If our goal on the flexis AG blog to educate our readers about the pressing issues in global manufacturing and supply chain management, then today’s entry is right on par with that mission. Transport logistics, though a critical element to a manufacturing supply chain management strategy, is perhaps one of the least discussed aspects of SCM. While an underutilized element of administering a successful value chain, transport logistics (or the manner in which companies move finished products from the production room floor to the customer’s door) is the last crucial link in fulfilling customer expectations and ensuring production programs are executed to their fullest extent.

It’s somewhat difficult to understand why transport logistics often gets lost in the fray of global supply chain management. Perhaps it’s because more emphasis is placed on operations at earlier stages in the value chain such as planning and procurement. Or perhaps it’s because the facilitating of effective production programs is often at the forefront of the minds of planners and managers. Either way, transport logistics, though often neglected, can either be a significant boon or detriment to how effective a manufacturing company conducts itself.

It sounds simple, but how well a manufacturing company moves products from the shop floor to the customer’s front door is not only a sign of a healthy supply chain, but also a critical indicator as to how efficiently planners and managers mitigate several aspects of global supply chain management. But in one of the more interesting paradoxes in today’s manufacturing landscape, integrated transport logistics, while extremely valuable, is one of the more overlooked elements of how manufacturing companies work their production cycles.

What’s one of the most undervalued elements in creating E2E supply chain visibility? It might surprise you, but this overlooked aspect of supply chain management is perhaps one of the most critical ingredients in how companies successfully move material supply to the production floor and finished products to the customer’s door. Of course, we’re talking about transportation.

That’s right, transport logistics, while perhaps underutilized, is a significant driver in how manufacturing companies administer, oversee, and evaluate the overall health, sustainability, and efficiency of their supply situation. It’s somewhat difficult to understand why transport logistics often gets lost in the fray of global supply chain management. Perhaps it’s because more emphasis is placed on operations at earlier stages in the value chain such as planning and procurement. Or perhaps it’s because the facilitating of effective production programs is often at the forefront of the minds of planners and managers. Either way, transport logistics, though often neglected, can either be a significant boon or detriment to how effective a manufacturing company conducts itself.

Because of the global nature of today’s automotive supply chain, slowdowns or valleys in production programs are constantly on the minds of OEMs and others across the supply stream. With so many disparate parts of the world now in play with production, distribution, warehousing, or transportation hubs, holidays, seasonal lulls, and other brands of disruption in terms of productivity can not only be frustrating for various players in the automotive landscape, but they can also be significant pain points for companies who do not utilize this time effectively.

For example, take a recent article in the commerce publication MarketWatch suggested this past summer was atypical in terms of production levels - at least throughout Europe, primarily in Germany - with manufacturing continuing at a brisk pace throughout the usual summer slow season, many within the global automotive supply chain still experienced lulls in orders and planned production programs. With so many employees on vacation and crucial parts of the supply stream in something of a holding pattern as the industry prepares for the busy fall season, it’s tempting to view the summer months as nothing more than downtime - a breather from the harried spring ramp-up in production. Given the 24/7, 365-nature of today's automotive industry, this summer slowdown instance is just one example of periods when production can slow and productivity can wain. 

Operational transport planning in today’s automotive supply chain is like that one junk drawer or cupboard everyone has in their house. It’s a chaotic collection of seemingly unrelated items that you often forget about until a certain item goes missing. The drawer or cupboard lacks any kind of organization and you often have little idea as to the volume, quantity, and nature of items inside. Similarly, operational transport planning and its lack of transparency and visibility into the overall supply situation means increases in unnecessary costs and resources, missing or lost parts and deliveries, and more complex logistics that detract from the clarity necessary to leverage lean supply chain management principles.

In short, operational transport planning can be a significant stumbling block for OEMs and Suppliers in transporting, monitoring, and reviewing how their parts move from production facilities to the customer, both in terms of speed and condition.

Think about the last time you packed a suitcase for a trip. You wanted to make the most use of the space. You carefully selected which items would be of most use and then placed them strategically in the suitcase to maximize the space restrictions and include as many items as possible. You had to consider the weight of the suitcase, whether that weight would result in additional surcharges at the airport, and the way in which the items were packed in order of priority to make the most commonly used items easy to fetch.

