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supply chain visibility

Can Advanced Analytics Put a Pin in OTIF?

According to the 2020 Third-Party Logistics Study, data analytics is not only becoming more viable in the logistics industry, but it’s also becoming a necessity and make a difference. With the growing storm that is e-commerce, brick and mortar retailers have had to step twice as fast in order to stay in the game. Especially, when you consider some of the power plays made by the internet titan, Amazon. As one of Amazon’s biggest sources of competition for domestic goods Walmart, in particular, has tightened their game up significantly.

In particular, Walmart uses some stringent policies to ensure that shelves stay stocked and goods are arriving exactly when the retail stores need them to. First is the Must Arrive By Date (MABD) provision, which means that suppliers must have deliveries to the store within a certain delivery window, typically four days, while also having a high invoice accuracy. This is a fairly standard industry practice for retail stores to ensure timely deliveries. 

Failure to meet these requirements could mean a 3 percent chargeback per case value of each missing item. 

However, Walmart as since followed that up with their heavy-handed On Time In Full (OTIF) policy. Now suppliers must have deliveries at the store within a two-day window, no later and no earlier either (even early deliveries will still be penalized.) Failure to meet these requirements could mean a 3 percent chargeback per case value of each missing item. 

As of April 1st of 2018, the company made the policy even harder. Prior to then, the OTIF policy stated that full truckload shipments needed to meet a 75 percent OTIF rating and less-than-truckload shipments needed to meet 33 percent OTIF to avoid fines. Now, FTLs are required to meet an 85 percent standard (down from the lofty 95 percent they had originally planned) while LTL requirements have increased to 36 percent. In addition to the chargebacks, too many violations could cause a shipper to fall out of favor with Walmart and lose supplier status, which would be a major financial hit for most companies.  

But what happens if demand is peaked and capacity is booked?

For shippers, OTIF can make for a tight schedule. But what happens if demand is peaked and capacity is booked? What if there’s a major weather event that has the logistics network scrambled? Shippers need better tools at their disposal to keep things running smoothly, and that’s where data analytics comes into play. 

How Analytics can Make a Difference 

There is a truly astounding amount of data that can be captured within the supply chain. As more companies begin the process of digitizing their operations and automating their systems, just about everything can be tracked, traced, quantified, and speculated. The challenge, however, is making sense of it all. There is such a surplus of data that it leads to a sort of data overload and can turn even the most avid analyst catatonic. 

Analytics turns this vast amount of information into insight, according to the 2020 Third-Party Logistics Study by Infosys Consulting, Penn State University and Penske Logistics presented at the CSCMP Edge conference in Anaheim, California. And with this insight, “you stand a much better chance of improving your operations,” says John Langley, professor of Supply Chain Management at Penn State University. 

Real-time information can help to match supply with demand. But that’s not all it can do. Far from it, in fact.  

To some degree, the logistics industry has already started to use real-time data and analytics. Langley sites dynamic pricing in freight for an example. Here, real-time information can help to match supply with demand. But that’s not all it can do. Far from it, in fact.  
 
For shippers, there is a wide array of challenges they encounter on a daily basis. Of the shippers that responded to the 3PL study, many agreed that the use of analytics would be helpful to many facets of their operations as well as overcoming the challenges they face day to day.

Type of problem % of shippers who said analytics would be helpful 
On-time and complete order fulfillment 69% 
Shipment visibility 63% 
Freight costs per shipment 60% 
Transit time 59% 
Cost to serve 58% 
Order-to-delivery cycle time 58% 


Langley says that analytics is ideal for tracking and improving a KPI like Walmart’s OTIF, because the policy itself is a compound metric. And while it might be easy to villainize Walmart from a shipper’s perspective, they aren’t the only company to use aggressive tactics like this. Target, Kroger, Costco, and others are also tightening their regulations in order to keep their shelves stocked. 

Learning From Your Mistakes 

Perhaps one of the most powerful tools of data analytics is it gives you a different perspective of your operations and allows you to drill down to pivotal details. Why was your shipment late? Why were there missing pieces? Analytics can determine the cause and effect relationships to target the root cause of the issue while sorting out coincidence and other anomalies. In other words, real-time data analysis allows you to track where things went awry and focus on improving operations so that particular issue doesn’t happen again. “If you can measure it, capture it, analyze it, you can use it to your advantage in terms of knowing more about your own processes,” Langley says.  

Getting to be a supplier for Walmart is no small matter.

Getting to be a supplier for Walmart is no small matter. For companies that already have that title, keeping it is important. However, even shippers that don’t have the best scorecards, analytics can prove to be a useful bargaining chip. If you’re able to prove yourself, and that you have the right measures in place to improve operations, it’s likely that you can demonstrate your worth as a supplier and make it to the “in” list.  

