It’s a popularly quoted statistic that supply chain inefficiencies can waste as much as 25% of operating costs, which only goes to show how much an impact you can have on your bottom line by working to reduce waste. This is, of course, easier said than done: supply chain waste comes in myriad forms and is notoriously difficult to root out. Why? Because every decision you make across the entire value stream has the potential to introduce unforeseen costs down the road.
Ever had one of those days where you set out to run three easy errands but end up driving in multiple circles, making 7 unplanned stops and not getting home until well after dinner? Us too, and this is an apt analogy for how some supply chain transportation logistics networks are running these days—with trucks making multiple partial runs, unplanned stops being added to the itinerary at the last minute, and containers sitting on the dock for days. Transportation logistics is chock full of low hanging fruit when it comes to optimizing your network and reducing waste. With the unnecessary movement of goods, half-empty trucks, and trucks sitting around while warehouse staff scramble to find the entire order—this is an area ripe for optimization. We’re going to look at a handful of examples of how you can start working toward the goal of cutting transportation logistics waste from your supply chain.
Remember when you were in school? No matter the class, every term you got a syllabus for each class that laid out when exams, quizzes, and term papers were all due? Then you set about working each syllabus into your own personal calendar, with short-term items like quizzes, mid-range ones like exams, and the long-game term papers for each class. There’s a similar way to look at your production planning schedule, with short-, mid-, and long-range goals and KPIs. Long-range is handled by your annual strategic plan, mid-range duties fall to S&OP, and today we’re going to dig into the short-range process of S&OE. Specifically, we’re looking at how to know if your sales & operations execution process is successful or not.
Most prognosticators have pretty much agreed that Industry 4.0 is going to radically change the world of manufacturing through big data, cyber-physical systems, and internet of things (IoT) integration—but not everyone agrees on exactly what this new paradigm is really going to look like. This might seem like disagreement, but in reality it’s part of the point: Industry 4.0 is going to look different at different companies. It’s even going to look different during different seasons, or for different production flows. An easy, consistent definition and an easy set of IT expectations is anathema to the whole idea of the fourth industrial revolution.
You’ve all heard the saying, “the left hand doesn’t know what the right hand is doing.” This encapsulates many organizations' approach to sales and operations planning, or S&OP. Too often, companies fail to include all the relevant stakeholders and departments in their S&OP process, leading to major sections of the supply chain being left out. For a process that impacts every aspect of a manufacturing concern, this seems not only short-sighted but also like a potentially catastrophic oversight. On the other hand (no pun intended), when a company’s S&OP process is run by an integrated team that includes representatives from the C-suite, sales & marketing, production, inventory, all the way to logistics—the outcomes can improve drastically.
We all have different ways of getting a handle on our supply chain activity. Some folks might check a series of KPIs every morning to see what small fluctuations in supply and demand have occurred overnight, while others might be more interested in the big picture, seeking out a comprehensive visualization of the supply chain at the end of every month. However you like to think about and analyze your supply chain data, your routine probably revolves around a dashboard.
Remember your last car trip? You spent all that time planning your route to maximize the sights you would see. Then you organized your equipment and snacks and packed the car just right so everything was easily accessible. Can you imagine what would have happened if you went to leave and the car didn’t start? Now your whole itinerary is thrown off, you have to call roadside assistance, change the hotel reservations, not the way to start a great vacation. The analogy to the transportation leg of your supply chain is clear—if you neglect one segment the whole system can come crashing down. In order to optimize your end-to-end supply chain, you need to pay close attention to the transportation network. This is often the place where systems break down and costs can spiral out of control. On the other hand, just as doing preventative maintenance on your car eliminates the possibility of the failure of your vacation, optimizing your transportation network can eliminate cost overruns and other disruptions to your smoothly functioning supply chain. Follow these best practices and you’ll be off to a great start.
Sustainability is more than a buzzword. In a recent study reported in Forbes, a whopping 88% of those polled say they are more likely to support brands that they view as helping them lead more ethical and sustainable lives. What impact does this have on your supply chain? Well, the public is who ultimately buys your product, and they’ve spoken. They want companies to care as much as they do about leaving a better planet for the generations to come. As members of the global community, we need to step up and do what we can to support the goals laid out by nations the world over, to clean up sourcing, pollution, workforce conditions, and more. Just how to go about cleaning up an end-to-end supply chain is a complicated question, so here are some guidelines we hope will help set you on the right path.
If you ever go to Las Vegas, you should be advised that casinos heavily frown upon card counting, and it’s easy to understand why. A game like blackjack is supposed to be more or less random in terms of what cards are dealt when, which puts the house at an advantage. Over the course of several hands (before the entire deck has been reshuffled), however, a careful observer can note the proportion of face cards that have come out in order to come up with a rolling estimate of how likely or unlikely they are to come up in future hands. This puts the player at a real statistical advantage over the house—at least until the casino politely (or not so politely) asks her to leave.
Industry 4.0 technology is making its impact felt all along the supply chain as we enter the third decade of the 21st-century. Alongside IoT sensors, GPS trackers, smart pallets, and robotic picking technology, the progress made in supply chain management software has been unstoppable. Whereas once Excel sufficed to layout a strategic plan and track forecasting, today this method is becoming increasingly outdated and outpaced by more collaborative options. These new systems allow for real-time updates and enable real-time collaboration on planning documents by multiple stakeholders at the same time.