Guest Commentary: Logistics Flow Control: How to Control What You Don’t Control

Who would think that the movie Forrest Gump would provide a great analogy for logistics operations? Unfortunately, the movie quote “Life is like a box of chocolates. You never know what you’re gonna get” applies to the inbound operations of too many retail and distribution companies. Despite the best laid plans using concepts such as collaborative planning, the flow of products from suppliers too often fails to match the requested quantities or delivery dates. Our work with customers in the retail and distribution markets shows that the multiple parties involved have execution processes and supporting technologies that are in conflict, causing actual inbound delivery performance to vary greatly from plan. This is particularly true when the freight is “prepaid” by the supplier and moved via less-than-truckload (LTL) carriers to the retailer/distributor’s distribution center (DC).

The problem is that the “sum of the process and technology pieces” from the retailer, supplier and LTL carrier don’t provide for effective coordination of information and actions across the inbound logistics chain. For the typical inbound logistics flow, shipments are planned for delivery by suppliers, given to LTL carriers for execution, enter the LTL carrier’s network and eventually make it to the retailer’s dock door. Both the supplier and carrier would rightfully claim that they have planned with the intention to make the retailer’s requested delivery date. Even though they have an agreed upon plan, in fact, the supplier and carrier transportation management systems (TMS) are “pushing” product at the retailer with no real idea if the retailer can accept it at the time the supplier and carrier plan. In addition, the serial set of decisions is adding time into the execution process that can cause shipments to be late.

For example, with retailers/distributors using some form of dock appointment scheduling process or technology, the LTL carrier typically cannot schedule an appointment until it has knowledge of the shipment, which typically means goods in hand and evaluation all of the deliveries it needs to make. At that point, because of DC capacity constraints, the retailer/distributor’s schedule may not offer a delivery window that makes the contracted date. Or the LTL carrier is not aware of the impact of “slight” changes to the delivery date, and changes it to allow more deliveries to be consolidated before scheduling an appointment. In the end, the goods fail to show up on time and depending upon the contractual agreement, fines are levied on the bewildered supplier.

To be on time and know exactly what is arriving, the retailer, supplier and LTL carrier need to collaborate during the end-to-end shipment execution process. We call this form of collaborative execution Logistics Flow Control. What makes the Logistics Flow Control concept different is that it spans the entire purchase order (PO) to DC dock door process. The retailer, supplier and LTL carrier are all involved. Inventory/shipments are planned and maintained in one place and “pulled” to a logistics chain-wide synchronized delivery appointment. The Logistics Flow Control concept provides all three parties with a unifying process with a single goal and supporting technology where they all have PO/shipment visibility. Because all of the POs are known, they can be appropriately consolidated in advance and appointments can be prescheduled with confidence that the retailer will accept them upon delivery. Using a simplified “360⁰” scorecarding metaphor, the impact of changes made by any of the parties can be instantly assessed and made aware to the others.

Concepts such as Logistics Flow Control can also change how retailers communicate and manage rapidly evolving PO priorities with their suppliers and in-transit goods. For example, with the advent of a major hurricane this past summer, one retailer used the Logistics Flow Control concept to reprioritize goods in transit, to move up deliveries for items such as flashlights, batteries and water, and hold back other nonessential goods from blocking DC capacity. Without a unifying process, the retailer could not have quickly coordinated not only the suppliers, but the carriers with goods in-transit.

The merging of software-as-a-service (SaaS), logistics networks and retailer, supplier and carrier communities is making concepts like Logistics Flow Control possible. Logistics Flow Control is a true multi-party process where a combination of network integration and human interaction are required to make it effective. Cloud technology is the perfect place for collaborative execution approaches like Logistics Flow Control as it offers a single place where all inbound logistics participants can access the data and services.

Chris Jones is the Executive Vice President for Marketing and Services at Descartes. He has over 20 years of experience in the supply chain market, holding variety of senior management positions including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group.