We’ve got horrible roads where I live, lots of bumps and potholes everywhere. Not surprisingly, I’ve had to replace the shock absorbers on my car more than once. What does a shock absorber do? They dampen all those bumps in the road so your car can travel as smoothly as possible. If you’re a transportation manager, you probably feel like you’ve been the shock absorber of your company’s supply chain and logistics operations, especially over the past few years. What does that mean exactly? What actions can companies take to prevent their TMS from becoming a shock absorber? Those are some of the questions I discussed with Andy Dyer, President, Transportation Management at AFS Logistics, a non-asset-based third-party logistics provider, on a recent episode of Talking Logistics.
The TMS Shock Absorber
Supply chains have seen tremendous volatility in the past three years, and transportation has often been the shock absorber in this process. I asked Andy why this has been the case.
Andy explains that since transportation is the last step in the supply chain output process, it has to deal with the accumulation of inefficiencies and ineffectiveness that have happened upstream. “Whether that’s delayed production, lack of production, late materials inbound, order sourcing problems, or just people from one department not talking with people from another department, all those things come down to transportation. It’s at the tip of the bullwhip effect,” he says. “Then the transportation team has to decide in real time to move the load faster, or source it differently in order to not disappoint the customer.”
Thinking Outside the Function
Given transportation managers’ problems, what can be done to start creating solutions? Andy suggests the first step is that people from all departments need to think outside their own function to understand how their actions impact other parts of the business.
“I would start with looking at the hand-offs between functions,” he says. “For example, if I’m running inbound transportation and supporting a distribution center, it’s important for me to think outside of ‘Did I get the truck there on time?’” What else should an inbound transportation manager be thinking about? Andy explains in this short clip:
Supply Chain Orchestration
What Andy is describing is supply chain orchestration (SCO), so I asked him if Supply Chain Orchestration is something customers are thinking about and want to enable when they first engage with AFS?
He says some are, but more commonly people begin the conversation with their immediate pain points. “My costs are too high. My OTIFs are too low. I have too much inventory of this and not enough of that. I have poor delivery. My chargebacks are too high. Those are the symptoms. That then leads to ‘Five Whys’-type of conversations that help people to understand the intended and unintended consequences of decisions being made and to understand the root causes of their difficulties. Usually, it comes down to a lack of information, poor information, or the timeliness of the information. People often don’t call it SCO, but that’s really what it is.”
SCO in Action
Andy suggests that a good place to start with SCO is with vendor inbound, which is often managed by procurement. Procurement has to understand what is important to their customer (manufacturing, distribution, etc.). “If I’m running a manufacturing plant, I really don’t care when a vendor ships anything. What I care about is when it delivers (do I have it when I need it). This requires a change of focus from input-based measures (e.g. Did it ship?) to outcome-based ones (e.g. Did I get it On-Time, In-Full?)
“Using technology platforms like Kinaxis, which we use, we can understand the rules, publish schedules, understand what has and hasn’t been done, and then make all of that information broadly available to the stakeholders in the process. If you have complete and consistent information, you can then start making transportation decisions that are effective and efficient.”
It’s important to note that in supply chain and logistics the stakeholders are not just internal. Suppliers, carriers, third-party logistics providers, etc. all need access to that information to make the entire process more efficient.
AI and Positioning Yourself for Success
I also asked Andy about the role of AI in this process and how companies can best position themselves for success with SCO. He shared some great insights and advice, so I recommend you watch the full episode for all the details. Then keep the conversation going by posting a comment with your questions and perspective on this topic!