Q&A: 5 Trends Forcing Supply Chain Innovation

Posted by Martin Verwijmeren on Jul 28, 2017 1:31:19 PM

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This past week, we conducted a webinar on 5 Trends Forcing Innovation in Supply Chain. It was a great conversation on the innovations happening within supply chain operations with spirited questions and discussion after the webinar.

Five Trends Forcing Innovation in Your Supply Chain

As we weren’t able to get to all the questions, we’ve compiled all the questions below with answers from webinar speakers Chris Brablc and Brian Hodgson.

From your experience, is VMI an important thing still for customers, or are they more going to expect flexible partners fulfilling short term, dynamic demands?

Vendor Managed Inventory is still very important and we see it continued to be valued in automotive and retail. The benefits of supply chain orchestration and increased collaboration is extended visibility of information to improve how VMI can be applied. Sharing inventory levels, planned usage, expected consumption are examples where sharing more real time information can cut down on overall supply chain inventory, while ensuring the right levels for production or retail sales.

You mentioned getting more granular with your visibility. What are you seeing orgs doing with this insight into non-transportation steps such as manufacturing?

When you think about supply chain visibility and its evolution you are seeing organizations look to get much more granular into the supply chain and all the steps required to deliver a customer order on time well past just transportation. In order to fulfill and order On-time, In-Full (OTIF) there are a number of steps in the supply chain that need to happen quickly with lead times we will look to improve and optimize. Typically, organizations have pretty good visibility once an order gets to the transportation stage of the supply chain with insight from their TMS but where they have limited to no visibility are the steps before transport.

This can include steps in the manufacture process, picking and packing in the warehouse, assembly or kitting,or splitting, cross dock activities, combining steps in transport or reverse / repair steps that give more detailed visibility into the expected milestones and time horizons for all of these steps. This is important because as lead times get shorter with greater customer expectations we need to understand when and where bottlenecks form in our process. While many organizations have visibility within the four walls of these steps, visibility across the customer order for all steps often doesn’t exist. This leads to identifying what went wrong with a customer order after the fact because they lack the ability to take action on this exception in real-time so the customer is never affected by the delay both internally and externally across your supply chain network.

We are looking for control tower solutions. What should we be looking for as we talk to providers?

Control tower and supply chain visibility are intrinsically linked and when looking at control towers, you’ll find that not all control towers are equal or take the same approach to helping execute and control the supply chain. Typically, supply chain control towers may be just focused on transportation or they may be more high level analytics tools, which can be helpful but in the end, you’ll want to look for a more holistic solution that is focused on end-to-end execution and control covering all the granular steps, including transportation, but all other activities as well

As mentioned above, we’re seeing organizations are increasingly looking for end-to-end visibility across all the stages of the supply chain. This visibility is step one for most organizations to see the real-time nature of fulfillment of customer orders. Control tower is step two to start to take action on these milestones, be able to execute on exceptions in real-time and consistently optimize how you leverage your supply chain stakeholders and investments.

When looking for a control tower, here are a few good questions to ask providers:

  • Does your control tower provide visibility and execution across all milestones in the supply chain including non-transportation steps?
  • Does your control tower connect with my existing systems and network of supply chain suppliers and partners to optimize each customer order flow?
  • Will I lose the control tower technology should I decide to switch providers? (NOTE: Typically the case if you get a control tower from a 3PL or 4PL partner.)
  • Does your control tower provide both visibility (identifying the issues) and orchestration (resolving the issues)?

As an internet retailer, we provide products from our warehouse, and well as some products from suppliers. You mentioned dynamic network inventory, what additional benefits does this provide beyond what we are doing?

Traditionally, supplier ship programs are based on status rules such as a set of product IDs are always shipped from a certain supplier. With more dynamic inventory rules, shipment from a supplier might be based on available inventory in the warehouse, at the supplier, or perhaps the destination of the shipment and the supplier’s proximity. These dynamic rules can also be combined with more advanced orchestration such as with multi-item orders where items may need to be consolidated and delivered together. This helps you to not only satisfy orders quicker due to leveraging the best available inventory but for many organizations this also means satisfying more orders overall with greater visibility into inventory across their entire network vs. siloed warehouses where inventory may be low.

