Internal alignment across marketing, operations, and sales departments is crucial when it comes to providing the connectivity needed to gain visibility across the supply chain. Unfortunately, supply chain professionals know that decisions that impact costs are often made by multiple departments that do not collaborate before making decisions.
The key to managing a global supply chain is having the ability to see logistics costs at a transactional level. The challenges involved in achieving this level of global visibility have to do with the ability to query data from multiple departments and systems.
Fortunately, there are processes and technology that support internal alignment.
By importing transactional-level data from the five business segments below into one relational database, a decentralized organization can go about beginning to create synergies within its different departments.
1. Inbound Logistics Expense
Data imported should include line item detail for each inbound carrier used, complete tracking detail for each inbound shipment, and the total cost of each purchase order placed.
2. Outbound Logistics Expense
Data imported should include line item detail for each outbound carrier used, complete tracking detail for each outbound shipment, and the total cost of each customer shipment/order delivered
3. Cost of Procurement
A complete list of each SKU purchased will allow you to identify the sourcing location of each global supplier and total cost of bid pricing for procurement goods.
4. Operations and Inventory Expense
Data imported should include the days held in inventory per SKU, the total carrying cost per SKU, and obsolescence cost per SKU.
5. Sale Price Per SKU
Analyzing the sales price per SKU will allow you to determine the historical sales data for all SKUs, expense assessment for sales price versus margins, and total operational and logistics cost for all SKUs.
A relational database holding specified data from multiple sources empowers operations and logistics professionals to leverage one single source of data containing the itemized inbound and outbound cost per SKU for all modes of transportation globally.
If you can determine the actual total logistics cost per SKU, uncover the freight data spend for all modes and carriers, obtain access to reporting for freight spend data, and develop benchmarking for the total cost per SKU, your company or organization will be better able to determine the precise ways in which its bottom line is being affected.
In addition, a relational database will allow you to evaluate the cost of inventory on hand versus the use of premium freight service.
On a broader level, what all of this means is that you will be able to achieve data integration between operations and logistics departments, and ultimately, allow your operations and logistics departments to access one single data source.
If you are still unsure about the benefits of utilizing real-time tracking information to determine operational bottlenecks caused by your company’s global supply chain disruptions, ask yourself the following questions:
- Am I currently able to identify and assess all of my company’s global supply chain disruptions?
- Do I currently utilize a single source of data to determine corrective courses of action?
- Do I currently implement global supply chain improvements based on real-time data?
Now, ask yourself what would happen if you were to create sourcing alignment amongst multiple divisions and departments via a relational database.
- Would I be able to determine cross-divisional purchasing ownership?
- Would I be able to develop an itemized master SKU list by division?
- Would I be able to complete the optimization of purchasing power on a corporate level?
- What is the likelihood that I would be able to achieve total cost reduction for my company’s global supply chain? Are my company’s chances improved?
- Would I be able to better optimize purchasing power while reducing my company’s overall logistics expense?
If you answered no to the former questions, and yes to the latter questions, it should be clear that identifying, implementing, and managing continuous cost reduction strategies for your end-to-end logistics network via a relational database would have its benefits.
By receiving electronic data feeds for all modes of transportation, data formats, and domestic and international carriers via the appropriate relational database or global visibility dashboard, you should be able to achieve total integration of cost visibility for your company both now and in the future.
Niko Michas is President and Founder of BridgeNet Solutions, Inc., a Chicago-based firm specializing in helping companies to achieve supply chain cost reductions through data analytics software. For more information, visit http://www.bridgenetsolutions.com.