Industry 4.0 is a revolution in manufacturing and holds promise for improving supply chain efficiency and flexibility. The convergence of technology disruptions—automation, analytics, artificial intelligence, and augmented reality—drives this revolution. Why is digitization important and what key technologies are fueling the shift?

Intelligent supply chains. Intelligent technologies, such as automation, remote fleet management, and cargo tracking, are transforming supply chain technology to provide in-depth, real-time insights into locations and cargo status.

Cloud-based GPS and RFID technology provides instantaneous updates on cargo location, whether in warehouses or in transit, and assessing transportation performance and efficiency.

Digital thread. A digital thread is a communication framework that can share information to data consumers in a continuous feedback loop. A communication framework can ensure the entire supply chain is responsive as shifts in volumes, manufacturing, design, and through-life service occur.

For this to be effective, workflows and people need to be integrated. This marks the evolution from supply chain network to integrated value chain, allowing suppliers and customers to achieve collaboration and efficiency while reducing costs.

Demand-driven supply chain management. In transportation and logistics, decisions need to be made quickly and agility is essential. Demand-driven supply chain management has been part of the industry for some time, but the high volumes of data and deep insights require a step up from traditional methods. In the past, forecasting was based on historical demand, but that may not be enough with the influx of data and current demands.

IoT-embedded sensor technologies enabled with predictive analytics and machine learning can gather, analyze, and report insights from the environment and provide real-time responses to stay agile in the face of increasing demands. Data also offers insights to inform decision-making and build strategies and contingencies to adapt to future obstacles and maintain high levels of customer service, sales, and efficiency.

Cyber threats. Bad actors have more opportunities to exploit vulnerabilities in a digital supply chain, especially with third-party vulnerabilities that grant access to the real target. Conversely, manufacturers can have gaps that provide access to suppliers, destroying brand relationships across the entire ecosystem.

Suppliers and manufacturers need a rigorous protocol and evaluation process to assess risk and create stringent security across organizations and partnerships.

Meeting customer expectations. Customers have become used to fast order processing and deliveries and have little patience for delayed orders. To respond to these demands, some manufacturers are switching to centralized distribution and real-time inventory management.

The increasing demand for hyper-customization is also fueling shifts and linking the customers to the supply chain. Rapid prototyping and additive manufacturing are restructuring supply chains and more manufacturers are choosing on-premises manufacturing capabilities with lower waste.

Digitization holds promise for addressing current challenges in the supply chain environment and creating more opportunities moving forward.

Author: David L. Buss , CEO, DB Schenker

Source: www.inboundlogistics.com

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Retailers uncover new ways to respond to anticipated and unexpected order spikes so they don’t lose the sale.

Whether you anticipate a retail demand surge or it happens unexpectedly, you need to be able to manage that sudden order spike in ways that don’t harm customer relationships or your bottom line.

Here are nine ways companies across the retail supply chain capture and fill orders when demand surges.

1. GO DEEP WITH SUPPLIERS.

Have “what if” conversations with suppliers. Identify the products that are likely to experience a spike, and pose surge scenarios to suppliers and manufacturers to learn how—or if—they can meet increased demand levels.

“Any company that buys anything should have conversations about what happens if demand doubles or halves,” advises Michael Zimmerman, partner and analytics practice leader at consulting firm Kearney. The solution might involve a financial investment to guarantee capacity or contracting product manufacturing elsewhere so you have options.

2. MAKE DECISIONS AT THE FACTORY.

Consider committing to factory capacity before you need it. That’s what Mark Burstein, industry principal at supply chain technology provider Logility recommends. If, for example, the manufacturing timeline for a product is three to four months, he says, a retailer might not receive a surge order until 150 days later. Booking capacity early moves your surge order ahead of others who haven’t ensured that protection.

At the same time, Burstein encourages retailers to forecast demand not just for products, but for raw materials as well, and to position those materials at the factory early. “With the materials in place, you can direct them to both high demand and most profitable products,” he says.

He also recommends saving time and touches by shipping finished goods directly from the factory, bypassing distribution centers completely.

3. PRE-SELL TO CUSTOMERS.

Taking a page from book publishers that have long used pre-orders to gauge demand for a book and determine how many copies to print, retailers of other types of products are now surveying customers to determine interest in a product.

“Retailers are getting smarter, thinking about how they can start to pre-sell and put customers in line to buy products ahead instead of waiting for a Cyber Monday surge,” says Troy Graham, vice president of business development at e-commerce solutions company Descartes Systems Group. This approach also assures customers that they will get the product, he adds.

