Let’s say you’re a kid, and you’re trying to set up a lemonade stand in front of your parents’ house. You go to the store (possibly with parental supervision) to get lemons and sugar, you come home and mix the two into a pitcher, and you set up a little folding table near the sidewalk. Since children are notoriously bad at big-picture thinking, you probably think of the lemons and the sugar as your only real costs, and you price the cups of lemonade (which are set out by the pitcher) accordingly in order to achieve a worthwhile ROI.
In much of the world, we’re stuck in the grey doldrums of late winter—but let’s think back to the recent holiday season for a minute. Specifically, let’s imagine that you’re trying to send a last-minute gift to a friend via FedEx, UPS, or another package delivery company. You’re hoping that the package will get there before the holidays, so you do some research into your best shipping options: you’re hoping to figure out which company offers the best ratio of on-time or ahead of schedule deliveries to competitive rates, which carriers have the best track record on lost or damaged packages, and who has the best tracking options.
Supply chain forecasting lies at the heart of the balancing act between current supply and future demand. At a fundamental level, it’s the process of combining historical purchasing data with customer buying trends to develop a prediction of what sales flows will look like at a given time in the future. The ability to generate an accurate demand forecast is challenging enough in and of itself, but when you mix in the inherent risks and outside challenges of your end-to-end supply chain—you start to see how easy it can be to get things wrong. Think of it like this, if you’re having a party and invite 12 people, what do you do when each of them unexpectedly brings a friend? Did you get enough cups? How about food? Do you have a contingency plan for the quick delivery of extra supplies? That’s a simplified example, we know, but the fundamentals remain the same—you must have all the data at hand to overcome whatever challenges present themselves and create the most accurate forecast possible.
Where does risk come from? Is it an external force? Something from within? Or is it what happens when you’re not prepared for an unexpected event? In our experience, it’s the combination of all three of these forces, acting on your weekend plans, your work project, or your supply chain. How do you address these risks? Reactively, by waiting for the disruption to occur and then working feverishly to repair the damage and return everything to normal operation? Or proactively, by defining plans and processes so that when a disruption happens, you and your team can follow the established steps to return to normalcy? Again, we would posit that it’s in finding the right balance between these options, allowing you to proactively plan for any contingency you may have to react to, that you’ll find risk management success.
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 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.
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.
We’re surrounded by redundant expressions every day. Close proximity and basic fundamentals spring immediately to mind. Unintended mistake, past history, and plan ahead follow close behind. When hearing the phrase “advanced analytics,” many people jump to the conclusion that this is just another business-speak example of redundant word use. Aren’t all analytics advanced? In truth, the expression has a specific use, particularly in a discussion of data use in supply chain management.
Wouldn’t it be nice if supply chains could run themselves? Well, between automated scheduling, production machinery, and even logistics planning, you can achieve a fair approximation using the right tools. Even so, there are plenty of places along the value chain where things can go sideways. The headaches may be less frequent, but they are no less real. No matter how seemingly care-free your supply chain, there are aspects you’ll want to closely monitor to ensure that smooth running continues. Crucial to each of these is the visibility into your processes that comes with Industry 4.0 technology and a solid supply chain management solution.