For a better understanding of how to navigate OTIF and other ways to improve your operational efficiency, check out our white paper: Walmart: the retail-supplier relationship. You can also speak with one of our experts by calling us at 800.MY.SHIPPING, or filling out the form below.

The State of Your Supply Chain Affects the Level of Your Inventory 

Inventory is the core of any business. The right inventory, at the right time, at the right point in the supply chain is crucial for the success of the business.

For example, the shortage of raw material at the factory will affect production. If warehouses are not replenished on time, distribution will be derailed. If retail outlets run out of stock, sales and customer relationships will be adversely impacted. Each of these processes in the supply chain is dependent on the availability of inventory to carry out their function and meet business objectives. 

While the unavailability of inventory results in a loss of sales, too much inventory leads to an increase in the carrying cost.

While the unavailability of inventory results in a loss of sales, too much inventory leads to an increase in the carrying cost. Carrying cost is the cost incurred to store, handle, and maintain inventory at every stage in the supply chain.

The factory, warehouse, and the retail outlet all incur the cost of storing and managing the inventory until it is required at the next stage in the cycle or sold. A high carrying cost ultimately impacts the price of the product and the profit margins of the company. Hence, neither excess nor a shortage of inventory is an ideal situation. 

This is why it is essential to understand the inventory consumption pattern and arrive at an optimum level that needs to be maintained at each stage in the supply chain. 

Why does the State of the Supply Chain matter?

How you operate your supply chain, how agile it is, the technology you use, the level of digitization, the extent of integration among the different stages of the supply chain. All these things affect the performance of the supply chain. The level of inventory you need to maintain at all times is dependent on the capability of these parameters.

An agile, integrated, and digital supply chain makes it easier to understand how the inventory is being consumed at each stage.

An agile, integrated, and digital supply chain makes it easier to understand how the inventory is being consumed at each stage. It enables inventory managers to calculate the optimum level of inventory more accurately. The optimum level of inventory is where minimum carrying cost is incurred and there is no loss of sale or disruption in the production or delivery process. In other words, the inventory reaches the required point just in time – not any sooner, and not later. 

When organizations use this strategy to design their supply chain they inevitably improve their inventory management.

Winning Logistics Strategies in the Race to the Urban Consumer, a whitepaper by DHL and Euromonitor on last-mile transportation, explained how companies can become more competitive and improve their supply chain by adopting the F.A.D strategy. The F stands for flexible transport, A is automation, and D is data management. When organizations use this strategy to design their supply chain they inevitably improve their inventory management. They can better plan inventory inward and outward movements, improve on speed and reduce administration and handling costs, can improve inventory forecasting and planning, process data real-time, and provide shipment tracking. 

For example, this article cites how Apple understood the importance of supply chain management as early as 1997 and with proper supply chain planning, the company successfully managed to beat the competition. For the Christmas of 1998, the company bested its competition by simply changing its freight mode from sea to air.

“To ensure that the company’s new, translucent blue iMacs would be widely available at Christmas the following year, Jobs paid $50 million to buy up all the available holiday air freight space, says John Martin, a logistics executive who worked with Jobs to arrange the flights.”

This one change made sure that its products were easily available during the holiday shopping season. Apple could not have done this if it had followed a rigid approach to transport planning and management. 

And, if the delighted customer is also a competitor, you know you’re doing something right.   

Another example in the article shows how it delighted customers with quick delivery and shipment tracking. And, if the delighted customer is also a competitor, you know you’re doing something right.   

“When iPod sales took off in 2001, Apple realized it could pack so many of the diminutive music players on planes that it became economical to ship them directly from Chinese factories to consumers’ doors. When an HP staffer bought one and received it a few days later, tracking its progress around the world through Apple’s website, “It was an ‘Oh s—’ moment,” recalls [former HP supply chain chief Mike] Fawkes.”

What are the benefits of a well-managed supply chain?

A supply chain that is managed properly makes it easier to monitor stock at various touch points. It can help improve inventory forecasting and distribution. Some of the benefits that such a supply chain offers for inventory management are: 

Visibility: Visibility allows inventory managers to monitor inventory levels at each stage. With a continuous and real-time view of the inventory, they can place orders or plan distribution of the inventory to reach the intended destination on time. 

A strong transportation management system also enables you to store historical data, provide advanced analytic tools and trend reports, enable users to optimize freight expenses thus helping you create an efficient shipping process.

TMS: While inventory is the life of the business, transportation is the backbone. Without adequate transportation management, it will be challenging to get the inventory to the right place at the right time in the required condition. In addition to planning transportation, a strong transportation management system also enables you to store historical data, provide advanced analytic tools and trend reports, enable users to optimize freight expenses thus helping you create an efficient shipping process.

