How to achieve supply chain optimisation

Supply chains are complex and supply chain managers face increasing challenges. To name just a few, they include: siloed data, rising customer expectations and emerging disruptions (hello, COVID-19). To keep pace with these demands while remaining profitable, smart logistics managers are partnering with expert providers to optimise the supply chain from end to end.

Good supply chain consultants analyse and improve the multitude of processes within the system and the network overall. They reduce wastage, give customers what they want - when and where they want it - while maintaining business profitability and sustainability. Here is what to look for in a partner to optimise your supply chain.

Sophisticated technology to aggregate data

You can’t manage what you can’t measure. So collecting real-time data (RTD) is a crucial step in optimising any supply chain. RTD operates at several levels in transport logistics; it might be a scannable barcode on an individual parcel or covering an entire shipment, it could be a GPS transponder on a truck, or it might be a ship’s manifest uploaded to a Cloud storage site.

To make any sense of the data it’s essential that it feeds in from its various sources into one central repository. Trying to manually enter or transfer data is fraught with danger, not to mention incredibly time-consuming. Instead, an RTD-enabled multi-carrier dispatch platform like efm’s OneFlo makes it easy not only to consign freight but to maintain visibility across its journey, with consignment status notifications and Proof of Delivery documentation in one place.

While real-time updates are important for the day-to-day, aggregation of data is critical for optimisation over the long-term. Measuring outcomes and observing trends across key metrics including punctuality, accuracy, and damage rate, enables you to track performance and identify opportunities for improved performance.

Trained, passionate people

Technology is no doubt essential for capturing data but to make sense of it and act upon it, you need trained and enthusiastic people who care about ongoing improvement. First, a strategic team will analyse your requirements and select the right mix of carriers to suit. For instance: a blend of less-than-truckload, truckload and intermodal might ensure the best price and service; a regional LTL carrier might deliver in a shorter timeframe than a national carrier; and a regional carrier may offer a discount to avoid an empty backhaul. If cost is the overriding priority – perhaps for customer returns – least-cost routing is an option. However, this is just the beginning.

Supply chain optimisation experts will continue to review the data and find areas for improvement. Take for instance a real-life example from one of our customers. We identified an opportunity for the business to save more than 10% of annual freight spend, however after 6 months, they had realised only around 50 percent of achievable gains. Our investigation revealed that the customer’s teams were using the lowest cost carrier, but only for about three in four consignments. The remaining quarter was on track to cost the customer $40,000 in the year from a single branch. And this was from just one of 20 branches. Without a team constantly monitoring and looking for problems to solve, businesses could think they have ‘fixed’ their problem while wasting hundreds of thousands of dollars per year.

An inquisitive mindset

You need a team that likes to find problems and seeks to understand them. You do not want an investigator to mistake a symptom for the root cause. The 5 Whys – the iterative interrogative innovated by the Toyota Motor Corporation- is an effective way to expose weaknesses in your systems or processes. Our Account Managers routinely implement the 5 Whys method to get to the root cause of a problem.

Through this process we uncover various underlying causes of inefficiency, which are often not immediately obvious. For example, through consultation with branch managers around the country, we may find that someone has a personal bias towards particular carrier due to a previous working relationship. Or it could be an operational issue, such as when a cheaper carrier will only pick up the freight before 1pm but customers want to finalise an order late in the afternoon.

Once the root cause is identified it’s possible to address it. In these situations, we might for example work with the carrier to adapt their service to meet the customer’s expectations; or we find another carrier solution. Financial performance KPIs for branch manager performance is also another lever that can drive a significant improvement in a company’s nation-wide profitability.

Dedicated customer service

The experience that the receiver – your customer - has with your logistics provider is an extension of your company’s brand and is ultimately a reflection of your company. Therefore, it’s critical that your logistics provider address customer enquiries appropriately. Both their re-active and pro-active approaches to customer service are equally important for optimising the supply chain.

The re-active part is the process of appropriately receiving and addressing customer enquiries. Although you might take this for granted, the standard of service across providers is often sub-par, with many providers outsourcing this requirement to a small team offshore responsible for hundreds of customer accounts. The lack of a single point of contact and the absence of knowledge about the local geography can lead to disconnection with you, the customer, which breeds inefficiency. So, it’s important to look for an onshore customer service team that will provide a dedicated service for your business.

Secondly, the pro-active component of customer service is just as important. Customer Service and Account Management need to work together to create a better experience for customers and receivers. Again, a logistics team will analyse the data to investigate why there are so many customer enquiries and improve the processes so they don’t happen in the first place. For example, when efm began its relationship with one customer we were fielding around 80 enquiries on their behalf per day. After working closely with the customer’s in-house logistics managers for six months, we managed to reduce this to around 30 enquiries per day through proactive monitoring and DIFOT reporting.

A focus on details

Your supply chain partner should have an obsessive focus on details because the whole will become more than the sum of its parts. For example, demurrage charges – fees paid for exceeding the allocated time for loading or unloading – can easily add 10 to 15 percent to the face-value of the transport. With visibility of the location of shipments at any time, a strategic logistics partner can identify the bottlenecks and optimise processes to reduce these charges.

Another example is the consideration of freight configurations to improve load efficiency for each shipment. Pro-actively load planning so as to fill every square inch of the asset, whether that be a truck, railcar or airplane, reduces direct freight costs and will have a flow-on effect at the depot where unloading will be much easier and faster. For end-to-end optimisation, it’s necessary to pull apart and analyse every facet of the supply chain.

A commitment to ongoing improvement

Resilient and sustainable supply chains are a non-negotiable for businesses today that want to remain relevant. The question is how to achieve this competitively and this is where supply chain consultants – or truly strategic fourth party logistics providers - come in.

The right partner, with the mix of qualities mentioned above will enable you to optimise your supply chain from end to end and turn the challenges of our time into an opportunity to carve out competitive advantage.