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What is Sales & Operations Planning?

Sales & Operations Planning: All demand (sales) and supply (capacity, materials) of a product is balanced and planned to secure on-time delivery to our customers, while making optimal use of our full supply network.

Why is S&OP important?

Sales & Operations Planning is important as the plan agreed on is leading for the operational activities within any organisation,

S&OP is not a Supply Chain project, but a joined ownership of the organization

In many organisations, the advanced form of S&OP (where it is more than only balancing Demand & Supply) is often referred to as Integrated Business Planning (IBP). This to differentiate it from ‘just’ a Supply Chain process.

There are three main areas in S&OP

6 Tips for Maximizing Efficiency and Productivity of Warehouse Operations

CONTRIBUTION BY KEVIN HILL – Online Marketing Manager at Quality Scales Unlimited

As a warehouse manager, you would understand that handling warehouse operations are a massive task. One small mistake may affect the efficiency and productivity of the warehouse. You must continually implement measures to optimize various warehouse processes and improve the overall effectiveness of the operations involved. Apart from minimizing downtime and increasing productivity, it is essential to improve your supply chain. Let us look at a few tips that help in achieving the same.

(1) Reduce Travel Time
Travel time in warehouse refers to the amount of time that is spent on walking or moving between the slots or different stations. Time taken for picking tickets, packaging and shipping affects overall productivity. One way to reduce travel time is by optimizing the in-warehouse routes and unnecessary legs in order picking.

(2) Implement Weighing Scales
Warehouse weighing scales can greatly improve productivity in your facility. For example, by using forklift scales, you can lift, weigh, move and record loads in a single operation. Since they have electronic sensors, they can weigh theloads accurately. The weighing scales are made of durable materials and have no springs or hydraulics, which ensure that they can withstand harsh conditions and jolts without interfering with their accuracy. Integrating weighing scales into different warehouse operationshelps you improve the accuracy of shipping and billing as well.

(3) ImplementTraining Programs
Training programs help your staff identify various opportunities where efficiency can be increased. Remember that training is not a one-time thing but rather an on-going process. Train your employees to tackle various warehouse issues at the beginning itself. Encourage them to generate regular reviews, reports and stay abreast of the latest technology. The training program must also include a thorough review of all programs or incentives offered.

(4) Maintain Real-Time Inventory Visibility and Management
You must leverage technology to provide real-time inventory visibility and management. Since real-time inventory tracking considers averages and variations in orders, you will be better equipped to handle any sudden changes in throughput.

(5) Schedule Regular Maintenance of Equipment
Maintenance of equipment is essential to ensure its smooth running. You must have a maintenance plan which ensures that the essential machinery is serviced at regular intervals. When the machine is well-serviced, it will its prevent complete failure as you would identify a potential problem during the maintenance checks itself. Another benefit of regular maintenance is increased efficiency as the operations will run smoothly, without downtime caused due to the breakdown of machinery. Regular maintenance helps in detecting and identifying problems before they become big and cost you time and money.

(6) ImplementLean Warehouse Techniques
Implementing lean warehouse practices will improve manufacturing processes, lower overall costs and enable more efficient and quicker production. Lean production techniques help in creating a culture of continuous improvement, employee empowerment, and waste minimization. Additionally, they help in improvingquality, cost, service, and delivery.

Lastly, embrace automation. Not only will it help you achieve greater warehouse productivity, but also drive significant cost savings. Implementing floor scales for weighing will increase the accuracy and efficiency of the warehouse processes.

Robot Trucks or Autonomous Vehicles Will Revolutionize the Supply Chain

CONTRIBUTION BY DR. TOM DEPAOLI – UNIVERSITY PROFESSOR AND CONSULTANT

Most supply chain professionals do not completely understand the disruption and upgrades that autonomous vehicles, specifically what I call robot trucks, will create. Most cannot get past the pitfalls and possible barriers to robot trucks. I define robot trucks with a much broader perspective. I include trucks of all sizes and even internal plant material handling equipment like fork-lifts and automatic guided vehicles (AVGs).

The biggest leap is that robot trucks will learn! Many doubters just cannot get past this. Although not complete artificial intelligence (AI), robot trucks will adapt on their own, to conditions and circumstances, and build an open memory of what to do.

Major advances in Simultaneous Localization and Mapping (SLAM) are accelerating.

Here are some aspects to ponder:

(1) Warehouse placement and location will be completely challenged. Many logistics people spot warehouses placement based on a 500-mile deliver radius or circle. Robot trucks will at least double this radius to 1,000 miles. Some warehouse placement is to enable the semi-truck drivers to return home for the night.  Obviously, robot trucks do not need to return home for the night.

Robot trucks will directly compete with domestic air freight and rail. Next-day delivery of 1,000 miles or more is feasible with robot trucks. In fact, rates may be based on how fast a material is delivered down to the minute.

Some trucking companies may even adapt a spoke-hub concept or meld with an air freight company.

(2) Labor shortages of truck drivers will become less of an issue.The design of a robot truck will not have to accommodate for creature comforts (driver) which can be as much as one-third of the total cost of a manned truck. Driver limitations of only 10-11 hours straight driving will not be a factor.

(3) Smaller local delivery robot trucks will competewith more exotic delivery methods such as drones.

(4) Truck delivery dock design and layout may have to be modified or adjusted to meet robot truck capabilities.

(5) SLAM will be enhanced for internal plant vehicles,like fork-lifts, and automated guided vehicles. (AVGs). Material handling costs can be as high as 30-40% of a product’s cost and is pure waste.

