In today’s economic environment, where the need to reduce supply chain execution costs and free up working capital is greater than ever, a solution that can promise a reduction in excess inventory is the answer just about every company wants. Even for the most sophisticated supply chain organizations, achieving adequate levels of visibility in the supply chain is an ongoing challenge. Many companies spend a great deal of their time and energy looking for ways to convert an inefficient supply chain weakened by silos or discontinuities into a seamless, demand-driven value network (DDVN).
A DDVN uses demand data to position inventory effectively, plan manufacturing capacity and execute shipment orders. The foundation of a DDVN is visibility–access to real-time, network-wide data and seamless, electronic linkage across the supply value chain. Visibility permits an enhanced ability to execute and manage exceptions, as well as provide on-time deliveries and a compressed order-to-delivery cycle.
Control Tower
To give you an example of how you can facilitate a DDVN for your customers, my company Ryder System, a third-party logistics provider (3PL), has developed what we call the Control Tower. A combination of processes and technologies, the Control Tower facilitates the centralized collection and distribution of part and SKU level data with an emphasis on visibility and proactive exception management.
Similar to the way in which every flight has a flight plan in the aviation industry, Ryder gives every shipment managed through the Control Tower a plan, which is recorded electronically. What occurs throughout the life of that shipment is visible electronically in real-time to manufacturers, suppliers and Ryder.
From the Control Tower–which is a physical hub as well as a process utility–Ryder tracks and oversees shipments from the time they are picked up to the time they arrive at their final destination. Control Tower personnel working around the clock manage and close out shipments against their individual plan. The value of visibility, in this case, lies not only in having access to real-time network data, but also in having the processes and resources to manage exceptions adroitly so as to guarantee a flawless execution. To further accelerate the order-to-cash cycle, the system is integrated to ensure that all parties, including departments handling the financial reporting process, are receiving the information they need as quickly as possible.
Ryder developed this solution through a combination of its own proprietary technology and i2 and SeeBeyond technologies. The Control Tower processes some 14 million shipments annually. What it offers varies according to the industry and customer–in some cases, the Control Tower is used for fixed, inbound deliveries and in other cases, for a more dynamic outbound retail environment–but the goal is always to ensure that exceptions to each shipment plan are quickly handled so that the shipment can continue to its final destination with minimal interruptions.
Reducing Expedite Charges
The Control Tower facilitates the dynamic optimization of transportation options to ensure delivery at the expected time. Carried out in an electronic tender and acceptance environment, the Control Tower also benefits the customer from a compliance standpoint, eliminating rogue routings and compliance violation charges. In addition, expedite costs are reduced and buffer inventory is greatly diminished, allowing companies to operate more efficiently with less inventory.
For example, one large OEM was able to eliminate $40 million in expedite charges thanks to its use of a DDVN. Another high-tech, consumer electronics manufacturer was able to eliminate its compliance charges of $5 million over a two-year period.
For those companies that do not have the resources or the scale to justify outsourcing, there are also many proven transportation and warehouse management software programs on the market that can yield very positive results, especially if these companies are still using manual processes to monitor their shipment events. Performing an audit of problem areas in the supply chain and then using this information to investigate technologies is one viable option to increase visibility.
Whether by hiring a 3PL or choosing to do it yourself, taking the necessary steps to enhance network data, interconnectivity and visibility will be critical in optimizing and improving the performance of your supply chain.
Jim W. Moore is vice president of supply chain solutions for Ryder System Inc.This article originally appeared in the Logistics Today digital magazine. To read other articles from that issue, click here: http://penton.ebookhost.net/lt/ebook/14/
