ll give you an example on this. As we have airlines who have their track-and-trace modules. So we have shipments that we can track and check, and that connect with the database of the systems of the airline and shipping lines, where we can see real movement on if the shipments are already in transit, if it is a sale or not, if the aircraft has landed or not, or the shipping has cleared customs. So all of that, the entire chain gets connected and it’s intertwined with one another. So that availability to piggyback on the systems of the 3PL is something that we are basically taking advantage of what was available out there.

Francis Adanza

I see. And so taking a step back, what was the problem you were trying to solve or what were some of the challenges that you were wrestling with prior to leveraging a 3PL to do this service for you?

Muhammad Imran Tahir

Francis, one of the key issues that we faced was getting real-time data. So when we have a query or when we have a shipping status, we would need to manually trace back our steps and always probably have to go back to the beginning to, “Okay, when did this arrive at the dock or what happened next?” And then it went into the packing stage or did it tie it up with a particular airline carrier? And then we go to the next phase and find out which carrier we have used, what tracking number we have, whatever bill we have or shipping line. And then we go on to another platform to check if that ship has sailed, or if that airline has already arrived. So we would have to not only go back to the beginning every single time, but to check this on different platforms before we can conclude that this is where the status of the shipment is.

The biggest drawback of that was if you are not very thorough with your research, you may end up conveying wrong data to your end-user. And it will reflect very poorly on us that we are not only giving inaccurate information, but the control is missing, that sometimes shipments get stuck in transit. Sometimes, we have delays and are not able to capture real-time on what has happened. This is a very poor reflection of a service, considering that we are at the forefront of providing the service, and not having that visibility was the biggest challenge.

And it was a very manual and tedious process where we had to rely on our personnel and individuals. And then you have concerns on the availability of individuals. As an example, we moved different types of materials. So if someone specializes in certain chemicals or certain spare parts or certain accessories, we would need to work with that particular individual. And if someone’s not available, then we are actually just waiting to see when we can get that information from that person, whenever they’re back on vacation or they’re back in the office, or if they haven’t copied anyone else in the chain. So that was a large piece of this puzzle, which was always missing. So that reliability goes away with this track-and-trace and technology platform that we are using with our 3PL.

Francis Adanza

Got it. Thank you. So I can see why that was important to the business. And you touched on a few of the use cases there. Can you share some of the other capabilities that you have now that you didn’t prior to the 3PL service?

And then along those lines, who are some of the other folks in the organization that are seeing benefits of this relationship?

Muhammad Imran Tahir

Yes, the other area where we see a considerable level of improvement was we had to reduce the managing of different service providers for us. Like, we were dealing with half a dozen trucking companies, and that was an accounting nightmare as well, where you have to audit the invoices and make sure you have the proof of deliveries and documents. And at the same time, we’re dealing with multiple airlines where we have to then maintain relationships, have freight negotiations and agreements. What changed is that all that gets clubbed under a 3PL contract where we pay for the services that we use. The negotiation, the space, the bookings, the arrangements, the auditing, the invoicing is based on a contract. And we work with a one-stop shop that provides the entire fast freight forwarding services to us.

The advantages transcend not only from logistics. It actually goes back to the first department with our procurement teams where we can offer them more reliability in terms of options. That if we don’t work with X amount of carriers, we are starting to use only what we have in our portfolio. But working with the 3PL who probably has offices all across the globe, they have more buying power. So they work with more carriers. We can actually give directions that we want to move from point A to point B, but they make the discretion on which is the fastest way to get from point A to point B. And we don’t have to actually pick and choose that and do a try-and-test model to see if it will work or not.

And then not only limited to procurement, you do away with a lot of the auditing part of invoicing and the costs and using accounting and finance. So we were feeding off on resources and we were extending the supply chain, I would say, unnecessarily extra long, and that would just delay things in terms of output. Now that we have tried to make it as lean as possible. So those advantages are visible to everyone, and those platforms can be seen by everyone in the business. Like we share our — you can have login details or account details for anyone in the enterprise who can put in a reference number or a subject — PO number of everything. And they can see the entire visibility to it, which we really didn’t have before.

Francis Adanza

Fantastic. It definitely sounds like this partnership made a dramatic impact on the business. Specifically, how do you measure the before and after or the ROI of the service that you’re receiving?