(6) Current truck support infrastructure will be gone. Truck stops, truck driver motels, and truck repair centers in route will no longer be required. It will have to be redesigned for robot trucks.

The greatest leap will be the interconnect-ability of the equipment and communication with inbound and outbound freight delivery vehicles. I also believe one of the biggest barriers to robot trucks will be that fact that we are a litigious society and accidents will be aggressively litigated.

However, all the data points to fewer accidents with robot trucks not more. Legislation will be needed to deal with this issue. Unfortunately, legislative bodies are rarely proactive in creating laws for emerging technologies. I offer as evidence of this failure to act legislatively with this statement, “Heavy-duty rigs make up between 7% and 10%of vehicles on the road but consume more than 25% of the fuel”, according to Dave Cooke, Senior Vehicles Analyst at the Union of Concerned Scientists. Yet there is still no coherent national energy policy to consider alternate fuels for these heavy-duty rigs. Fuel choices include hydrogen, natural gas, electricity and methane. They all have distribution and environmental footprint issues that need to be addressed.

In summary, supply chain professionals must rethink their entire logistics strategies both eternally and internally with the emergence of robot trucks.

Transform Your Supply Chain For Omnichannel

CONTRIBUTION BY TOM CRAIG – SUPPLY CHAIN AND LOGISTICS CONSULTANT AND PROFESSIONAL AT LTD MANAGEMENT

Inventory rich is a condition enjoyed by many retailers, manufacturers, and wholesalers.  Much of this is due to systemic inventory.  And the condition is becoming more significant as firms deal with the differing demands of omnichannel and with the accelerating requirements of lean for supply chain stakeholders.  The challenge is compounded for companies that source and/or manufacture globally with their large supply chains.

Many firms are focused on supply chain finance, just—in-time, vendor managed inventory, buy-sell, optimization, and other programs. These supply chains are based on the end positioning for inventory; they are not based on how fast inventory moves. Turns and days on hand–and liquidity–are not good.

Numerous current operations do not have inventory velocity which creates financial and customer benefits.  Systemic versus velocity is a choice derived from using the old supply chain versus designing and implementing the new supply chain.

There is inventory throughout the supply chain—multi-echelon distribution, in-transit, raw, work in progress—everywhere.  The situation is a factor of the way, for multiple reasons, that present supply chains are designed and managed in a somewhat piecemeal fashion, instead of in supply chain totality.

Omnichannel did not cause the condition; it has compounded it.  Additional channels have increased uncertainties with demands and how to meet and allocate products to satisfy the customer buying options. Some have taken this to mean carrying more inventories to handle channel demand ambiguities.  This is especially interesting in that companies can have too much inventory; yet these firms may also be out of stock of items.

Unsold and unnecessary inventory can negatively impact profits from intense promotions and steep markdowns to sell it.  Reactions to these situations can, in turn, cause purchase cutbacks in future quarters that limit inventories, resulting in lost sales.

Supply Chain Reality.  These points lay the foundation for many excess inventory problems that run through supply chains, regardless of industry or market.

  • Complex international inbound supply chain.Whether the parts and products are coming from suppliers or company factories, if they are located outside the home country, the global supply chain is the most multifaceted and demanding. The distance and flows among different countries set the stage for what happens throughout supply chains.

Add in that there can be 15 (or more) parties involved with an international order and shipment.  Each party, to varying degrees, operates within its own practices; there is limited real integration from a supply chain perspective. Even more, one of the key parties–container lines– brings vagaries to the supply chain execution with schedule times and reliability.

The complexity is increasing. Additions and changes to suppliers, origins, products, production and factory trade-offs—and more—make understanding and managing the supply chain challenging.

  • Supply chains within supply chains. Every firm has a supply chain—and more.  The idea of a single company supply chain is an illusion. In actuality, there are supply chains within supply chains.

Think of the Mississippi River in the US. It is very long and runs from Minnesota down through Louisiana and ends in the Gulf of Mexico–the Mighty Mississippi.  But the river is not a single entity.  It is fed by 7000 streams, water basins, and rivers to form one river that actually is part of 31 states and 2 Canadian provinces.  That is how supply chains are—many branches of inventories—and how they have evolved.

Supply chains, as a result, are more complex than is often presented.  Not recognizing that actuality means that supply chains can be under-designed and under-managed.

  • Emphasis on the downstream. Much supply chain discussion involves some part of the domestic supply chain—distribution centers, transportation and such.  The exception may be international transport. This is similar to lean supply chain management which focuses much within the four walls of warehouses and factories.  With the emphasis, companies can be operating in a fulfillment mode and looking at the last mile and other topics that do not address inventory excesses.  By the time inventories reach warehouses, they are often at excessive levels.

 These shortcomings may create a myopic interpretation of supply chain management design, operations, and performance. With all the focus on the downstream, the excess inventories issues exist.  These could have been mitigated with a comprehensive view of the supply chain.

  • Inventory is a buffer against uncertainty.  There are issues with demand ambiguity, network design, and inventory positioning. But there is another driver of inventory uncertainty—time—the amount of time it takes to replenish items.  International sourcing has long lead times that also have variability.  The additional time and inconsistency increase inventory requirements and compound uncertainty–and the amount of inventory that is carried.

New Retailing
Omnichannel with e-commerce is retail duality. There are two very different ways to reach customers. One is the traditional store approach which requires customers to go to the store to purchase products from stocked shelves.  The other has retailers delivering many individual orders to many individual customers.

It is customers going to retail stores; and it is also retailers going to customers via e-commerce.  The change is expanding from mass merchandising to tailored direct selling.  Retailing is transforming from being about stores to being about a delivered service.

