Keith R. Schmitz is a Midwest-based writer who has written about and taught courses in the areas of supply chain operations, material handling and management.
It's not easy being lean. In today's sputtering economy, supply chain leaders face the enormous challenge of satisfying customers with the most limited of resources. To do this, they must understand the complex and interdependent touch points within the supply chain. They must understand the obvious—and not so obvious—impacts of their decisions on total costs as well as service. They also need to balance all of these requirements under conditions of continual change.
As companies struggle to compete in a volatile economic environment,creating a manageable supply chain becomes all the more critical. Manageable supply chain operations dynamically integrate demand and supply management, target customers to boost revenue and help to maximize profit and shareholder value.
If that sounds like a lot of work, it is. But it's worth the trouble. By building a manageable supply chain operation, companies are better positioned to tackle changes in the supply chain environment. Beyond that, a manageable supply chain enables a company to become an adaptive enterprise, using technology tools to gauge changes in the market and respond quickly to them, consider the best options to use capital and grow its business faster than its competitors can.
The challenge is to get more out of what has already been invested—to achieve maximum return on assets (ROA). Every company must ensure that its most important assets—its existing IT infrastructure and its database of information on customers, suppliers and employees—are optimized for maximum return.
Elements of a successful supply chain
Strategically, it is easy to talk about minimizing costs while maintaining or increasing customer service levels. It is at the operational level where this strategy will either succeed or fail. This is the area where logistics is critical to meeting customers' needs in a cost-effective manner.
The cynic in all of us will question whether it's truly possible to balance customer service and total supply chain costs without sacrificing one for the other. With a lot of hard work, it is possible. The result is higher profits, higher earnings per share and higher stock values.
In order to meet the customer's needs and still obtain good financial results, supply chain leaders must focus on technology, infrastructure and human capital. That's more than mere theory. The following are some actual examples of cases in which supply chain leaders have come up with solutions that reduce overall operating costs and increase service levels:
A project team designed standard business processes that consolidated more than 20 different order fulfillment process flows into two standard business processes, improving expected turn time by 15 percent while increasing order accuracy and decreasing back orders.
A decision support team's analysis of a client's shipping costs resulted in a change in packaging material and grouping, leading to cost reductions of more than 18 percent.
A shipping team came up with a plan for grouping customers' shipments based on destination, reducing the number of order status inquiries by more than 15 percent.
Operations specialists proactively modified a customer's packaging types, resulting in a 20-percent savings in material costs.
But successful supply chain leaders have to do much more than satisfy customers; they must balance those customers' needs against profits. The only way to know what is possible—and determine its impact on your balance sheet—is to adopt an in-depth supply chain approach. This requires leaders to use the following three tools to manage every facet of the production and movement of products:
Technology. A central element of being a supply chain leader and creating a manageable supply chain is the ability to integrate with legacy systems,ERP systems and workflow systems. Once connectivity and visibility are established across the supply chain, it becomes essential to harness the available data to help managers make informed decisions affecting the supply chain.
Two important technological changes will affect how business is conducted with customers: integration of software applications, such as enterprise resource planning (ERP), customer relationship management (CRM) and advanced planning and scheduling (APS),and the advent of Internet-based communication.
Companies have begun to realize that every customer interaction is an opportunity to ensure that a customer is satisfied and that satisfied customers buy more products. The need for companies,especially those in the mid-market sector, to achieve greater return on relationships, enhance customer loyalty, expand and protect market share, and adapt to constant change can only be met by integrating ERP, CRM and material requirements planning (MRP) functionality into their supply chain.
Infrastructure. To remain competitive, supply chain leaders must be able to sell their products worldwide, at any time and in any quantity required. The prerequisite for this is a system of connected/networked global distribution points (and the associated information) that can respond individually and quickly to customer demand. What is needed is an integrated supply model that can coordinate sourcing of multiple products/components from multiple suppliers on demand.
There is a great deal of planning involved when considering how much of an on-demand model a client can effectively incorporate into its supply chain. The most compelling reasons for considering this cultural change in a company's operations include the following:
On-demand solutions greatly enhance a client's ability to communicate with its entire customer base while sending messages that are individual, personal, unique and targeted.
On-demand solutions distinguish a company from its competition, resulting in improved customer retention and loyalty.
On-demand solutions add flexibility to order design and program management.
An organization's ability to manage a supply chain infrastructure that integrates on-demand solutions will give it the flexibility to adapt to the market's ever-changing requirements.
The cornerstone of on-demand manufacturing is material management, an area where true supply chain leaders will have to focus their attention and energy. This is the grouping of all management functions that support the complete cycle of material flow from procurement, warehousing and production to fulfillment and distribution.
Human capital. It is people who come first.Without a good team, business success is impossible to achieve. The quality of products and services depends on the competence and professionalism of the people who provide them. A true supply chain leader is one who not only understands the importance of enthusiastic employees, but also consistently and effectively motivates them toward continual improvement.
Building trust with your employees comes from being able to rely on the other links in your supply chain. A successful supply chain requires an understanding of the new interdependencies being constructed and of the roles and responsibilities that must be adopted for the enterprise and its supply partners to become more collaborative.
Beyond the requisite technical skills, employees must become comfortable with the new workflow and underlying concepts int roduced by supply chain initiatives before the company will benefit from increased productivity.
To help shorten the ramp-up period, businesses implementing supply chain solutions should plan a comprehensive training program that offers employees hands-on access to a system that simulates real-world supply chain environments and provides insight into strategic supply chain operations.
Great expectations Supply chain ROA can be greatly enhanced—or impeded— by the way a company addresses the difficult challenge of adapting to a supply chain workflow model. Ultimately, it will be the human factor that makes or breaks this new work process within an organization.
The future development of supply chains will determine the success of companies and their profitability. Working with other supply chain leaders can translate into cost savi ngs and enhanced supply chain solutions. Your organization will begin to adopt the practices, attitudes and expectations of the customers and suppliers with which it interacts. By selecting the best, working with the best and expecting the best, you increase your chances of achieving the best.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.