How Flexible is Your Logistics Network?

It seems ironic that the sophisticated logistics systems that gave rise to just-in-time manufacturing are now being outmoded by the evolution those very systems encouraged: manufacturing on demand. Combine those changes with new intensified consumer demands in retail, ranging from customization to next-day delivery, and you have a perfect storm – or the demand for a whole new way of looking at how technology supports a more complex supply chain, the next level above the traditional linear network.

These and other changes demand attention to what we now call the Supply Chain Ecosystem, which stresses the critical importance of maximizing multiple networks in your supply chain.

In nature, earth’s ecosystem is a complex network of interwoven feedback among sunlight, clouds, plants, and animals from the whale-sized to submicroscopic. Likewise, a logistics ecosystem demands a more complex structure involving interdependencies and connectivity between multiple organizations.

These complex evolutions in manufacturing plague logistics and create inefficiencies. We’ve all seen the following, sometimes far too often:

  • Trucks arriving at the wrong place at the wrong time.
  • Airlifting freight when it could have traveled by ship.
  • Expediting freight when its arrival was not urgent.
  • Empty trucks passing each other on the road as waste in motion.
  • Underutilization of private fleets with no optimization strategy.
  • Trailers, railcars and containers echoing with empty space.
  • Similar themes within the production and distribution center space.

So what does optimizing networks mean? It involves having the right information at the right time and in the right hands. Second, and more important, it means being able to share that information across the supply chain ecosystem. It means the developmentand, with experience, the evolutionof information systems that flow smoothly through traditional barriers, whether those barriers are bureaucratic silos or narrowly drawn computer applications.

What are the networks most commonly plagued by these inefficiencies? They include carriers (truck, rail, air and sea); suppliers who ship by carriers; governmental agencies that set cross-border trade and regulations; and, at the end of the line, customers and the customers’ customers.

The question then becomes how to optimize. The answer lies in how you acquire, organize, and disseminate data. To be sure, the necessary data is already there. It underlies all systems and, provided improvement in linkages, the data flows can move in tandem. And as users learn, systems can improve and evolve, just as in the global economy, just as in nature itself.

One clear example of network collaboration lies in the ever-present issue of maximizing carrier capacity. In an ideal maximized setting, all carriers in the supplier and customer network could cooperatively seek capacity and book freight with an entity that may not have been a previous customer. Shippers, likewise, could do the same for private fleets where they have half a truck and want to connect with other shippers to carry their freight from and to the same zone. Consolidation of freight at ports also provides a significant opportunity to improve product flows.

Many problems companies face regarding logistics management result from not being proactive, but more importantly, not willing or able to share information across their own ecosystems. Information is basically useless unless it is shared and used. Properly distributed data promote better decisions which also work against waste.

What is required to deliver real results, then, is a genuine expansion from asset-focused (singular) use of data to information-focused (multiple) use of data. Those who can facilitate this data flow and integrate its applicability across the network the best will have strong supply chains, stay competitive, and ultimately thrive. Unfortunately, those who refuse to see a need for change won’t succeed.

Traditionally, disparate systems and single-minded processes drive logistics costs and results. The change we see on the horizon is in single platforms. We believe the strategy of expanded connectivity amongst supply chain partners—done to collaborate and share data to fill and optimize capacity—will enhance efficiency in terms of proper mode selection and shortened fulfillment cycles.

Relationships with suppliers, carriers and customers will need to become closer with partners working to provide both service and assets. From a technological standpoint, shippers’ and leading service providers’ strategies must evolve to embrace the need for collaboration and data sharing. Embracing this change will strengthen the ecosystem and streamline supply chain efficiency.

lee_payneLee Payne is the Vice President of Product Strategy at Kewill. She has worked in the supply chain industry for 20 years providing strategic direction to help increase efficiency and produce high customer value.