Retailers struggle with omnichannel.  For example, they are dealing with slowing store sales and are closing stores.  Yet, some use a click-and-collect delivery practice to get customers into stores while, at the same time, shutting them.  This presents a contradictory message and can raise questions as to the customer experience that underlines the new retailing.

Omnichannel and e-commerce have changed demands, expectations, and requirements.  Order Immediacy—delivering e-commerce orders within 48 hours or less—is the customer experience.  Traditional retail supply chains were built to stock stores, not perform order immediacy.

Original supply chains for e-commerce were built to ship parcel orders, not deliver quickly.  E-tailers and omnichannel retailers may transition to Tier 1, 2, and 3 based on how they respond to the new retail reality. Customer expectations are delivery of their orders within 2 days—or less—of when they placed it.  Retailers and e-tailers that are not able to deliver orders quickly may be looking at their futures in rear view mirrors.

Amazon
Amazon started the order immediacy customer expectation.  And they are not stopping. It is not fulfillment exercise of shipping quickly from distribution centers.  It is about the supply chain and how to move products through it—not just ship from warehouses.  Order immediacy is driven by supply chain management—the new supply chain management.

They started the idea of drones for order deliveries. Around the world, they pushed same-day deliveries, developed dash buttons, have leased airplanes, started a freight forwarder in China, may be buying container ships, and are looking at using 3D printing delivery trucks; —all for easy ordering and to speed movement within their supply chain and to customers. Faster and faster everywhere. It is not just about last mile delivery.

New Supply Chain
Retail duality requires and is driven by supply chain duality–to deal with stores and moving cases and pallets of products and to deal with many, individual customers and meeting their satisfaction expectations. The new retailing is about supply chain management.  And that new selling requires a new supply chain to drive and create the customer experience.  Trying to force standard retail supply chains do more than they were designed for is not agility; it is a failing attempt to change and grow.  A one-size-fits-all supply chain does not meet the differing requirements of omnichannel.

Retail duality requires and is driven by supply chain duality.

Standard supply chains cannot respond to the new retailing.  It requires the new supply chain.  Otherwise retailers will be buried in inventory along the supply chain, while not meeting providing the customer experience.

The New Supply Chain drives new performance requirements and moves products quickly through the entire supply chain.  There are key, interrelated elements that address systemic excess inventory and satisfying customer requirements. The New Supply Chain directs and manages structured complexity to deliver the Customer Experience.

The New Supply Chain directs and manages structured complexity to deliver the Customer Experience.

In turn, to respond to order immediacy by retailers and e-tailers, manufacturers must accelerate production and supply chain capabilities.  They also need the new supply chain with its embedded lean capabilities.

Elements of New Supply Chain.  It extends upstream, compresses, advances integration, and speeds the movement of inventory/products.  The result is reduced inventory and improved performance.

  • Inventory Velocity.Much inventory sits—in storage of warehouses and other places. No value is added.  Products are supposed to flow.  From a lean view, this is waste.  Moving inventory more quickly through the supply chain is critical to the omnichannel supply chain, to lean, and to good liquidity practice.  Velocity is important to mastering demand ambiguity. With the new supply chain, inventory velocity is escalated to inventory velocity squared.

With the New Supply Chain, inventory velocity is escalated to inventory velocity2.

Velocity means that companies can move inventory faster and runs counter to what some firms do by adding to their already high stock levels—and low turns that add to liquidity and inventory problems.  Companies face being left behind by order immediacy that will be required across borders, industries, and markets.

Not every product requires velocity.  Selection of products/SKUs is needed.  The targeting can be based on analytics, segmentation, or other methods.  Inventory velocity mitigates the tendency toward carrying more inventory, while increasing service.

  • Time Compression.Removing excess time is important to the new supply chain for inventory velocity. Unnecessary time exists throughout the supply chain. With so many parties involved in the supply chain, it is caused by internal and external actions.

Compressing time means being able to react more quickly to sales vagaries—and, in turn, realizing inventory yield maximization.  Identifying areas of extra time is needed in to compact it. Value stream mapping of the supply chain is an excellent tool to find time compression opportunities and reliability improvement.  This is especially true for the upstream sector where much of the total time occurs.

It may also impact outsourcing.  There should be a shift from outsourcing with logistics providers to instead using supply chain providers.  This means a new breed of outsourcing firms who can compress time—and positively impact inventory velocity.  This is a new outsourcing performance metric—contribution within the supply chain, not for a logistics activity.

  • Extend Supply Chain Upstream.Upstream is where the supply chain begins. Extending the supply chain is a logical result of recognizing the supply chains within supply chains and managing its complexity.

Supply chain management pulls, not pushes, inventory. Extending the supply chain is a natural action to doing this.  It does not expand the definition of end-to-end supply chain management, it actually performs it.  In fact, end-to-end recognizes that suppliers are not an end.  Suppliers have supply chain complexity and supply chains within supply chains.

The omnichannel supply chain can have a pushback to suppliers for more and faster deliveries.  This means more than implementing procedures for supplier compliance.  Upstream extension implements the New Supply Chain with key suppliers.  It is designing and managing the entire supply chain, not sectors of it, not logistics functions of it.  The extension is into the supply chains of suppliers.  Identifying key suppliers can be accomplished using segmentation or supply chain risk analysis.

This upstream move redefines supplier relationships and identifies the previously unknown, hidden supply chains—the supply chains of suppliers.  It is the secret sauce of inventory velocity and is a de facto vertical integration of supply chains.  The result is that extending the supply chain shortens it by removing unspecified parts, compresses time, and drives inventory velocity to inventory velocity2.

