Supercharging Your Supply Chain (Part 3): Making Logistics Move Smoothly
- June 8th, 2012
- By: Sean Riley
This is a decade of major transitions (ahem) for logistics.
Rising fuel costs are a major factor in logistic costs. The McKinsey Quarterly says in the present decade, we could see oil prices rise and oscillate between $125 and $175 a barrel.
To give you an idea of how serious that could be, the article points out many companies found their supply chains didn’t make economic sense when prices hit $125 a barrel. While identifying and utilizing alternative energy sources will help set a ceiling for oil prices, these same energy sources are not yet viable from a cost benefits perspective.
The top way to prepare, according to McKinsey, is to address “asset technologies,” which includes trucks, tankers and rail.
Beyond rising fuel costs, natural disasters in popular outsourcing regions results and the resulting “re-sourcing” trend are also triggers re-evaluation of the supply chain in light of more cost-effective logistics.
That’s why we believe making your logistics move smoothly — and cost effectively — is an important part of Supercharging Your Supply Chain .
But what you may not have considered is the four ways B2B technology can improve your logistics.
1. Better visibility. End to end supply chain visibility will absolutely help you become more efficient, but this is particularly true with logistics. For example, a customer places an order for delivery and a sophisticated demand management application sources the optimized distribution location and the best transporter. Unfortunately, the transporter is delayed and the load that was picked and staged by the 3PL is repackaged for other orders to clear the dock space. The transporter arrives and the load is picked, staged and shipped. Now the driver’s hours of service (HOS) expires and has to take a mandatory ten hour break.
You don’t find out about any of this until the customer calls looking for their order. You realize that if you knew about the initial delay you could have overridden the source point and resolved the issue so your customer would never know an issue ever existed.
That capability that may seem obvious, but it’s becoming more important as retailers turn to in-store merchandise for order fulfillment. Better visibility can also help you see how logistics partners and shipping options contribute to your supply chain costs.
2. Simplify business deals. A good B2B solution will allow you to communicate with logistics partners in a variety of standard formats, such an EDI and XML. Electronic communications will simplify a number of transactions and communications, such as:
- Sending requests for load pricing proposals.
- Receiving proposals and bids from multiple carriers so you easily identify the “cheapest and best” option.
- Allow you to send load tenders, bill of lading and manifests electronically, which reduces errors while providing documentation of the transaction.
- Providing data and documentation electronically to customs or a port authority, again, with the value-added being fewer delays due to missing or delayed paperwork.
A good associate is expensive and even the best associates make errors when taking verbal orders or transcribing orders into your order management application of choice. Customers can be assured that the correct quantities and SKUs have been ordered when they have control of the order input and are not relying upon an intermediary.
3. Simplify the outsourcing of logistics. If you’re a company that uses 3PL’s, 4PL’s or Lead Logistics Providers, then B2B solutions can help by automating data exchanges, such as:
- Sending advice on goods
- Receiving a notice of goods receipt
- Receiving Pick, Pack and Ship confirmations
- Receiving inventory advice when stock levels or orders change
4. Improve the process of returning merchandise.
When you need to change or cancel an order, timing is critical. B2B solutions make this process more agile, which means fewer errors and, of course, less money spent on returns.
B2B solutions can supercharge your supply chain by making logistics more agile, more responsive and more transparent. It can even provide the data you need to find new and exciting ways to optimize logistics in other ways.
So, if you want to reduce logistics costs, don’t forget to look at automation and how a B2B solution can support your logistics plan.