Each day, thousands of trucks carrying millions, even billions of dollars in merchandise traverse the United States. Traditionally, companies have used paper, or hand-key computer tracking programs to record each shipment’s progress as it moves through the supply chain.
But with so many opportunities for human error or misprints, keeping track of every item can be nearly impossible – leading to millions of dollars in lost revenue from shorted or mistaken orders and items that have to be discarded once forgotten.
Order shorting – i.e. not having enough of a particular item because it was never loaded onto the truck or because it was delivered to the wrong locationÑ is only one logistical issue. Numerous other order discrepancies can and do occur in the supply chain every day, including: product damage that leads to rejection at the delivery site or products that are delivered in the wrong quantity or type.
Although each of these issues are encountered by companies running their own private fleets, the impact becomes exponentially more difficult to manage for companies utilizing third party carriers that have a limited role and involvement in back-end logistics processes.
This article will look at a day in the life of two truck drivers – one whose company uses technology for their drivers and operations workforce (a third-party carrier), and another whose company does not (a private fleet) – in order to identify best practices for minimizing bottom line impact of order shorts and discrepancies.
The Technology-Less Driver
It’s 5 a.m. as the drivers, dockworkers and administrators who support the mid-size, 80-truck fleet at a leading food service distributor prepare for the day ahead. Each driver has between 12-15 stops and carries hundreds to thousands of dollars worth of product on his or her truck. Delivery notes, which contain 1-2 pages of line items and details for each stop, are printed out and ordered in the sequence corresponding to delivery order. Each driverÕs delivery routes are based on route optimization technology.
When one of the drivers arrives at his first stop, he notices that a case, containing 12 bottles of ketchup, did not make it onto the truck. After amending the delivery on the customer’s paper invoice, he has the customer sign the receipt, hands a hard copy to the customer and then makes notes on the company copy so that later in the day he can explain to his supervisor what occurred. The customer is upset not only by the improper delivery, but the fact that she is left with an incorrect receipt that will not be reconciled for up to a week.
At the end of his shift, the driver arrives back at the warehouse and speaks with his supervisor. An adjustment is made to credit the customers’ invoice for the inventory that was not received, and the paperwork is brought to the accounts payable department. The invoices are then routed to a central scanning office, where they are scanned and sent as a PDF to the accounts department. The entire process typically takes a week, during which time the customer is out the money spent on the case of ketchup and the supplier loses money on inefficiencies as a result of having to go back to the same site a second time to complete the order.
This manual process leaves huge room for error, losses and discrepancies.
The Technology-Enabled Driver
Flash over to another scene – where one of the largest pharmaceutical distributors in the US (with $90 billion in revenue and 43 carriers) starts their day. Altogether, the 43 carriers who distribute the pharmaceutical products will make 70,000 stops today. The distributor has mandated its carriers to utilize electronic proof of delivery products to capture receipts, signatures, exceptions, adjustments and returns, to ensure that a strong proof of delivery and product tracking can be shown at all stages. According to the agreement between the pharmaceutical distributor and the carriers, at least 97 percent of orders must be delivered and at least 98 percent of orders must be on time.
As inventory is loaded onto the truck at docking stations, it is compared against an electronic manifest. The data from all of the drivers at each stop throughout the day will be aggregated into a central portal for review and analysis. By tracking stops this way, carriers can predict the time of arrival at each stop and auto-alert customers of the expected arrival time.
At one of his first stops, a driver grabs 36 boxes of surgical gloves. But, as he scans them and readies them to be brought into the building to the customer, the software on his device automatically alerts the driver that only 32 of the boxes were to be delivered to this particular location, helping him to avoid a short at one of his stops later in the day.
At his fourth stop, the driver brings in a box of refrigerated tote bags that have broken zippers. When the customer refuses this part of the order, the driver’s software auto-recalculates the amount due, and the customer signs for the re-calculated charge. The automatic reconciliation ensures that the customer records and receipt at the time of delivery are an accurate reflection of the true inventory in possession. The extra inventory is marked as a return and the product is then tracked on a reconciliation list (compiled throughout the day) as it travels back to the warehouse.
The above examples of mistakes made throughout the supply chain (with or without the aid of technology) likely would not threaten a long-term contact relationship unless they occurred repeatedly. However, take the example of a restaurant that must plan its orders with precision to ensure the freshness of its ingredients. Finding out two hours before opening time that the morning delivery is short a box of lettuce can be a headache, an inconvenience and ultimately a financial burden. From the supplier perspective, missing heads of lettuce could mean the difference between a long-term restaurant contract, and loss of revenue.
Route optimization and warehouse management technologies alone are not enough to cut down on delivery errors and inefficiencies across the supply chain. The examples above illustrate what technology can do, and how critical a role it can play in advancing supplier/customer relations and ensuring that relationships, and revenue, are not lost over avoidable mistakes.
Not only do the described technologies increase the accuracy of orders, cut down on errors, and save costs and wasted operational cycles, they help ensure the longevity and quality of the professional relationship between supplier and customer.
Mike Lee is CEO of Airclic, a leader in enterprise mobility. For more information, visit www.airclic.com.