  • Advanced Process and Technology Integration.The supply chain process flows horizontally across the internal organization and externally to suppliers and customers. The horizontal direction contrasts with organizational pyramids with its vertical emphasis and implicit silos. Also factor in all the stakeholders and participants involved with supply chains.

Supply chain complexity and breadth has gaps in the process; it has gaps in technology.  These gaps—black holes–mean a loss of visibility and of compressing time and building velocity.  Total process and technology integration is integral with extending the supply chain upstream.  Blockchain can have a significant benefit for global logistics, trade, and supply chain management.

Much technology reflects sections of the supply chain.  WMS, TMS, and other technologies address pieces.  They are somewhat standalone pieces of select activities and do not provide visibility and control of the entire supply chain.  Integration is about visibility; but visibility is not enough. Expanding digitization for the total supply chain is needed to drive and manage it and to support the process.

Conclusion
The world is in the early stages of a global supply chain revolution.  The Amazon Effect.  The Internet of Things.  Platform Businesses.  The new supply chain will grow beyond omnichannel.  It will cross into other industries and markets and will incorporate supply chains of products, information, and finance.

The world is in the early stages of a global supply chain revolution.  The Amazon Effect.  The Internet of Things.  Platform Businesses. 

All the elements of the New Supply Chain tie together. They are not separate steps.  They are not to be selectively chosen or excluded. These are inter-related.  The New Supply Chain brings performance excellence.

Similarly for manufacturers and others, moving to the New Supply Chain provides structure for the advanced lean requirements that come with the new operating reality.

Think about what will happen when virtual reality becomes virtual retailing and what that will requires supply chain management with larger order sizes and greater product mixes.  Or, as retailers struggle, what will happen if and when brand-name manufacturers enter e-commerce markets?  Retailing is being continuously redefined.

Moving to the New Supply Chain is required for the new global reality of doing business.  It is not a choice.

The 4 Supply Chain Metrics

CONTRIBUTION BY TOM CRAIG – SUPPLY CHAIN AND LOGISTICS CONSULTANT AND PROFESSIONAL AT LTD MANAGEMENT

First, the metrics discussed here are for manufacturers, retailers, and distributors.  This is important and why they are THE supply chain metrics.

Metrics are a way to measure performance; and, in turn, communicate that information to key executives in the company.  Their value is how supply chain management is supporting the direction and strategy of the business.  It is important that they present a strategic and tactical understanding of what is happening and how well it is happening.

Supply chain management is a process that flows across the organization and from suppliers through to customers or stores.  The challenge of a supply chain is the length; scope; geographic reach; number of internal and external stakeholders and participants; and overall complexity.  No other activity has all this—suppliers and factories around the world and global customers.

Supply chains are non-linear, not linear as some project them.  There are supply chains within supply chains. Viewing non-linear supply chains as linear contributes to performance issues and to measuring operations.

All these make it difficult to select the proper metrics. There are numerous metrics.  Good metrics should measure the performance of the total supply chain, more exactly the process.

KPIs (key performance indicators) must be measurable.  As a result, numerous metrics are about the logistics components.  Some of these are good.  However, they do not present a view of the total supply chain.  Plus, many have little or no usefulness for the C-suite.   Assessing logistics parts is a node-link approach and does not recognize the supply chain process.

Supply chain management is a process that is often measured on its logistics costs. That approach is a root cause of issues. Such computations do not measure the supply chain or its performance and can include factors outside of the supply chain.  In addition, the way accounting treats supply chain costs is dated.  They go back a hundred years, before supply chain management and global activity were recognized.

Supply chains are being transformed. The Amazon Effect has stimulated the beginning of a global supply chain revolution. It is moving beyond e-commerce/B2C and is crossing industries and markets.

Traditional supply chains for retailers and manufacturers face issues with omnichannel, its different markets, and new ways to reach customers, including end-user ones.  The underlying expectations are pushing supply chain transformation.  In turn, this means improved performance and new metrics.

Supply chain complexity raises the question of whether measuring the overall supply chain is sufficient.  Segmenting can reflect similar supply chain characteristics, business unit, or other ways. Supplementing the macro performance with segmented KPIs provides understanding and insight to what is happening on both centralize and “decentralized” views.  It enables seeing underlying factors to the “corporate” measure.

Another topic is how many metrics to have.  Too few supports the view of a monolithic, linear supply chain. Too many metrics can become measures for measures sake.

The best four metrics that define supply chain performance are:

(1) Inventory Velocity. Inventory has been a hot button with dual challenge of capital tied up and while being able to service sales orders. With omnichannel and meeting customer expectations, it has become hotter.  Aligning inventory and the supply chain network is an additional challenge. Moving inventory more quickly through the supply chain has become a requirement. This is also important with inventory planning and with being able to respond to positioning products.

This is also a good metric for tactical issues, such as the working capital mandate.

It is important for lean and the waste of excess inventory.  In many of these cases, inventory is stationary, not moving dynamically across the supply chain. Speed increases the value of inventory, while reducing working capital.  It is critical with aligning networks, positioning inventory, and satisfying customer requirements.

Inventory control is outdated in a business world defined by speed—from decision making to customer expectations.  Supply chain management is pivotal in achieving the many forms of velocity. Also, inventory management, as traditionally understood, has been replaced by alignment and by velocity.

Velocity can be measure as turns or days of inventory.  It can be applied to finished goods; WIP (work in process), especially that is transferred to another location; and raw materials.  Segmenting as to division, product category, or other relevant ways for the company is important.

