Global parcel logistics firms have launched groundbreaking new distribution channels to offer Consumer Goods (CG) companies access to the traditional markets in places such as Latin America. The new distribution model enables them to sell specific products from the CG companies directly to the store owners and deliver products within 48 hours. The value it delivers to the CG clients are significant. Upon route delivery, the logistics company collects cash and deposits it directly into their accounts for a major reduction in Days Sales Outstanding (DSO). CG companies also receive greater visibility into purchase patterns increasing their ability to predict demand and plan accordingly. This supply chain practice increases overall supply chain visibility.
Supply Chain Visibility Top Priority
According to the supply chain analyst community, supply chain visibility is one of today’s top priorities for supply chain managers. Visibility has become the buzzword that continues to define supply chain management. Everybody wants it, but few understand how to reach the supply chain holy grail. What does supply chain visibility mean? Basically, it means knowing where your inventory is at any and every moment. It is that and much more. It is the true synchronization between order management, transportation, inventory management and logistics end-to-end. Many businesses simply do not have the internal IT infrastructure to support complex supply chains initiatives. Additionally, many CG companies struggle to collect and identify the data that is really important to their business, and more importantly, their customers’ business. How do you overcome the barriers to increase visibility?
The Steps to Supply Chain Insights
Step One – Be intentional about supply chain excellence: The journey starts with the shelf. The journey to improve visibility must be about a means to an end. There will need to be intentional focus on the journey. Business results have to be the overarching reason to improve supply chain visibility. For example, “do I expect that the business model will increase earnings per share as a result”. Better visibility allows you to make the right decisions for operational and near real-time horizons.
Step Two – Invest in the right technology: Analytics and optimization solutions will help you get to potential insights and statistical novelties in ways that were not possible a couple of years ago. There are 2 technologies necessary to make cross-functional data valuable and the outcomes executable. Data analytics drives the insights into your customers. Optimization is then applied to supply chain planning and execution business processes to make the predictions generated by analytics executional and bring to light supply chain visibility.
Step Three – Remove the silo’s to create end-to-end visibility: To achieve supply chain visibility and improve results, logistics companies and the consumer good companies will require data sharing. That means internal and external collaboration and sharing of pertinent data is a must. Advancements in data analytics capabilities will provide the ability to improve predictions of customer purchasing patterns. Know what you want to achieve from the data analytics and make sure to share outcomes with all of the business functions.
Step Four – Invest in the right persons: Successful big data and analytics requires a team that can blend together technology, analytics, optimization and business savvy. Big data and analytics success requires a team with different but overlapping skills that knows how to effectively and efficiently communicate and collaborate. Decision making solutions using optimization require analysts that understand the value of that optimization.
Step Five – Know Your KPIs: Ensure everyone agrees on the KPI’s. If there are multiple business units collaborating on supply chain initiatives, not all business units calculate common KPI’s the same. Example: On Time Deliveries may use different calculations depending on the type of business. Ensure accountability and transparency are part of the team’s core values and that stakeholders are actively engaged.
Supply chain visibility through dynamic route delivery coupled with upfront analytics will change the game for consumer goods companies trying to compete in the home delivery business model. Companies that take these five steps seriously, can revolutionize their business processes and find huge efficiency gains.
Bobby Miller is currently responsible for global consumer good product innovation and direction at ORTEC. Bobby pioneered the ORTEC solution ‘Perfect Shipment’ which utilizes demand forecasting to generate optimal shipments, enabling organizations to plan and reduce freight cost in advance of execution. He has over 25 years of expertise working in the Consumer Goods Industry and developing supply chain software solutions that help companies globally such as P&G, General Mills, Coca-Cola and Clorox. Prior to ORTEC, Bobby was Sr. Manager of Supply Chain Excellence for Georgia-Pacific, where he pioneered the concept of sales order load optimization. He has also held various positions with Kraft, Coopers Lighting, Information Resources, IRI Logistics and Manugistics. Bobby received a B.S. degree in Information Systems from Chicago State University. He is past chairman of the Technology Association of Georgia Supply Chain Society.