Muhammad Imran Tahir

First and foremost, like I mentioned earlier, visibility, tracking and tracing, that’s number one. Number two, your bottom line spend. You are not overexposed in terms of your financials. Number three, the exposure and the risk involved that you are limiting yourself with our own practices, where we have a warehouse facility to run, we have to maintain forklifts, we have to maintain labor, and we have to go. So you’re out of that risk.

You’ve mitigated risk to not be exposed in terms of depending on scenarios where you want everything to work at the same time for you to move from point A to point B. Now it’s the job of the 3PL who is already having those costs, mitigated with having various other customers on their portfolio. So our warehouse had our material only. But using a 3PL’s warehouse, they already have a running warehouse. They already have a running facility. They are already incurring insurance and warehousing and labor supply and everything. We are one additional client of theirs where they offer the same services that they offer to anyone else, and we’re taking advantage of that.

Francis Adanza

Got it. So it seems like technology was an important requirement in your evaluation of a 3PL service provider. What advice would you give to other folks out there who might think about a similar partnership as well as rolling out that initiative and everything else that comes with it?

Muhammad Imran Tahir

Francis, currently, as you see, technology is probably driving the entire global supply chain as of now. I’m sure that you realize that with so much happening in the tech sector, we would only lose out on the advantages that come with it.

Of course, there are some challenges. You need to have systems that work, processes that are very well-defined. But if we don’t capitalize on the tech part of a supply chain, you are not getting economies of scale that you would normally have. And one of the recommendations that I can suggest is that there are models available. Right now, we are at a 3PL level with our freight forwarder, but there are organizations that have gone over and beyond to use a 4PL or a 5PL where you have subject matter experts to do what they need to do.

So for our requirement, we need material from point A to point B and everything in between is handled and operated by someone who is an expert in that field. And in their field line of expertise, they have their track-and-trace modules. They have their visibility, technologies and tools that they are always up to speed with the market practices. So if there is a new tool or a reporting mechanism that is available, they will be the first one to take that edge over their competitors to bring it to us as customers that this is something new, and this is something we’re planning to do.

And we may not see that if we were doing it on our own because we are no subject matter experts on really deciding the packing. And as an oil and gas company, we would want those who know how to pack a particular shipment, those who know what the risk associated with ours. They would do what they do best. And for us, we get the output. We need the material in a timely manner, in good integrity, in a working condition under the KPIs that we have set with our 3PL, and we pay a fair price for that.

So I probably think that those who are already using this model know the advantages. And those that are not, you need to come to speed with the tech available out there. And there are a lot of options.

People have gone to an extent of using blockchain, and that’s the next frontier and how shipping lines and airlines and how they will build on that. But not being part of the tech changes that’s around you, you’re going to be left behind from your competition. So I think tech helps a lot. It comes with its own pain points. You have your learning curves, but it definitely has more advantages that you need to gain in this very fiercely competitive world out there.

Francis Adanza

Got it. So you mentioned early on about potential integrations, and then you’ve gone and talked about blockchain. What is next on the horizon for this particular project or any other technology initiatives you were planning?

Muhammad Imran Tahir

Currently, one thing that we were planning and we already have some discussions underway where we want to integrate systems. Every organization has their own platforms, their own ERP modules, and our 3PL has and so on. We have our own. And so the one frontier that we are trying to reach is systems talking to one another, and that would be the next best thing. Because at this current stage with different systems working, there’s a lot of risk of data duplication data errors. And this is where you have people who key in with key strokes in real time. And if it’s not done right, it has a long-term impact that unless and until the mistake or the error is placed at some supply chain level, it remains in the system.

But once you start integrating, once you start having systems to talk to each other. So you can press the key stroke here, and everything else on all platforms with all your parties in the supply chain have the same visibility to the same key stroke that you’ve entered once. So that’s the next level that we are trying to pursue, where we have a way where our 3PL has their system and they are talking to our system. And between the two platforms, data flows seamlessly in between.

Francis Adanza

Awesome. Well, Muhammad, thank you for sharing your 3PL lessons learned. I certainly learned a lot about service provider evaluations and what capabilities I should look out for, and I’m sure our audience will appreciate these insights.

And so for that, I thank you for your time and spending some of your time with us today.

Muhammad Imran Tahir

No, thank you so much. I know this was a discussion for some time. And finally, we were able to get to some normality. And we’re back in the office 100%, and I look forward to hearing back on this, and hopefully it can add some value to those who are listening, and I really appreciate it, and thank you for the opportunity.

Francis Adanza

Absolutely.

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