(2) Time Compression. This KPI ties to inventory velocity and is an integral part of the providing the immediacy customers want. Time is a hidden waste both inside and outside the company and is an enemy of supply chains.  Reducing it is important with the new business reality.

Measuring time and compressing it must be done across the total supply chain—from suppliers through to customers (and/or stores).  This means breaking it down by inbound, outbound, and stationery—sitting in distribution centers and factories.

Remember, time is important with building inventory velocity and minimizing inventory waste. There are two points here.  One is that the largest time sector is with the inbound supply chain, especially if there is international sourcing.  The other, and often overlooked, is the non-movement part.  That is a fixed block of time that is not compressed, unless it is recognized.

(3) Perfect Order—Customer. This is an outstanding metric.  The KPI comes from the SCOR (Supply Chain Operations Reference) model.  This metric is about the customer.  It validates the customer mantra.  This is what customer service is—delivery of orders, complete, accurate, and on time.  It is implicit in a customer’s doing business with a company.  But, as simple as that sounds, firms struggle with it.

The new reality of selling for manufacturers and retailers is the customer experience and meeting customer requirements.  Service expectations have been elevated.  It is not limited to B2C and is spreading across industries, markets, and B2B.  Omnichannel is everywhere.  Speed is expected. That makes this metric vital.

(4) Perfect Order—Supplier. The supplier is at the opposite end of the supply chain from the customer and the perfect customer order. This metric then creates a yin and yang. Supplier performance—purchase orders delivered complete, accurate, and on time—is very important to supply chain success.

This is a fundamental metric.  Supply chain performance begins on the inbound side with suppliers.  The impact of weak supplier accomplishment ripples throughout the supply chain and impacts the actuality and fundamentals, both operational and financial, of the company.

The four metrics triumph because they recognize and deal with the entire supply chain and its process.  Success with them can mitigate company failures and problems with sales, growth, and profitability.  The four metrics have value across markets, industries, and businesses.  They are inter-related, connected, and bring cohesion to the supply chain, what it does, and how it does it.  These define it and provide a way to see the intricacies and convolutions which can be lost in the daily happenings. They recognize what can be viewed as unrelated parts of the supply chain—when they are not.

The four metrics triumph because they recognize and deal with the entire supply chain and its process.

For example, the two perfect order measures highlight the supply chain.  Add the time compression and inventory velocity that recognize the speed which has become a requirement of business. This is especially true for retailers and manufacturers dealing with duality of omnichannel and its selling to intermediaries, directly to end-use customers at their designated locations, and through ways that has customers coming to merchandise.  The traditional ways no longer function as they once did.

The challenge to improving performance is ongoing. Success lies at the macro and granular levels.  Some of the work ahead includes:

  • Focus and improve the process
  • Increase visibility across the supply chain
  • Integrate the financial supply chain with the product supply chain.
  • Align the inventory network
  • Extend the supply chain upstream
  • Implement advanced integration of process and technology

 

Data Integration Made Sexy

CONTRIBUTION BY Nathan Brown – CTO and co-founder at EVS

Data Integration. At its best, it is the silent hero that makes the modern enterprise run. At its worst, it is a long-forgotten dark closet of ad-hoc code written by former employees and consultants, strung together by CRON jobs and web servers whose purpose no one understands, but cannot be shut down because they might be running some code in an undocumented critical path. Pretty grim? Like I said, worst case.

The integration hangover starts the day after the feature party ends.

When I try to understand why things are a certain way in the software space, I start by looking at how the software is bought. The software that publishers are making is just a response to what buyers are prioritizing. And business units are not often buying on integration capability as a first-tier requirement. Operational leaders get googly-eyed over feature set. Let’s face it, integration is a fairly boring afterthought. Dreaming about features is a lot more fun.

As we start putting our mission critical systems into cloud, however, integration quickly rises to a first-tier requirement (or headache). There is a big difference between buying a mission critical system, such as a WMS, in the cloud and putting a documentation and collaboration system (not mission critical) in the cloud. And enterprises are starting to put mission critical systems in the cloud. This trend will not end. Gartner hit the nail on the head when it recognized that businesses may have thought the cloud isn’t for mission critical systems in the recent past, but that is changing quickly. (Disclosure: My employer, EVS, is a customer of Gartner.)

Remember Those Days?
We’ve come a long way from the big, kludgy in-house data systems of the 80s and 90s, the middleware used in the early 2000s and early days of cloud migration. What was once a complicated environment, with expensive, manual processes that required numerous programmers and coders to be the “glue” holding it all together, has dramatically changed. “Middleware” has evolved into a new category of solution to help make this all work: iPaaS (integration platform as a service).

Embracing iPaaS and Modern Design Ethos
The cloud is more than just a delivery platform, it comes with an ethos and a set of expectations. iPaaS solutions are expected to be easy to turn on, have utility-based pricing, and be secure and reliable. They are expected to be much easier to train and become proficient in, when compared to monolithic on-premise solutions.

The best integration platforms have a way to interconnect legacy systems and on-premise apps to your cloud services, allowing you to think of your business operations as 1 ecosystem, regardless of where the data is housed. They come with pre-built connectors or use existing templates that have been built by others for Salesforce, CRM technology or other cloud APIs. They also act as a central repository for process and interface knowledge.

Lowering the total cost of ownership and maintainability of integration is a huge factor in minimizing technical debt. Switching to an iPaaS means that your enterprise glue is now documented and standardized.

Our experience in moving to an iPaaS was in replacing a combination of nodeJS bots, scattered REST APIs, web servers and CRON jobs. With a platform tool, our integrations are deployed, monitored, logged, and documented in 1 place.

