ROI from Visibility Solutions is Clearly There – Here are a Number of Places You can Find It

Today, the vast majority of enterprise-class companies are global. Why? The benefits of sourcing from low cost countries and selling into new foreign markets are too strong to dismiss.  Unfortunately, many still make due with sub-standard global processes and technologies borrowed from domestic operations. Global transportation and supply chain visibility are two such areas. Here are some questions to ask yourself to highlight ways you may be losing money without the right processes in place for global shipments.

Over-Reliance On Expedited Shipping

While some shippers must always use expedited shipping because their products are time-sensitive, many organizations use it to compensate when something has failed in the supply chain. Examining opportunities to reduce expedited airfreight and move to ocean freight is always a good cost-reduction strategy for global shippers. When evaluating this opportunity, ask yourself these questions:

Do I have enough visibility into my inbound shipments against orders to make trade-offs that will still meet customer demand without having to expedite shipments?
Do I need to pay for expedited inbound shipping from my suppliers? Where can I find more lead time in the planning process?
Is my inventory system giving me enough information about ordering timeframes so I can avoid the cost of rush orders?

Through better planning and supply chain visibility, most global shippers can reduce expedited freight by 15 - 20% annually. This translates to significant costs savings for global companies with even moderate shipping volumes.

Incurring Demurrage and Detention Fines

Demurrage and detention charges usually occur when planning schedules are out of balance, when communication and notification are poor, and when there are delays in clearing Customs. A company that routinely incurs these fees is likely not carefully monitoring cargo arrival and doesn’t have a sound understanding of in-transit cycle times.

Understanding your business processes is the first step:

How am I notified when freight arrives?
Am I clearing Customs as efficiently as possible so the free period in the terminal isn’t exceeded?
How can I further minimize transit times so I can return containers on time?
Can I improve my yard and dock operations to ensure maximum throughput and prevent trailer aging?

According to a study by the Aberdeen Group, real time visibility and coordination can help reduce demurrage and detention fees by 25 – 50%. (Globalization: Linking Supply Chain Transformation to the Profit and Loss Statement,” Aberdeen Group, Sep 2011.)

Poor Communication with Trading Partners

An unproductive use of your customer service representatives’ time is providing answers about deliveries that could be found online. Similarly, purchasing specialists can work more efficiently if they have two-way communication with vendors and shippers.

Ask yourself whether customer and supplier portals would free your staff to address more strategic initiatives.

How do I currently communicate delivery status to customers?
How do I place orders with my suppliers and receive delivery status from them?
How can I improve communication and information sharing along the entire supply chain?
What is the percentage of time my customer service representatives spend providing order status information?

According to the same Aberdeen Group report, a US-based consumer packaged goods manufacturer was able to drive the following benefits by improving trading partner collaboration and supply chain visibility:

Reduced number of days of inventory in hand by 24%
Reduced lead times by 28%
Improved on-time customer delivery from 33% to 74%

Making the Changes

Recognizing areas where you may be losing money due to lack of supply chain visibility is only the first step in improving operations. Implementing processes that improve the efficiency of those areas is the next step in reducing costs. With answers to these questions, you’ll be able to determine whether improved visibility into your supply chain will produce tangible results.

GTM Solutions Should Allow the Configuration of Specific Execution Rules for Each Distinct Supply Chain

Particularly among retailers with tens of thousands of SKUs and many hundreds of stores, there is a need for differentiated replenishment and logistics treatments across complex supply chains. For example, an organization may need supply chain processes that are specialized to goods with unpredictable demand, such as the latest fashion. The same organization may also provide goods with more predictable demand that require steady replenishment. Similarly, other goods may have higher import and export compliance requirements that must be carefully managed.

As organizations divide their product lines and SKUs into segments based on factors such as criticality, selling cycle and rate of sales, they are increasingly interested in global trade management (GTM) solutions that are flexible enough to support these segmentation strategies. GTM solutions must adapt to address the different needs of multiple supply chains within the same software system and shared network of suppliers, logistics providers and customers. In particular, systems must be able to:

Extend processes to suppliers and logistics providers

Manage logistics and compliance activities within one solution

Tune or configure business processes to support the segments’ needs

Provide one centralized view of the global supply chain across all segments

Capture all associated data to support reporting and “predictive analytics”

Those organizations that are proving to be successful at supply chain segmentation are able to meet the demands of their different customer segments without excessively increasing costs. One method to achieve this is to use a common platform, such as a portal, to ensure that parties along the entire supply chain can share information and eliminate errors that could slow shipments.

Multiple supply chains across thousands of SKUs introduces a degree of compliance complexity that is impossible to manage without a centralized product database that ties regulatory controls to product classification. Additionally, a GTM solution will determine needed documents and even assist with pre-clearing Customs to keep goods moving. Finally, automated screening and re-screening of trading partners across hundreds of restricted party lists ensures that each supply chain segment remains compliant with global denied party regulations.

A GTM solution should allow the configuration of specific execution rules for each distinct supply chain. Sophisticated workflow and rules processing engines make it possible to structure different processes for each replenishment strategy. A cloud-based network will facilitate the collection and analysis of business intelligence in a centralized repository to give an overall view of supply chain performance across segments.

Tag Archives: global supply chain

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