4. PUT SOME OF THE ONUS ON THE CUSTOMER.

Third-party logistics provider Flexe is seeing results with brands that advise customers to “get it while you can.” Flexe clients using this scarcity strategy to manage demand spikes are better able to promise and then meet a customer delivery date.

“This strategy allows brands to get items to the customer quickly, but it’s also on the customer to make that happen by heeding the ‘while supplies last’ messaging,” says Megan Evert, senior vice president of operations, Flexe.

5. OUTSOURCE SURGE FULFILLMENT.

Flexe offers a launch fulfillment service designed to handle surges inherent with product introductions. Typically, the manufacturer ships inventory to Flexe facilities in multiple markets selected for their proximity to anticipated demand. “When the brand knows it will have a severe spike, we can partner and distribute the inventory appropriately so that no one site has to ship 300,000 orders overnight,” Evert says.

Outsourcing surge fulfillment makes sense for other types of situations, too. “We’re not saying outsource your entire fulfillment,” she adds. “This is a way to respond to the dynamic situation we’re all experiencing. Don’t make it harder by trying to do all of this yourself.”

6. IMPROVE DELIVERY TIME BY FILLING ORDERS FROM THE BACK OF THE STORE.

Increasingly, retailers looking for ways to get high-demand orders to customers more quickly are using a micro-fulfillment model that involves filling orders from the back of brick-and-mortar stores.

That’s what one of Pat Fitzpatrick’s outdoor action sports clients does. “A small warehouse keeps enough inventory for three to four days, but pushes everything out to stores for fulfillment,” says Fitzpatrick, vice president of sales and marketing for commercial storage solutions company McMurray Stern.

Companies can use this approach strategically according to demand locations, he says, or to improve delivery times in areas farther from a fulfillment center but closer to a store.

7. RAMP UP REVERSE LOGISTICS.

Graham sees an increased focus on reverse logistics. “As we think about spikes in volume and limited inventory, retailers are looking at returns and asking, ‘How do we get them inspected and back to sale quickly?'” he says.

Micro-fulfillment makes that easier. “If you take returns in the store, you can get the product back into inventory much quicker,” Fitzpatrick says.

8. CARRY MORE INVENTORY THAN YOU’D LIKE.

Many retailers have gone from “just in time” inventory management to “just in case,” stocking excess inventory of products most likely to benefit from a demand surge.

“The volatility and unavailability of some products has led retailers and consumer packaged goods companies to emphasize inventory over anything else,” says Zimmerman. “They want more to sell and they will pay extra for it and store more of it.”

Short-term warehouse space marketplace Chunker helps companies do that by connecting them with temporary surge storage capacity. Operating like “an Airbnb for warehouse space,” Chunker provides a buffer that lets retailers and brands stock up on inventory without committing to a long-term lease.

“Warehouse space comes with risk when companies have to sign a lease,” says CEO Brad Wright. “Shorter-term, more agile storage lets them flex their storage up and down.”

9. LET GO OF BEST PRACTICES.

Increasing inventory carrying costs and other recent survival strategies are counter to pre-pandemic best practices. “But perfection is not the goal here,” says Evert. She recommends being thoughtful about what you can do to increase the chance that the product will get to the consumer. When the best practice approach isn’t an option, consider alternatives.

“Without that, you’re losing demand,” she says. “In the worst case, you fail to realize you have to move faster and to save pennies, you lose the whole sale.”

Source: www.inboundlogistics.com

Image: www.pexels.com

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The complexity of the supply chain can be daunting. Everything from distribution to data crunching requires dedicated attention that can feel overwhelming unless you have the right tools in place or the right partners to back you up.

On episode 120 of the Inbound Logistics podcast (bit.ly/ILMagPodcastPage) Marty Wadle, chief commercial officer and Paul Jensen, senior vp of supply chain solutions for Ruan, an Iowa-based logistics provider, spoke about the importance of transparency and trust in the industry. Here are the highlights of their interview.

Wadle: A single integrated solution removes waste and duplication and creates a stronger relationship with the customer. It creates inventory visibility throughout the supply chain—whether it’s raw materials inbound, work in process, or finished goods.

If you work with one logistics provider, you see the freight all the way through the process. Visibility across the entire supply chain when you’re working with one provider is a huge benefit.

A single, integrated solution also enables rapid response to supply challenges. If we see what’s going on in the entire supply chain, we’re able to effectively maneuver around a clog, wherever it might be. If we see where we have challenges—at the ports or with containers coming in from overseas—then we can do other things to expedite freight once it hits our borders to get that product to customers more efficiently.