From a personnel standpoint, iPaaS allows us to bring in outside help more easily and hire people who already know how to use the platform. Programmers who know MuleSoft for example, would make a seamless transition. But you don’t have to be a programmer or coder anymore. A platform takes integrations out of the sole domain of developers and into the domain of business analysts and non-developer tech staff. (Disclosure: MuleSoft is a vendor of my employer EVS.)

From a Screw Driver to a Power Drill
In the IT world in general, the tools are getting better on every front. Much better. The end of all of this is that we are spending more of our time on the business process and less time maintaining the plumbing. iPaaS is a step forward in that direction.

Embrace the cloud, embrace integration done the modern way. Consider iPaaS as a core part of your cloud strategy.

The Impact of Maintenance Operations On Supply Chain Management

CONTRIBUTION BY Bryan Christiansen – founder and CEO at Limble CMMS

We all know how delays in any part of the supply chain can cause significant problems and incur additional delays among the rest of the supply chain.

One thing that is often overlooked but plays a major role in keeping the supply chain from crumbling down is maintenance management. In one way or another, you can connect maintenance activities with every stop in your supply chain.

Be it transportation, production, or storage, a failure of one maintenance team can be felt throughout the supply chain. In that light, let’s explore this idea into more detail.

Transportation

Be it moving raw materials to a warehouse or moving finished product to the consumer, transportation is an essential part of every supply chain.

For this part of the chain to work without any hiccups there are a lot of maintenance work that must be done behind the scene.

First, if you want to deliver materials/goods to a designated place and on time, your mode of transportation has to be able to endure the route without a critical failure. This is the part where you hope that ship, train, aircraft, and fleet maintenance managers have done their part of the job to ensure a successfully delivery.

Secondly, it is not rare that certain materials/products have to be transported in special conditions. Refrigeration is the most obvious example. According to an article from Food Processing on the Net:

Freezing food extends shelf life and prevents deterioration of flavor, texture, color and vitamin content. Freezing rapidly after harvest retains vitamin C levels in vegetables and provides consumers with high quality safe products. Refrigeration is key to improvements in the supply chain to meet consumer demand for a wide selection of fresh, nutrient rich produce with a longer life.

It is not hard to see how things like refrigerators also have to be regularly maintained as their failure can ruin the order and cause significant delays in your supply chain.

Production

If there is a stage in the supply chain where maintenance gets the recognition it deserves, it is on the production floors of most operating plants.

There are two major philosophies that are used in maintenance management. A reactive approach where you wait for something to break until you fix it or replace it, and a multitude of proactive approaches that focus on predicting failures and doing preventive maintenance work.

As you can imagine, a proactive approach should be a go-to option for any plant that want to minimize the chance of becoming the cause of the delay because of unscheduled asset downtime.

Having that in mind, maintenance managers are slowly but steadily turning to proactive maintenance. More ambitious organizations might try to implement total productive maintenanceto minimize unexpected downtimes, while an average facility will most often satisfy with implementing preventive maintenance strategy.

Warehousing and Storage

At some point in the supply chain, be it materials or finished products, something will most likely have to spend a night or two safely stored in a warehouse.

However, for everything to be stored safely, there are a few conditions that must be met:
(1) machinery like forklifts have to be in a decent operating condition;
(2) warehouse itself has to be maintained properly (while it might seem trivial, things like broken lightbulbs, slippery floor, unstable shelfs…can all lead to the damage of stored goods;
(3) again, refrigerators and similar purpose items need to operate properly

While you might not think about it often, every asset and every item that was ever a part of your supply chain has, at some point, been under the care of some maintenance technician.

Reaching Customers

Even when your product reaches the store, the role of maintenance doesn’t disappear. The responsibility just transfers to the facility manager of that store. To actually put the products in the customer’s hands, the store needs to operate in normal conditions.

If the store is closed because you have a leaking pipe or a broken roof, the chain won’t be able to be closed. While that might happen rarely, it is often something that could have been prevented and avoided. Additionally, if the store isn’t maintained properly, there are a plethora of other problem that can ensue.

All of this becomes even more important if the product has to be kept under certain conditions (temperature/light/humidity…). Luckily, maintaining a store is far less demanding than maintaining a production line so, even if you don’t experience these problems first-hand, keep in mind that the problems don’t prevent themselves and that someone works behind the scene to keep everything running smoothly.

The Importance of Maintenance

As you can see, maintenance is connected to every single step of the supply chain. While different industries will have varying maintenance needs, it is interesting to see how crucial good maintenance is in keeping a healthy supply chain.

Returns – A Threat to the Bottom Line or an Opportunity to Cut Costs?

CONTRIBUTION BY Robin Kiziak – Finance Manager at Wickes

Reverse logistics is a funny old game.  A company sells a product, either through a bricks and mortar store or through internet retailing, and the consumer returns the product.  What happens next?

The reason the product is returned is manifold.  It could be because the product was damaged or faulty in some way. It could be because it wasn’t what the consumer expected.  It could be it wasn’t the right colour.  It could even be, taking the cynical view, that free delivery was achieved by purchasing a certain value of goods and the consumer added the product to their basket to push them over the minimum spend threshold.

Whatever the reason that a product is returned, the company now has an issue. It has a product that it doesn’t necessarily want and it has an additional customer service issue that it needs to deal with.

Taking the customer service issue on board, if dealt with in the right way not only can the business enhance their reputation with the consumer but this can also build brand loyalty.  If dealt with in the wrong way they could lose a customer and possibly more if the customer takes it upon themselves to use word of mouth and social media to express their dissatisfaction with the organisation.