This same concept applies to container load management in the automotive supply chain. For OEMs to optimize transportation logistics and leverage lean supply principles for greater efficiency and visibility, container load management solutions are a good way to help manufacturers cut through the complexity and uncertainty that comes with global supply and transportation management by providing a more dynamic approach to managing container loads. Much like how you carefully select how to fold your shirts or where to stow a toiletry kit to maximize your packing ability, manufacturers who implement a container load solution will be better equipped to move products in a more cost-effective, productive manner.

In a recent blog entry, we examined the technology trend known as the Internet of Things and how digital connectivity and optimization is rapidly making it easier for supply chain managers and planners to achieve end-to-end supply chain visibility and transparency. The IOT and other smart supply software solutions provide, among other functions, real-time reporting and data management of products, but what good are these capabilities without intelligent systems to track and manage the location and conditions of products?

Enter Radio Frequency Identification (RFID), which is quickly becoming an important tool to leverage in achieving supply chain agility and transparency – especially as the supply pipeline continues to globalize and enter new and emerging markets. RFID technology utilizes tracking tags attached or embedded in objects to instantaneous identify the location and condition of these objects without the use of barcodes or scanners. These tags also contain and store information about the object – for example, a RFID tag on a head gasket may include such information as when the gasket was produced, where, when it was shipped to a warehouse, and more.

In a recent entry, we discussed the ins, outs, and benefits of leveraging LTL (less than truckload) shipping in the automotive supply chain as a critical driver in reducing freight costs, increasing efficiency, and enhancing visibility and agility from the production line to delivery at the customer’s doorstep. We also briefly looked at why some supply chain planners and managers are still reluctant to embrace LTL as a viable method of transportation management, dispelling some misconceptions about LTL as a key value proposition in today’s global supply landscape.

Today, in something of a part II of that discussion, we’ll examine another freight management strategy and its potential impact for companies seeking to optimize their transportation management via reducing costs and increasing productivity and reliability. Intermodal shipping, which has been viewed in the past as a problematic strategy for the movement of products, has in recent years become an increasingly viable and valuable component of a company’s freight platform.

For companies in today’s automotive supply chain, there are perhaps two primary concerns when it comes to production and supply logistics: How do we best produce our products, and what is the best way to move these products to our customers. While the former is often the focus of greater discussion and debate, especially given the disparate nature of production with facilities and hubs appearing more frequently in disparate parts of the world, the latter is often overlooked - though consist oversight in shipping and transportation management can be just as harmful to an OEMs bottom line as gaps in demand planning.

The fact is, even in today’s interconnected supply chain where software solutions provide greater potential for end-to-end visibility than ever before, there still remains great complexity and nuance when it comes to transportation management and ensuring best practices for shipping products to suppliers, distributors, or other customers, especially when trying to leverage lean supply principles. Because factors like fuel costs, taxation, regulations, and regional distress, OEMs are constantly having to monitor and modify freight methods in order to ensure products arrive within delivery windows under optimal conditions.

One such method for doing this, LTL (Less than Truckload) shipping, has increasingly been seen as a value-added proposition for OEMs who may be wary of relying solely on rail transit, especially in new and emerging markets like Mexico where the quality of infrastructure may be a concern.

Here’s a staggering statistic: A 2010 report from the U.S. Environmental Protection Agency (EPA) found roughly three-quarters of greenhouse gas emissions in the manufacturing industry originate in the supply chain. That’s about 75 percent. In addition, the report also found an estimated 50 percent of total expenses and greenhouse gas emissions stemmed from the manufacturing supply chain industry, which makes for a great deal of both resource investment and harm to the global environment at the hand of manufacturing and supply companies.

What’s perhaps most startling about this stat is that it’s more than 5 years old and doesn’t take into account the rise in emerging markets and regions in today’s automotive supply stream. In an industry that is increasingly becoming more competitive and crowded, it’s not a far cry to imagine these numbers have, if not worsened, remained consistent during these last five years, and many industry analysts believe the supply chain’s negative impact on the environment will only worsen unless manufacturers and suppliers take significant steps to curb their carbon footprint.