Someone who has gained a unique perspective of working at a very high level on both sides of the fence is Louisa Loran, former Vice President of shipping company Maersk, and current Global Director of Strategic Industries for Transportation & Logistics at Google.
During her 6 years at Maersk, Loran worked in key positions helping to oversee business development, eCommerce, digital platforms, sustainability, marketing and customer insights among other things.
Since then, she has been working at technology giant Google, including 2 years as Head of Supply Chain & Logistics Industry Solutions for the EMEA region.
Through these experiences, Loran has been able to see first hand how major technology and logistics companies operate, create, and solve problems.
Understanding these different approaches and working cultures will likely become increasingly paramount as the relationship between technology and supply chain deepens.
We thus reached out to Loran to tap into her rich knowledge and get her thoughts on how companies in these two disparate market sectors operate, and discuss how the relationship between them may evolve over time.
Read on to find out:
- How Google is driving forward the digitalisation of logistics and supply chain
- Why user value is pivotal to Google’s approach
- How enterprises in the technology and logistics spaces differ in their structure and working culture
- The risk equation logistics companies will have to take into account when considering in-house tech solutions
- The extent to which tech giants may be tempted to move into manufacturing
Google’s role in logistics and supply chain
When it comes to digitalisation in logistics and supply chain, systems like TMSs, WMSs, real time visibility platforms and freight marketplaces all come to mind. Therefore, to the casual observer at least, it may not be immediately obvious where Google comes in.
So how is Google empowering digitalisation in the sector?
According to Loran, it’s the underlying technology behind Google’s popular consumer-facing products that holds immense potential for supply chain and logistics.
“Take Google Maps for example. It’s easy to translate that into the world of TMSs and logistics optimisation. It goes beyond that though. The reality is that everything Google does is truly about data and using AI to make data universally helpful On Google Search for instance, where someone has something to offer and someone’s looking for something, Google sifts through the data that sits behind that query and does the adequate matching,” Loran told trans.iNFO.
Loran then expanded on this, adding:
“So what we take to market for the logistics customers is the capability to work with their data; not only the data that sits within their private enterprise, but also the data sitting in their community. We know how logistics companies historically have done a lot of things, either by fax or EDI. But getting into an API exchange where one can learn more through real-time data, or even exchange the value of data, is a core part of it.”
Loran added that Google spends a lot of time ingesting relevant public information. This is particularly important given the disruption and congestion that so many supply chain managers have seen in recent years, which has led to excess inventory among other problems.
“The reality is when you zoom in to the macro level, there are quite a few leading indicators that tell you how consumers will react,” said Loran. “So by ingesting things like trends, or events, or weather patterns, or other things that are publicly available, supply chain and logistics companies can make better decisions.”
As Loran told trans.iNFO, it’s these valuable data insights that will largely define Google’s role in the logistics and supply chain itself, rather than any particular competitive application:
“Google does not look at this from the perspective of saying we will be the next competitive application [e.g TMS, WMS etc] for you, but we will bring you the technology that allows you to build more of a transparent and agile supply chain that you can control yourself.”
The logistics and technology sectors: two very different worlds solving somewhat similar problems
So how do the approaches of technology and logistics companies compare?
According to Loran, they can be described as “two very different worlds in which, interestingly, quite similar problems are being solved”.
Loran sees the logistics sector as being representative of many industries in that it embodies a hierarchical leadership structure, where clarity of purpose and unified contributions can drive success.
In contrast, she also notes how technology businesses like Google tend to embrace the benefits of information sharing.
Having navigated both environments, Loran can see the merits in each, and does not see one as being one superior to the other.
“I think what is natural in many of these types of [logistics] companies is a hierarchical form of leadership where everyone knows what you’re working and contributing towards. Looking at the Google side of things, you’re in a world that’s significantly more based on collective intelligence, and is more about venturing into a direction without necessarily knowing exactly what the future will look like, but always seek to build offerings which are valuable to others,” Loran told trans.iNFO.
The pros of the latter approach, in Loran’s opinion, is that it unleashes significantly more innovation.
This is because there’s more space to ideate and build upon each other’s ideas. On the other hand, Loran also concedes that the conviction and direction of traditional companies has merit.
“I spend a lot of time with my colleagues today in Google talking about how the technology is brilliant, but not relevant if it can’t be applied in a process or in an operational context,” Loran explained. “At the same time, I also talk a lot with my customers in the logistics and supply chain space about how much value they have within their own workforce and how we help them digitise, capture that, and look at what propositions could be unleashed from that.”
Another key differentiating factor concerns the approach to product building:
“I think the big difference between building a product in the Google world, is that it’s only valuable if it’s valuable to someone else. So, you can do some pre-work, but the user has to see value and be willing to pay for it etc. Whereas in traditional companies, I think it’s much more a case of believing something is right and then selling it or buying the right to use it. So it’s a very different flip to the other side.”
With respect to Google’s focus on delivering value to end users, Loran added:
“I think every business leader can relate to that mindset and should probably do some assessment on their own side in the same way.”
Unconventional paths to building user value
Recalling an example that arguably encapsulates Google’s approach, Loran told trans.iNFO of despite being very new to the company then, she had somehow become the first to learn that two teams were working on almost identical projects.
After introducing the teams to each other and discussing the matter with her boss, both teams continued on their separate paths.
Although this approach may seem nonsensical to some of us, Loran explained precisely where Google was coming from:
“The philosophy behind that is if you have to make an optimisation decision and close one team down, you don’t know what could’ve been achieved and which of the teams would’ve been successful. If you force them to compare notes throughout, there will naturally be a level of groupthink and that means that they go in a similar or at least conscious direction. So instead of this, what Google does is see who will succeed.”