From a supply chain and logistics point of view how does the company deal with a product that is returned?  In most cases this will fall within the realms of reverse logistics which refers to the life-cycle of your products after they arrive at the end consumer.

Reverse logistics is like cleaning up the morning after a big party – a mess that no one really wants to face, resulting from things that are left over or ill-used from the day before.

The notion of reverse logistics isn’t new, of course.The function has been around since the Phoenicians began shipping amphorae of wine to Rome in 1,500 BC.

Hopefully processes have moved on since then but reverse logistics is the conundrum that every company will face at one time or another and how it deals with this issue will determine whether it is an opportunity or threat to the business.

The graphic above illustrates the typical life-cycle of a product from the industry/manufacturer through the distributor to the retailer and to the end user. Reverse logistics deals with the journey of the product from the end user back to the distributor and onwards to being put back into stock, being recycled, being repaired or something else.

Reverse logistics can represent a significant chunk of supply chain cost, and it’s typically not very well managed. Estimates range from 1 percent of overall supply chain costs (quite well managed) to almost 10 percent (improvement required).

Areas where reverse logistics can drastically add cost to an operation are in terms of: Transportation – moving the product from the retailer back into the supply chain, be that to a distribution warehouse or specialised returns centre.

There are then what has been termed the 4 R’s of integrated returns management — recovery, reconciliation, repair and recycling.

(1) Recovery — it’s important to be able to recover the products to the correct location as soon as possible in order to be able to maintain, oversee and monitor product reliability as well as control inventory levels;

(2) Reconciliation — once a product is returned it needs to be assessed in terms of another 4 R’s – repair, restock, refurbish or recycle – which enables the company to determine which supply chain the returned product should follow. A large percentage of returned goods can be returned to stock and thus increases inventory;

(3) Repair — if the returned product can be repaired then it is time critical to facilitate the repair and ensure the product is returned to the consumer.It could also be possible that a product is either repaired at the distribution centre and returned to stock in cases when perhaps packaging can be re-instated or even sold on to a re-seller who will be able to repair the product and sell as refurbished;

(4) Recycling Government enforcement of proper handling standards for used and obsolete electronic products is increasing globally — e.g., the WEEE (Waste Electrical and Electronics Equipment) regulations being put into place in the European Union. Companies to ensure that they adhere to these standards and go about recycling in the correct manner;

The above costs build up to a significant threat to the bottom line of a company, however, the opportunity to improve overall cost efficiencies has pushed companies to begin looking at the flip side of logistics as the “new frontier” in the continuous improvement of supply chain performance.

What was once mainly an afterthought now has a name. And in a growing number of cases, there’s now a clear mission: How do we manage reverse logistics as an integral part of supply chain management to improve efficiency and reduce cost?

What are the benefits of an efficient reverse logistics network?

(1) Reduced costs – by planning ahead for returns and making the return order right, you can reduce related costs (administration, shipping, transportation, QA, etc.);

(2) Faster Service – this refers to the original shipping of products and the return / reimbursement of products. Quickly refunding or replacing goods can help restore a customer’s faith in a brand;

(3) Customer retention – as mentioned previously dealing with errors is just as important as making sales. If a customer had a bad experience with your product, you have to make it right. Fulfilment blunders can create educational opportunities. Learn how to keep your customers happy and engaged with your company – even after you’ve made a mistake.

(4) Reduced losses and unplanned profits – recover the loss of investment in your failed product by fixing and restocking the unit, scrapping it for parts, or repurposing it in a secondary market. With a good reverse logistics network in place, you don’t have to leave money on the table. Take a product that would otherwise just cost your company money and turn it into an unforeseen asset.

In summary an efficient reverse logistics network is vital in the new age of consumer led retail.  It will add costs to the business but at the same time companies should be planning ahead and embracing the benefits.

Reverse logistics can be seen as an opportunity and a threat but if there is nothing in place to deal with returns then that isn’t a place where your company wants to be.

How Can Data Improve Supplier Decisions

CONTRIBUTION BY Ben Goldwasser – Business development professional

A growing trend across all industries has been the application of big data, with the use of algorithms and the hiring of data scientists becoming commonplace. As businesses collect and store an ever-increasing amount of data, the algorithms required to make sense of this data will become even more valuable. This is due to the fact that algorithms can take any number of factors into account and provide unbiased insights into variation. The transportation and logistics industry has mountains of data available, and experts encourage carriers and their customers to embrace data backed business decisions.

Data Cleansing

In order for data to be used in the decision making process, companies must ensure that they are using high quality data in their analysis. Although the availability of supply chain data is increasing by a factor of 10x each year, a large quantity of data alone provides limited value for business analytics.  Prudent companies should utilize a process for correcting, and removing, errors and inaccuracies from data sets as well as addressing any recurring data issues. This process is referred to as ‘data cleansing.’

Once your data is clean, the true impact of algorithms can be felt,  as algorithms “make it easier for us to see the invisible” says Jim McGinness, regional head of Panalpina. Even with the use of algorithms, business analytics must remain collaborative. This means sitting down with various stakeholders, colleagues, management, customers, etc., – and discussing the use of big data for business analytics and how the results affect each stakeholder. Discussions such as these will allow companies to use data to achieve their internal and external goals.

Algorithms

While many businesses embrace data analytics as a valuable, strategic asset, others are unsure of how analytics can transform their processes.  One of the major applications will be allowing shippers to detect patterns and understand the deeper nuances of working with various carriers. Luckily, today’s “automated algorithms can identify patterns and provide insights” into carrier safety, pricing trends, carrier capabilities, and innovation. Using algorithms, shippers can understand which suppliers truly align with their company’s goals and/or are the best fit for the job at hand.