Integration: We cannot stress this enough. Integration is crucial to get complete control over inventory. For integration to be truly successful, it needs to take into account the needs of different departments and their workflow. When all the parties handling inventory are able to connect to the same system, only then will you be able to get better visibility of your inventory, improve tracking, and planning. 

Analytics: The digital supply chain is a substantial resource of hard data. It provides stakeholders with the opportunity of developing and monitoring KPIs and assist them in improving their supply chains. When the data for all the functions are gathered at a single reliable source it increases accuracy in forecasting and improves execution. The reports and trends can be used for making informed decisions. 

The state of your supply chain and inventory, the levels you need to maintain are directly related. If the supply chain is equipped with the latest technology and is functioning at optimal levels at each stage, it would reflect in the form of optimum inventory levels. If it is not, then you may see piles of inventory accumulated at each stage. There may be situations when you need to keep unusually high or low inventory levels. However, when inventory levels fall below or go above the optimum without a valid reason, take it as a red flag, talk with an expert. Contact us at 800.MY.SHIPPING or fill out the form below to connect with our team today for a FREE analysis of your supply chain. 

Time Definite Freight & Positive ROI

The saleability of a product is not only dependent on its quality and features, but also on how it is delivered and how soon it can reach the customer. In other words, delivery has become a crucial part of a business’s success. If it’s managed effectively, it can positively impact the bottom line and help build a stellar market reputation. If not, then it can have a negative effect on both. 
 
In our March webinar, titled Time Definite Freight and Positive ROI, Brian Blalock, Senior Manager Sourcing Strategy, and Eric Chambers, Vice President, Field Performance at BlueGrace Logistics, discuss the delivery method that is redefining the logistics landscape.

What is Time Definite Freight?

What is time-definite freight and how is it different from the normal freight delivery mechanism? How does it benefit the business and its customers? These and other such questions tend to arise when we discuss why this delivery trend is quickly becoming an integral part of an organization’s logistics strategy and customer service offering. 

Time-definite freight is precision delivery. It’s not on any given day or any roundabout day. It’s on a particular day, a particular time – morning, afternoon, AM, PM. It can be any time of the 24 hour day.

To address these questions and provide context to the discussion, Eric explains “time-definite freight is precision delivery. It’s not on any given day or any roundabout day. It’s on a particular day, a particular time – morning, afternoon, AM, PM. It can be any time of the 24 hour day.”
 
This definition provided not only answers the “what” but it also gives an insight into “why” shippers and logistics service providers need to know about it and make it a part of their organization’s logistics strategy. It is important because it puts the customer’s requirements at the center of logistics planning, ensuring that goods are delivered according to the timelines given by the customer.

Is Time Definite a New Logistics Solution?

The life sciences industry, e-commerce, cross border express providers like UPS, FedEx; last mile solutions by truckers, Amazon Prime’s free 2-day delivery, and disaster recovery institutions like the Red Cross are all using time-definite transportation.

No, it is not. Certain industries are already leveraging this delivery mechanism to optimize their supply chain and provide better service to their customers. The automotive industry started using just-in-time (a form of time-definite delivery) years ago. The life sciences industry, e-commerce, cross border express providers like UPS, FedEx; last mile solutions by truckers, Amazon Prime’s free 2-day delivery, and disaster recovery institutions like the Red Cross are all using time-definite transportation.

What Are the Benefits of Time Definite Delivery? 

“There are many many benefits of time-definite, it really depends on the individual working in a company or its customers”, says Eric. To provide an insight into how time definite can help improve the bottom line, he shares that it can help reach end customers faster and reduce handling points in a delivery.

When multiple handling points in a delivery are eliminated, the handling costs go down and it also reduces the probability of the shipment getting damaged. 

Both of these things have a huge impact on the bottom line. For example, if you are able to take your product to the market faster, it not only helps improve the cash flow but also ensures that you are a step ahead of the competition. Similarly, when multiple handling points in a delivery are eliminated, the handling costs go down and it also reduces the probability of the shipment getting damaged. 

Technology & Optimizing Time-Definite Freight

Given the fact that technology is being leveraged to improve and optimize different aspects of logistics, it is but natural to ask if time definite can be further improved with technology? Yes, it can.

Speaking about how technology is making time definite a complete logistics solution, Eric shares that: 

  • Technology can be used to improve response time and on-time delivery.
  • Technology can provide real-time visibility of the shipment.
  • If the shipment requires certain transit conditions, they can be arranged with the help of technology. For example, temperature monitoring and reporting to FDA for compliance for pharmaceutical products.
  • Technology can improve inventory forecasting and replenishment, thus minimizing loss of sales due to stockouts.