Loran does nonetheless acknowledge that the margins some companies operate in means there is an increased requirement to optimise, making it tough to adopt the approach described above. On the other hand, she maintains the open mindset could indeed be deployed in all kinds of companies.
“The thinking behind it is to empower people to build their thinking towards the point where it’s valuable to someone else,” she said.
Should logistics companies now be calling themselves tech companies?
The momentum enhancing the digitalisation of logistics and supply chain naturally means that companies in the sector are on a mission to recruit talented developers.
This in turn has seen some businesses utilise employer branding strategies designed to promote the tech-oriented environment they offer.
A case in point is a 2021 interview in which Søren Vind, AP Møller Maersk’s senior engineering manager and head of forecasting, said that Maersk was a technology company “at its core”. One of the company’s captains then took to social media to challenge this idea, emphasising the importance of seafarers.
Can global logistics giants consider themselves tech companies? Does it even matter?
Loran acknowledges that this debate, although somewhat silly, is not new and has indeed been going on for a long time.
“Let’s think back to when people started using a calculator and a laptop. Companies didn’t turn into digital businesses because of that. I see this as being very natural and a present-day equivalent of that,” said Loran, who added: “I do believe it’s an oversimplification to say you’re a logistics or shipping or a technology company.”
The key here, it seems, is to get the messaging right both internally and externally.
Loran sympathises with the need to signal something different to the market, as in the case referred to above. However, when doing so, it is imperative that all the groups within a company recognise how the added emphasis on tech will help with the physical operations on the logistics side:
“The reality is that you have two very different audiences that you are talking to at the current time, and that you need to demonstrate that the decision to over index on technology gives value to those actually managing the goods on the operational side,” stressed Loran.
Google’s Global Director of Strategic Industries for Transportation & Logistics added:
“I don’t know any seafarer who doesn’t value what engineering has done for their day-to-day work. They just need to see on equal terms how data engineering contributes to their work today. Then they’d surely welcome their employer being more technology enabled. So it’s a matter of things being put into their context.”
As logistics companies scale up their tech teams, in what scenarios should they decide to create in-house?
Technology departments within many global logistics enterprises are expanding, which in turn is theoretically growing their capability to produce in-house solutions.
This bodes the question as to when such companies should opt to develop in-house solutions as opposed to alternatives provided by third parties.
It’s a question described by Loran as “strategic and philosophical”. This is because, as she puts it, many logistics companies have historically grown by control, whether it be control of a network, an asset or something else. For some time, the goal was about gaining value from operationalising this, in other words selling things and leasing them back.
Loran sees that as being very similar to the journey that people have gone on from an infrastructure point of view. A notable example is when companies suddenly realised they needed their own data centres, and then learned that it’s much better to rely on others that host them.
“There are occasions when you do want to stand on the shoulders of others and rely on their understanding of the processes, and follow how they have built that into a system. On the flip side, if something is your core IP, in that case it would make a lot of sense to build it yourself,” Loran told trans.iNFO.
Nevertheless, there are naturally risks involved, regardless of what route is taken:
“If you choose to build everything yourself, chances are you will lose out on some of the innovation that people in your ecosystem, as well as some of the big tech players, are investing in today. However, if you choose to only buy applications, then you will be dependent on someone else defining your future.”
Given the risk on both sides, what should one take into consideration?
According to Loran, the real strategic task here is to outline key differentiating elements of the business. Once that has been done, it’s a case of building around that and relying on partners to innovate and cooperate on a joint-journey to improve other areas. And importantly ensure that all activities are captured as data so you ensure you learn through patterns, engagements etc and through that ensure that it is not only your human capital growing in skills but the company is doing the same through data insights.
With regards to this, Loran also notes the significant differences between leading asset optimisation and digital product development:
“Even in those with large teams who should theoretically be able to build in house, if they don’t have leadership empowering them to look across data silos and see correlations and patterns that could form a new product for efficiency, or one that could be sold to the market, then that effort and money is wasted. Additionally, you are also likely to have employees who are not very satisfied.”
The ideal approach, emphasises Loran, is thus to have a strategic view of understanding where a business wants to differentiate, invest in and build. Leaders also need to empower their teams to bring them into the fold.
Tech giants and manufacturing
Amid all the debate about logistics companies becoming tech companies, it is also worth considering the possibility of those roles being reversed.
Could big tech, for example, use in-house automation technologies and marry them with their own truck manufacturing unit? It doesn’t seem out of the question given the demand for electric trucks has spawned new manufacturers like Nikola, Tesla, Volta and others.
Even so, Loran believes that it is a common misconception to think tech companies would want to embrace manufacturing. In her opinion, such instances are rare.
“Many of the technology companies exist to enable others to achieve their journey. At least I can speak on behalf of Google, where we firmly respect and believe that capabilities in automotive manufacturing, for instance, are skills which others focus on and would therefore naturally be better than us at,” Loran told trans.iNFO. “But we can enable vehicle manufacturers to understand patterns, optimise algorithms and therefore enable their journey more effectively.”
Loran has also observed how leaders are shifting their business models by outsourcing manufacturing to those who do it better:
“We see many industries, for instance in pharma, where someone invents something and they’re doing a great job, but are then hampered by an inability to manufacture at the same speed as other industries. They thus acknowledge that their core skill is innovation, and trust others to do the production. So I think their mindset is basically to want a smaller piece of the pie, but a bigger pie. That is what’s going to drive the scale of this.”
As the worlds of logistics, supply chain and tech further intertwine, understanding what makes the people on both sides tick will only grow in importance.
Therefore, individuals with the inside track on both appear well placed to navigate what is set to be an intriguing period of development fostered by cross-sector collaboration.