My ERP does some of the trends you mention, what are the limitations I should look to fix?

ERP, WMS and TMS systems have become mainstays in the supply chain technology stack and for good reason. These systems have tackled large problems in your supply chain around order entry and manufacturing, warehouse optimization and transportation optimization.

What we’ve seen is that the main issues supply chain leaders have with these systems is not what they do but that these systems are often tied too closely to the “four walls” of what their solution covers. This has created silos in visibility, execution and optimization across the end-to-end supply chain. Supply chain leaders will often admit that with their current stack, they have multiple “solutions” to the same problem with their depending on the technology used, each offering a different take on resolution.

The big takeaway here is that organizations increasingly are looking for a single source of truth across their supply chain helping to extend their systems but also provide their teams with a single place to learn, optimize and execute across the supply chain. Without considerable time and monetary investment (and an IT team to continuously innovate), getting your ERP to connect with your other systems and provide this view is impossible. And integrations often result in static flows that lead to problems as supply chain needs change. There are a number of purpose built solutions in supply chain orchestration that can help to provide this visibility and control while requiring less implementation and internal resources as well as more agility as your supply chain evolves.

As a 3PL, what is the benefit of supply chain orchestration?

Brand owners increasingly are building out their supply chain networks to not only expand their business to new markets and geographies but also to meet the consistently higher demands of existing customers. As such, they are looking for ways to have better supplier collaboration and visibility and control of their 3PL partner networks.

For 3PL’s this presents a tremendous opportunity to stand out from others by providing better visibility to their customers while becoming increasingly agile and flexible in the services they provider. Supply chain orchestration with centralized control tower and visibility can help them win more business and expand existing business through:

  • Expansion of value added services
  • Added flexibility to support more order flows and thus customer use cases
  • Increased visibility into margins across every customer order to better understand profitable services
  • Multi-tenant customer support that helps manage multiple customers on the same technology stack

Supply chain orchestration helps 3PLs be much more nimble and responsive to customer needs ensuring that they can say “yes” to more bids and customer needs while also helping them optimize these flows for greater profitability.

The alternative to buying supply chain orchestration technology is to build internally. However, this is often costly not only to build but also to maintain over time. We see more 3PL’s opting the buy route vs. internally building so they can focus on more on the logistics side of the business vs. control tower technology.

You mentioned some reports, can you share the links to them?

The reports that we mentioned in the webinar are the following:

2017 Supply Chains to Admire via Supply Chain Insights: This is a tremendous yearly research report done but Lora Cecere and the Supply Chain Insights team.

2017 Top 25 Supply Chains via Gartner (sign up for free access): Another great ranking of the best company supply chains.

2017 Wordwide Supply Chain Survey via Geodis: The survey results provide a ton of insights into the key trends that supply chain leaders are thinking about. We had an article on the key takeaways in our blog "The Top 5 Insights from the Geodis 2017 Supply Chain Worldwide Survey".

AEI Study on the Fortune 500: This shows the tremendous movement and decreasing tenure of Fortune 500 companies.

We do contract manufacturing in Asia, and currently do not have visibility in how POs are getting broken down and shipped. What are the options to gain better visibility? What are best practices in getting suppliers to comply with our informational needs?

With supply chain orchestration you can collaborate more effectively with your contract manufacturers, not only seeing how Purchase Orders will be shipped, but also visibility to key steps in the manufacturing process. In order to increase supplier participation you should offer both portal and integration options, From a business perspective you could also provide financial incentives or penalties for not complying with your supply chain network policies.

We currently outsource of repair and reverse logistics process to a single provider who provides good visibility. What would be the benefits of supply chain orchestration in this scenario?

We have seen cases where the single source 3PL provider may have limitations in providing global coverage in terms of repair services and customer pick -up and delivery. With supply chain orchestration, you have more flexibility in leveraging additional services providers to ensure the optimal customer service, while still maintaining visibility and across all parties. So as you expand and grow, you can bring more suppliers into your network that filled specific niches. You can also make changes to your existing suppliers easily by evaluating overall performance through greater visibility.

 

Topics: Supply Chain Orchestration, Supply Chain Visibility, Supply Chain Complexity, 3PL, Supplier Collaboration, Control Tower, Inventory Management

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