Manufacturers know they need to make their supply chains as lean and efficient as possible, but it can be hard to know where to start and what to prioritize. I had the opportunity to discuss supply chain optimization with Brooks Bentz, the president of Supply Chain Consulting Services at Transplace. He gave insight on best practices and obstacles to avoid, as well as how to measure supply chain success, how to combat tightening capacity and how to automate operations.
Bridget Bergin: What are some major obstacles to achieving an efficient supply chain?
Brooks Bentz: The major obstacles stem from trying to operate 21st century supply chains with last century’s operating practices. Change has been with us since the beginning of time, but what has radically shifted recently is the speed at which change is occurring. We’ve described this as a state of “permanent volatility.” Expectations are up, product life-cycles are down and supply chains are not facile and flexible enough to respond dynamically to rapidly changing markets.
Leading-edge and bleeding-edge technologies are now available that can change the face of logistics and transform supply chains into the more dynamic and responsive functions that are required to meet customer expectations and improve the customer experience. This requires a different vision and mind-set and also requires the technological underpinnings to make it all work in a unified, holistic fashion. The bottom line is this: everyone needs better, more accurate information much faster to enable better management decision-making and superior execution.
Bergin: What are best practices for manufacturers to implement to combat these obstacles?
Bentz: The critical best practices to examine relate to how to best transform the logistics operations of the present into the supply chain of the future. This requires strategic vision, beginning with the end in mind. It also requires the capability to thoroughly and rigorously map the “as-is” processes and procedures of running the supply chain of today and the ability to translate that into a vision for, what I would call, the “to-be” model of the future and the roadmap to get there.
When a manufactured product that has been in production to the point of choosing to re-engineer or let its life-cycle play out, the experts examine the product and the market it serves in order to determine what should be done. The “new and improved” model has to be envisioned, designed, engineered, prototyped, tested, evaluated and only then readied for production. Supply chain reengineering needs to follow a similar set of steps.
Bergin: How can manufacturers best measure supply chain performance?
Bentz: The key in developing an outcome-based approach is asking the question, “What are we trying to achieve?” Lower cost, higher speed, smaller inventory, better reliability, some or all of the above? It all comes back to designing the supply chain that best serves the corporate strategy, then identifying the key elements of that so that the metrics and KPIs can be established. Next, you need the data to drive the continuous monitoring and measuring of performance against those metrics and KPIs. This is where so many fail. They simply don’t have the ability to get performance data accurately enough or fast enough for it to be meaningful.
If on-time performance is a key metric, but you can’t report on it until 30 days after the event, the impact becomes much less than if you can see results within minutes of a completed delivery. FedEx and UPS know almost instantly when a parcel is delivered to a residence or a business. On the other end of the scale, some don’t know until the delivery company sends signed paper delivery receipts back through the postal system to accounts payable.
Bergin: How can manufacturers best combat tightened shipload and truckload capacity?
Bentz: This is currently one of the hottest and most important questions faced by everyone who ships or receives product. The single, best, most powerful approach is to look at your business as a network of freight flows (inbound, outbound and inter-facility) and holistically reengineer capacity management across the entire network. This is done through what we refer to as “expressive competition” which leverages the power of the overlapping networks of buyer freight flows and service provider capacity.
By optimizing overlapping networks of buyer freight flows and service provider capacity, the net result is a more stable network and a reduction in the inefficient use of capacity, empty miles for example. This takes cost out of the supply chain for both buyer and seller and links them more closely together in an interdependent way. It also reduces turnover and instability driven by constantly chasing other opportunities viewed as a more efficient use of the service provider’s assets.
Bergin: What are some effective ways of automating or digitizing supply chain operations?
Bentz: The “holy grail” in supply chain is true end-to-end supply chain management. This can only be done — at least for the present — by using a best-of-breed technology stack that provides the enabling software for relevant supply chain functions. This typically manifests itself in something referred to variously as a network services center, command center, control tower, logistics hub and other monikers. The central thesis is having a unified, integrated suite of enabling technologies that allow for complete end-to-end supply chain visibility, event management and execution.