Success factors and a Real-Life Use Case

It’s not enough to just deploy new systems and processes. It is also important to know if they are working for you and your customers and how they can be further improved.

To know the success factors of Time-Definite Delivery and how we at BlueGrace collaborated with a pharmaceutical company to handle a critical business situation with the help of technology-powered time-definite delivery watch the webinar here
 
Questions regarding Time-Definite Freight, or want to explore how you can make it a part of your logistics strategy? Connect with our team by contacting us at 800.MY.SHIPPING or fill out the form below.

Intelligent Automation, the Future of Supply Chain. Is the Logistics Industry Ready?

It is a well-known fact that supply chain is increasingly becoming digital. But is simply adding a digital component to the complex supply chain network enough to make it efficient? Will it provide the edge that companies need to win in the current cut-throat and ever-changing global business environment?

What more is required?

According to a study conducted by IBM and National Retail Federation (NRF), the retail and consumer goods industry is designating intelligent automation, also known as artificial intelligence, as the future of supply chain. For this, IBM and NRF surveyed 1,900 retail and consumer products company executives across 23 countries.

The survey revealed that “intelligent automation capabilities help increase the annual revenue growth by up to 10 percent”. It found that of all the respondents surveyed, around 85 percent from the retail sector and 79 percent from the consumer products sector “plan to use intelligent automation for supply chain planning by 2021”. The study also found that 79 percent of the retail industry respondents “expect to use intelligent automation for customer intelligence by 2021”.

Combining human capabilities with intelligent automation can help reduce errors and encourage the culture of digital operations and customer experience innovations.

According to IBM, integrating supply chain with customer insight is essential for the success of the omnichannel. It further added that combining human capabilities with intelligent automation can help reduce errors and encourage the culture of digital operations and customer experience innovations.

When the retail and consumer goods industries, who have the most complicated supply chains, are envisaging intelligent automation as the future of the supply chain, then can logistics – the core of supply chain be left behind?

Definitely not. In fact, the current logistics landscape which is highly fragmented and complex will benefit immensely by leveraging the power of intelligent automation in its day-to-day functioning.

How Intelligent Automation Will Benefit Logistics

Better planning: Intelligent automation can integrate and streamline transportation planning, route planning, warehouse network, and inventory planning. It will enable data sharing among all functions, highlight errors and outliers in the data, and speed up data analysis thus increasing efficiency, improving accuracy and lowering operating costs.

Increased Transparency: The global nature of the industry, different rules and regulations across countries and multiple stakeholders has made transparency in operations and business transactions mandatory. Intelligent automation can be used to add checks at all data entry points to make sure that only verified and correct information enters the system and is available to all stakeholders on demand. This will improve decision-making, reduce incidents of miscommunication between users (internal and external), and decrease dependency on other departments for data.

Enhanced Visibility: A system empowered with smart technology like GPS and RFID can enable users to track shipments from pick up till the final delivery location. This can improve multimodal transportation planning and also keep the customers updated with a more accurate expected time of delivery. Visibility of shipments and other aspects of the supply chain also supports the planning function, highlights possible issues before they become roadblocks, and allows better control over the process.

Improved Efficiency: Adopting artificial intelligence to empower systems and processes will greatly reduce duplication and monotonous tasks. This, in turn, will improve both human and machine efficiency and reduce the turnaround time for each task to be completed.

Refined Analytics: Logistics is a data-intensive function. A large amount of data is used as the base for making strategies and taking decisions. An intelligent automated reporting system can reduce the time taken to collate, clean, format the data and minimize errors, thus leading to better, informed and quicker decision making.

Further benefits can be derived on a case to case basis as the technology is put in use. However, like with all new things, there’s a need to exercise caution.

These are just some of the benefits of using intelligent automation in logistics. Further benefits can be derived on a case to case basis as the technology is put in use. However, like with all new things, there’s a need to exercise caution. In a statement by the company, Luq Niazi, global managing director of IBM Consumer, explains the care organizations working with intelligent automation need to take. He says “The entire value chain operational infrastructure of B2B and B2C commerce, there has already been an increased adoption and demand for intelligent automation. This also brings forth the need for stronger transparency, ethical practices and business prioritization to evaluate and deploy AI responsibility.”

We at BlueGrace understand the importance of an intelligent tech-enabled ecosystem. Hence we have leveraged intelligent automation to build our transportation management system. The BlueGrace TMS provides its users with high-tech tools, visibility, visual analytics, speed, reliability, and it easily integrates with other systems and technologies. Along with performing all the regular functions, it also empowers you to identify opportunities to reduce costs and optimize your supply chain. To connect with our team to know more about BlueGrace’s TMS and how it can support your business growth, contact us at 800.MYSHIPPING or fill out the form below, and one of our experts will contact you today!