Next-Gen Supply Chain Management

Major transformational change in supply chain and logistics is not a frequent occurrence, but it has happened with regularity throughout history: The advent of the steam engine and the related rise of railway and steamship lines. The invention of diesel and turbine engines resulting in the supplanting of steam-powered vehicles with oil-fueled locomotives, trucks and airliners. The construction of limited-access super highways and the rise of trucking services. And now, the new-age supply chain will take the next leap forward through integrated technology-enabled solutions. Unlike the earlier examples listed above, ‘Next-Gen’ productivity improvement and optimized supply chain performance will come from technology-enabled solutions, rather than mechanical or engineering inventions.

In the recent film The Theory of Everything, Steven Hawking sets a goal of finding a “single, elegant equation that explains everything” in relation to the universe. Supply chain faces a somewhat less complex and less daunting task, but still needs a fully integrated, systemic approach to managing the business. So, while marvelous in concept and exciting in theory, true end-to-end (e-2-e) supply chain management has lagged behind the technological ability to deliver it. In other words, it lacks a single, unifying solution: there is no silver-bullet, no single, holistic solution supply chain professionals can turn to.

Unlike Dr. Hawking, we don’t need a single, elegant solution. But, if we are to truly transform supply chain management, we do need the ability to envision, design, and blueprint a solution for operationalizing e-2-e transportation management, if not for the entire supply chain. Transportation now accounts for about 63% of total supply chain cost, so it is vital to get right.

The critical capabilities stem from the ability to see what is going on across the entire patch (e.g. from shipper’s dock to store shelf) with SKU-level visibility. Then, and only then, as a category manager or merchant buyer, will a supply chain professional and his or her internal customers be able to get a comprehensive picture of the inventory of the products they are responsible for, including what’s on the shipper’s dock, at the consolidator, on the ocean vessel or stack train or truck, in the DC and on the store shelf.

Two significant benefits stem from this. First, being able to manage inventory much more efficiently because it all can be seen, down to the individual SKU-level. Second, analyzing, evaluating and tweaking roadblocks and delay points in the supply chain can be done on a continuous-improvement basis to improve performance. The goal is a more reliable, predictable supply chain. The net result of a more reliable, predictable supply chain relates directly to the ability to reduce safety stock and overall inventory.

Conceptually, this sort of solution is easy to envision and the technology now exists to make it a reality, but that’s where the simplicity ends. The art and the science of getting this right is in the groundwork laid for implementing a new or refreshed strategic roadmap. Like building a house, if the blueprint is haphazard or the foundation is poorly executed, the balance of the structure will fail to meet expectations.

The sausage-making in taking this on is unglamorous, gritty work in examining current operating and business practices and then using that as a springboard to build new capabilities, using tools and technologies that simply weren’t available before. Better construction, insulation and window manufacturing make for more energy-efficient homes that are more economical to operate. Similarly, amping up supply chain capabilities with the best-of-breed solutions on the market, coupled with skilled implementation and execution, leads to better supply chain performance.

All too often the vital upfront blueprinting and design is done without proper due-diligence. As one seasoned executive quipped: “We answer vast problems with ‘half-vast’ solutions!” The results of substandard efforts are predictable and undesirable. There are no real shortcuts. You need to plan well and expend the effort, resources, and money necessary to do a comprehensive process-mapping and blueprint design exercise. This should be an outcome-based approach, not a memorialization of past practices using new software.

As a start, find out how many solution architects you have – if the answer is none, then get some or retain consultants who have those skills and the necessary experience. You may consider outsourcing to help de-risk the effort and also to tap the skills and expertise of those who have blazed the trail before you. This can be done through an RFI/RFP process, but it really only works if you have done the upfront design work so you can explicitly and accurately enumerate what you want potential partners to respond to. Failure to be complete and accurate will lead to incomplete and inaccurate responses based on incorrect assumptions, which will inevitably cause pain further down the path.

Conducting rigorous evaluations of potential partners and their responses is vital. Doing so in a workshop format rather trying to replicate the Spanish Inquisition will make the exercise beneficial for all parties in working toward a more powerful solution that can be operationalized with the least amount of disruption and pain.

Those who jump out in front of that pack with true e-2-e capabilities for managing their supply chain in a unified, holistic way will trump the competition in terms of supply chain reliability and efficiency, cost take-out, inventory reduction and ultimately by improving the customer experience, which is really what counts most.

BrooksBentz_TransplaceBrooks Bentz is President, Supply Chain Consulting Services at Transplace. Mr. Bentz has more than four decades in supply chain consulting, transportation and logistics, and currently leads Transplace Consulting Services. His specialties include supply chain solutions, transportation management, freight capacity sourcing and optimization, transportation technology, shipper and carrier relationship management, fleet and linear asset management, and network operations. Prior to joining Transplace, Mr. Bentz spent 21 years with Andersen Consulting/Accenture, where he was a managing director in supply chain management, responsible for supply chain transportation. He also served as a vice president of intermodal for Burlington Northern Railroad, was president & CEO of Ameritrans Corporation, and was also the CEO of Trans-Star Trucking. Prior to that he was general manager, intermodal, for Boston & Maine Railroad, and founder, as well as COO of BMX, B&M’s motor carrier subsidiary. Additionally, Mr. Bentz is an adjunct professor in supply chain in the graduate transportation program at the University of Denver and a member of the board of directors.