In the transportation and logistics industry algorithms will begin to enable human decision makers to make better and faster decisions by preforming valuable analysis. Despite all the data collected, it only becomes useful when businesses use data to drive purchasing behavior and improve processes. The companies that can collect, organize, and apply this data will hold a strategic advantage in the coming years.

 

Is Your Supply Chain Strategy Inside-Out or Outside-In?

Contribution by Martin Verwijmeren – CEO and co-founder of MP Objects

Digitization has changed everything. It’s changed not only how we interact but how we make decisions with readily available information. This accessibility to information and organizations has flattened the playing field for every organization as they look to market and sell their wares.

This accessibility has forced organizations to embrace better transparency with potential customers and in turn has brought competition. With more informed customers with more choices to spend their money, you see that organizations now have to compete across a wide variety of marketing differentiators including Price, Product, Promotion and Place. The Place differentiator in the marketing mix these days is becoming more important. This is the customer experience.

The truth is that the customer is in more control today than at any time in history. What they dictate goes and any company willing to provide to these growing expectations can usurp their competitors, not just in B2C but B2B as well. The day of low cost and unique products as company differentiators is for all intensive purposes over, it’s experience that is winning.

In this post, I want to explore how we need to think about our supply chain strategies to drive true innovation and performance for our organizations.

Is Customer Experience Truly #1?

In 2013, Walker, a consulting firm, released a study on the Customer Experience. And their big revelation was that by 2020, customer experience will overtake price and product as the key brand differentiator.

However, that is not the only stats we see that are supporting this movement. Take the following stats collected by SalesForce and VisionCritical:

  • 86% of buyers will pay more for a better customer experience
  • A customer is 4x more likely to buy from a competitor if the problem is service related vs. price or product related
  • According to Forrester’s Customer Index, Customer Experience leaders gained 43% in performance – compared to Customer Experience laggards, who saw a 33.9% decrease.

Now, there are two things you probably notice with these stats.

First, they are a bit B2C focused and while I agree that is the case, we are seeing a ton of similar demands being asked by B2B customers (think Walmart and their delivery window mandate).  Every trend in B2C environments shape and influence B2B business and this is just another example.

Second, many are customer service specific. Customer service is obviously important to maintain customer relationships, however, the cause of most customer service calls are interruptions in service and service levels. Efficient and timely supply chain processes have been proven to reduce the volume of customer service related calls.

How Supply Chain Can Take an Outside-In Approach

For years, supply chain has chased the holy grail of consistent cost savings through process efficiency but what we have seen in recent years is that these efforts while they sound good, organizations actually seeing limited value from the initiatives. Accenture recently saw that organizations that look to reduce costs by 3-4% year over year often don’t see a tangible benefit to the bottom line from these efforts.

This is because we are taking an Inside-Out approach focusing on how we operate in our supply chains to create efficiency was built in another business environment. An environment that moved slower, evolved less readily. Efficiency is a tremendous strategy in this type of market as you can consistently improve your process through evaluation of known quantities.

But the world has changed. There are little known quantities and the ones that are have a short shelf life. Change is the new constant and process efficiency is being replaced with agility as our business plans and strategies evolve with our markets. Agility is the new driver of business success because successful companies have learned that adaptation is key to their existence.

For supply chain, this means being as agile as the other areas of the business and partnering with them to provide the best experience for the customer. This takes an Outside-In approach to supply chain strategy; one that’s customer focused and agile to changing customer expectations.

How Can Supply Chain Get More Outside-In

When we look at supply chains that are truly agile, they look, plan, execute and analyze differently than traditional supply chains. They do this in the following ways:

  • External Parties are Internal Parties: Outsourcing is a critical component to running a successful supply chain but supply chain leaders don’t just set and forget with these external parties but they look to build true collaboration with these parties with true visibility into their actions. Technologies are supporting Multi-Enterprise Business Networks are entering the supply chain space to help provide this type of collaboration.
  • Data is End-to-End, Not Siloed: Over the years, technology categories grew up to solve specific problems in the supply chain from traditional ERPs to WMS and TMS solutions. And you’re seeing this in every area of the supply chain. However, as we see organizations look to be more customer-centric, we see technologies such as supply chain control towers come along to help connect and extend existing systems for end-to-end supply chain visibility and control over every order. This is critical as customer requirements become more variable and diverse.
  • Flexibility to Customer Requirements: Exceptions are the norm in today’s supply chain environment for both B2C and B2B and this requires flexibility in your technology stack that can quickly and accurately respond to changes in customer requirements. This might be new product lines, expanding service options, increasing geographies, faster delivery options and other requirements that need to be automated and executed on in your supply chain. This requires technology that provides Supply Chain Orchestration.

The companies that succeed understand change isn’t just the answer but is the only way to survive. They are looking for better ways to sell and serve to their target customer and that means agility in their supply chain processes.

Legacy Systems Are Not the Answer, Supply Chain Orchestration Is

When you have legacy systems that were built a long time ago, outside-in agility was not their immediate concern and you can see it. They do their job well and are a critical piece of technology stack, however, as we look to evolve our supply chain strategy and processes, it’s integral we look for solutions that can work with these systems to provide true supply chain orchestration across all the parties and systems in the supply chain.

Fast growing companies in B2C and B2B quickly winning from global competition have invested in the customer experience and the strategies, processes and technologies such as supply chain control towers that help to ensure optimal experience across the end-to-end supply chain. Differentiating customer experience only comes with an evolution in focus and an evolution in approach and supply chain orchestration is the way to truly disruptive in your industries.