I am constantly amazed at the number of companies today that procure and manufacture both globally and domestically, yet use multiple logistics solutions that plan and execute locally. For example, I talked recently to several Fortune 500 supply chain executives interested in improving their supply chain and identified a common theme – each ran their international, domestic inbound, and domestic outbound logistics as independent business silos, using separate IT solutions and reporting structures. My immediate response to these companies – or any company seeking a truly “demand-driven” supply chain – is to adopt a single system of record for planning, executing, and sharing information across their international and domestic supply chain.
To begin with, it is impossible for a company to gain a true picture of supply and demand across three separate parts of the logistics environment (international, inbound domestic, and outbound domestic). The process of gathering and interpreting data takes valuable time and affords no window of opportunity for procurement or manufacturing to resolve issues as they arise. Users are required to piece together a complex puzzle to understand all the different legs of the shipments and to identify where their shipment currently resides. Without this information, procurement and manufacturing are at the mercy of logistics to figure out where their inventory is located when issues arise. This means that by the time the shipment is located, it is too late to perform any action to resolve the issue. Technology solutions were limited in the past and often forced companies to select three different solutions. However, with the advent of cloud computing and multi-party solutions, technology solutions can now provide an integrated picture across international, inbound, and outbound logistics.
Furthermore, demand is constantly changing across a supply chain. If a company gains the ability to integrate international, domestic inbound and domestic outbound systems and processes, they can start to make intelligent decisions based on demand changes. Take, for example, an order placed at an international manufacturing location. By the time the order is shipped and arrives at the domestic port, we can review demand to determine if the point the shipment was originally destined still needs the inventory. If the demand has changed and the inventory is no longer required, we can immediately intervene to re-allocate the inventory to another location based on supply and demand.
Finally, I see more and more domestic manufacturing companies that are missing tremendous opportunities by not integrating inbound and outbound logistics operations and systems. Here are two prime examples that come to mind that illustrate my point:
- We recently conducted a demand-driven readiness analysis with a Fortune 100 retailer and noticed their inbound and outbound logistics process was not integrated, which hindered their goal to become demand driven. Too often, specifically during the winter months, outbound shipments to stores were being planned based on the assumption that inbound shipments were going to arrive at their distribution center on time. The challenge they faced was that during the winter many of their inbound shipments are delayed because of inclement weather challenges. The result was that outbound shipments were being shipped without critical store products, resulting in out-of-stocks and directly influencing the company’s bottom line. By integrating domestic inbound and outbound logistics operations, this company could easily have avoided these disruptions because they would have known the inbound shipment was delayed and would have re-planned or delayed the outbound shipment to minimize the impact of the inbound shipment delay on store sales.
- We also met with a company that maintained two separate systems for their private fleet and inbound shipments. It did not take us long to identify several opportunities for the company to use their private fleet for backhauls to cover their inbound shipments. However, given the two separate systems involved, the company lacked the tools necessary to successfully plan and execute these inbound/outbound opportunities. The company now understands that in order to reduce their fleet’s carbon footprint and deadhead miles they will need to consider adopting a new, single IT solution to integrate their logistics operations.
I would like to challenge all supply chain executives to investigate integrating domestic inbound and outbound logistics operations as well as their international operations. It’s a viable solution today given the advancements in technology like Cloud Computing and Multi-Enterprise architectures.
Here are a few suggestions on how to get started today:
- Connect your international and domestic operations together by creating a common backbone that can create a planning, execution and visibility layer between your international and domestic operations.
- Begin researching putting your inbound and outbound logistics on the same solution so you can take advantage of inbound and outbound synergistic flows and reduce your carbon footprint, lower your inventory levels and reduce your transportation spend.
- Streamline logistics reporting structures so international and domestic operations report to the same executive.
- Identify opportunities to integrate your replenishment process with your logistics operations so your supply chain can become a competitive differentiator.
In my opinion, this represents a strategic opportunity that will place you well ahead of the competition.
Greg Brady is Founder, CEO, and Head of Research and Development at One Network Enterprises. Mr. Brady founded the company in 2002 and is a renowned supply chain and technology visionary. Before that, he led i2 Technologies to high growth and market leadership for seven years, both as CEO and head of worldwide operations. Previously, Brady was vice president of worldwide applications marketing for Oracle and held positions at J.D. Edwards and at McCormack and Dodge. He holds a Bachelor of Science from Indiana University.