We also look at ways to work with our carrier partners to put them on continuous moves. Shippers today are looking to be a shipper of choice. As we act as an extension of our customer, we do our best to create that shipper of choice view from our carrier perspective: How quickly can we get carriers in and out of the docks? Can we put two or three different lanes together to create a continuous move, keep that carrier moving, and eliminate their empty miles? That just creates a better solution.

We also look for backhauls for our dedicated resources that may be delivering finished goods for one of our value-added warehouse customers. The trucks can pick up inbound raw materials or other third-party freight so we can keep dedicated assets loaded at all times. That drives continuous improvement and takes waste out of the system for customers.

Jensen: A common theme across the different services that we provide is transparency. On the dedicated fleet side, we’re 100% transparent. On the managed transportation side, we’re 100% transparent with our customer—from a service, cost, and carrier payment standpoint—and that develops a sense of trust with customers.

We operate best when we’re part of our customer’s enterprise. We bring the most value when we’re included in strategic discussions about the direction of their organization, when our goals and objectives are fundamentally aligned. And that starts from the first day we engage with a customer.

We are all about being as transparent as possible, so that the decision-making on both sides—from our customer’s perspective and our perspective—drives toward a common goal.

IL: What are some innovations that Ruan has implemented where you really see that value-add in play?

Jensen: Every implementation of a solution begins with the needs of the customer. Whether that’s a sophisticated racking system or a complex pick-to-light, multifaceted kitting operation that directly feeds manufacturing lines, we build solutions that meet a specific customer objective.

That includes both finished goods on the outbound side as well as inbound raw materials through a consolidation center. We bring product from across the country into a single consolidation point for splitting, cross docking, reconfiguring, staging, and shipping to various manufacturing sites.

It starts with what our customer’s needs are. As we get into a customer’s business, and we start to learn what their supply chain chokepoints are, we can help them design a better solution that feeds through that distribution process. We understand what it takes to run assets, what it takes to manage carrier relationships, and what it takes to run distribution and finished goods shipping.

IL: When shippers look for a warehouse partner, a lot of thought has to go into that decision. What are some of the things shippers might overlook when they evaluate a new partner?

Jensen: As proposal systems and technology have gotten better, the nuts and bolts of how to share requirements has gotten easier over the past five or 10 years. What hasn’t gotten easier is understanding who your partner is going to be—getting to know them. And not just the services that they provide, but the type of organization they want to be. The way they behave, the way they interact with their customers, and cultural alignment is often overlooked. You need the ability to meet each other’s needs in a transparent way and develop a sense of trust.

When you go out and try to find the right partner, understanding who they are and what they want to be is just as important as pricing and capabilities because your needs will evolve.

I saw this on the shipper side when I worked for a seed manufacturer. In the five years I was there, our business in that industry changed dramatically with complexities that were injected into the manufacturing process, which resulted in much different distribution. Having a partner who could work through that with us would have been a lot easier than trying to figure it out on our own. That’s the kind of partner we want to be.

I’d also caution folks as they look to build a distribution network, build out a regional distribution concept, or just take distribution out of manufacturing to allow more space to create material. Don’t shortchange your long-term plan. Often, in the interest of saving a few dollars on the front end, companies want to buy into a smaller facility that meets today’s needs, but it won’t meet their needs in three to five years. Take a hard look at what your long-term plan is and build for who you want to be—not for who you are.

Although it’s more expensive in the near term, it’s a lot less expensive in the long term to be in the right facility, as opposed to having to make changes along the way as you implement your growth strategy.

Wadle: We perform site analysis for potential customers. One thing that you look at is identifying the right location for your inbound raw materials and for your outbound finished goods locations, to reduce that transportation spend.

Once you’ve picked that location, you also want to look at where you will draw employees from to fill that warehouse. If you’re in a spot where you don’t have access to enough team members, you will be challenged.

We work with our customer to make sure that not only do we find the right location from a transportation standpoint, but also decide if it is the right location for staffing inside the facility. Then we work closely on the configuration.

If we know that a customer’s growth projects that they will need 450,000 square feet in four years, we don’t want to get them into a building that’s 250,000 now and then we’ve got a year to figure out how to add to it or move into another location down the road. We work with the customer to configure the portion of that building they need with the ability to grow into the balance of it.

In the meantime, we’ll work with other partners, other shippers, to bring in third-party freight to defray the cost of that facility so customers can take the full building and be able to grow into it eventually.

Source: www.inboundlogistics.com

Image: www.pixybay.com

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