A Hi-Tech Company’s Control Tower Helped It Better Manage Air Cargo During the Worst Days of the Pandemic
In 2014, one of the world’s largest high-tech manufacturers started thinking about a digital transformation that would help them better serve their customers while also generating operational efficiencies. From a supply chain perspective, a robust supply chain digital transformation would involve end-to-end visibility of inventory in motion and inventory at rest in near real-time. And that inventory visibility needed to be granular, down to how many of a specific type of product – a stocking keeping unit (SKU) – was being produced by contract manufacturers, was stored their warehouses, or was on vehicles. This manufacturer knew this would involve a cloud solution and that it would also mean integrating to a variety of internal and external systems with interfaces rather than getting data via electronic data interface, emails, and telephone calls.
Six years later that advancedsupply chain control tower and transportation solution helped the company respond with agility during the Coronavirus pandemic.
A Supply Chain Control Tower
When this global manufacturer began their digitalization journey, they decided to achieve the end-to-end visibility they desired by partnering. They selected C.H. Robinson TMC as their managed transportation provider. TMC took over freight management for this company region by region and business unit by business unit. Today, TMC has over 60 transportation planners and analysts managing this global manufacturer’s global freight shipments. TMC has planners in control towers in Seattle, Chicago, Amsterdam, Sao Paolo Brazil, and Shanghai. They have onsite employees at the game makers sites in Seattle, Dublin, and Singapore. The control towers have different responsibilities. Chicago, for example, plans and executes outbound shipments from North America to other regions as well as handling reverse logistics shipments into the region. However, while the sites are physically distinct, TMC’s Navisphere technology is common across the sites and thus all sites have global visibility to this company’s entire supply chain.
The scope of the managed relationship spans the transportation planning and execution process. It includes having TMC analysts provide data and analysis that is used by the company to select which transportation carriers they will give the bulk of their business to. The manufacturer pays the carriers and owns these relationships, but TMC audits the bills to make sure carrier charges are accurate. TMC plans, optimizes, and executes global freight moves. Finally, TMC uses the data in Navisphere to allocate costs at the product unit level so that the game maker has an accurate understanding of their true costs and profitability by product and channel.
Further, the Navisphere control tower does not just provide visibility to inventory in motion, through integration to the high-tech company’s internal systems the solution also provides visibility into their client’s inventory at rest – inventory in the company’s warehouses and other stocking locations around the world. TMC can let the high-tech behemoth supply chain team know when it appears that to much of a certain product is being stored at a warehouse. Meanwhile, the near real-time visibility to inventory and shipments allows the multinational manufacturer to provide customers with more accurate estimated times of arrivals and TMC the ability to more proactively handle shipment delays and other issues that can arise.
ARC’s market research shows that TMC is one of the largest managed transportation service (MTS) providers. TMC has roughly $5 billion in freight under management. In other words, TMC is actively managing $5 billion in freight on behalf of their customers. Further, in the course of doing this research, TMC was the only company that spoke to ARC of a solution that provided visibility to both transportation moves as well as having a granular view of inventory.
Over the years, the relationship between TMC and this high-tech company grew from an initial focus on using the control tower and transportation management system for managing freight moves out of China to global responsibility for freight across all modes and business units. But managing the havoc created by the pandemic showed the real power of the technology. Because Navisphere is a cloud-based system, having planners work from home is a nonissue.
Control Towers Help Drive Supply Chain Resilience
As previously mentioned, this high-tech company manufactures certain products in China. Because of this, the global manufacturer and TMC had a front row seat where they were able to watch the emergence of the pandemic from its inception at the beginning of the year in Wuhan China. The lessons learned in China could then be applied in other regions as the pandemic spread. The increased ability to learn and collaborate is one advantage to having a lead logistics provider.
As the pandemic hit, TMC was having daily meetings between the origin team in China and destination teams around the world. TMC produced a market report detailing capacity and freight prices in the trade lanes linking to China to the rest of the world. Electronics often ship via air in the belly of passenger planes. As these flights were cancelled because of Coronavirus, transportation capacity exited the market.
TMC worked proactively with air carriers to determine their freight capacity. TMC also let the carriers see the forecast of what the high-tech company expected to ship and asked, “which of these shipments can you support?” TMC performed well in this crunch. Chris Cutshaw, the Director of Commercial and Product Strategy for Navisphere, told me. “Flight delays from China peaked at 7 percent of shipments even in the midst of China closing down.” Data I’ve seen from Resilinc, a supply chain risk management software company, shows that this is far, far better than most global manufacturers were able to achieve during this crisis.
Air prices, of course, have gone up because of the pandemic. TMC leveraged its visibility to the $500 billion in freight spend flowing through their network to produce lane benchmark reports. These reports allowed their client to see whether they were paying above or below market prices for their shipments.
The pandemic, of course spread. Italy and Spain were soon overwhelmed. The team saw that a country lockdown was likely. For Italy and Spain, the challenge occurred on the inbound side. If goods shipped into these countries and then the countries shut down, that inventory would get stuck at some port, airport, one of the company’s warehouse, or it would arrive at a customer site that could not accept the delivery. “In the past those shipments would have happened, and the inventory would have been stranded,” Mr. Cutshaw said. Proactive planning and visibility prevented this in most cases.
As countries closed, the closure was not total. Different nations had different industries or companies that were considered essential and allowed to remain open. From a transportation perspective, that might mean that no truckload shipments in one nation were allowed until further notice. However, the post office in that nation might be considered essential and remain open allowing smaller, consumer products to be shipped directly to the company’s customers.
These routing guide changes were occurring daily. Their follow the sun control towers, meant that TMC planners could work around the clock to stay on top of what was allowed in this highly dynamic environment. The routing upgrades were entered into the transportation management system (TMS) on an ongoing basis. The TMS than enforced these rules and helped ensure mistakes did not occur. This, Mr. Cutshaw pointed out, is another advantage of working with a managed services provider. For the people that work for TMC, logistics is “their passion and their career.” The model allows their employees to gain expertise at a rate that is hard to match outside this industry.
Robust supply chain control towers with visibility to both inventory at rest and inventory in motion have only recently come of age. Because of the pandemic, the need to have an agile supply chain has never been clearer. Real-time visibility is a key enabler of supply chain agility. Interestingly, a very robust control tower has been in operation for several years; it has flown under the radar, so to speak.