Don't Forget Logistics

In an increasingly flat world, managing this vital, but often neglected, "last mile" in the supply chain can save companies money by increasing visibility, enforcing compliance and improving competitive positioning


Like many supply chain professionals, Rick Johnson (1), director of inventory and supply operations at Fabulous Foods, an importer of exotic edibles, is doing a lot right. As his superiors expect, he's been solidly focused on supply chain excellence since coming aboard a few years ago. And there have been undeniable improvements since he took the helm.

A new approach to demand planning is in place. Supplier relationships are friction-free. Pricing supports sustained profitability. Inventory no longer sits on warehouse shelves. Even pickups and deliveries are more or less predictable. What's not to like?

Even with these improvements, Rick knows that his superiors are less than completely satisfied with the results. Something's missing, and it centers on the logistics operations. Rick's team is still handling a lot of tasks manually, which consumes too much time. It's difficult to know whether the plans their transportation management system produces are being used consistently, and Rick can't really enforce compliance in any case.

Over the last few years, there's been a lot of talk about supply chain agility. The on-demand supply chain. Flexible supply chains. Yet, total supply chain excellence remains elusive. As a recent Aberdeen Group report notes, "Despite heightened attention in recent years, many companies still do not have timely visibility into the critical processes involved in global supply chain management." (2)

Further, the report comments that this lack of real-time visibility "often prevents companies from accessing information quickly enough to be able to use it for decision making."

Equally important, supply chain managers who can't get the data they need easily or analyze it meaningfully will find it nearly impossible to deliver measurable gains. What it comes down to is that what you can't measure or benchmark, you can't improve. And accurate, timely data fuel the improvement process.

In organizations that have undertaken the efforts Rick's company has — and also in those that haven't — inconsistent logistics performance undeniably affects all other aspects of supply chain operations, impacting overall excellence.

The Drivers of Visibility

What Rick and his counterparts in other companies point to as they analyze their operations are the drivers of improved supply chain visibility.

Most companies, for example, probably need to increase their percentage of on-time inbound deliveries. Most will want the flexibility to change already-scheduled shipping arrangements on the fly in response to unanticipated problems. All, without exception, will want to be able to inform customers quickly of shipping glitches.

Figure 1: Top Five Drivers for Improving Global Supply Chain Visibility

We've referred to a "flat world." Whether supplier to manufacturer, plant to plant, distribution center to customer or customer back to seller, moving goods is hardly a trivial enterprise. In this complex environment, it can be difficult to determine who's actually calling the shots — or who should be. As Rick puts it, "It's definitely about more than loading up trucks, sending them on their way and assuming they'll arrive on the other end."

In a flat world, an infinite number of partners engage in getting products across the globe. Understanding and reducing logistics costs requires visibility into all their activities, because quite apart from being necessary to getting the job done, these activities generate expense. While the data involved can be mind-boggling and concerns about data quality real, the task of the logistics team is to tease out the information most relevant to both daily operations and future planning — and then transform it into actionable business intelligence. A neat trick for organizations that are typically understaffed or in "firefighting" mode. It's an even neater trick in a business environment where chief information officers and vice presidents of IT have so many other issues to manage that few, if any, allocate IT staff time to improving logistics processes.

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