By Tony Donofrio
As consumers, our buying decisions increasingly center on logistics. We may use Amazon’s Alexa to trigger shipment of everyday items such as paper goods and toiletries, or do all our holiday shopping online – freeing us from trips to the mall but also from wrapping, boxing and shipping gifts to far-flung friends and family.
Nearly every product is a commodity these days; competition for customers is no longer won with product alone. Service is critical. Already the norm for online retailers, this trend is now seen even with raw materials, parts and finished goods throughout the supply chain.
What makes it all possible is transportation management systems (TMS). Suppliers, manufacturers and retailers are using data in conjunction with apps, GPS and other tools to give customers increased visibility into the movement of goods to their doors.
One advantage to visualizing and streamlining multiple complex processes is that TMS helps shippers identify fat and build a strategy to eliminate it. Operational reports help uncover trends, like if shippers are missing opportunities to combine orders – patterns that are difficult to see without access to detailed metrics and analysis.
Companies can also factor the end-to-end supply chain into estimates of time and cost of production and delivery of goods. For example, a manufacturer with 30 factories across the United States could consider the location of suppliers and customers when estimating costs and project timelines – then aggregate orders to create efficiencies or take advantage of zone skipping.
A leaner workforce may also be possible. More streamlined transportation can mean fewer people are needed for loading, unloading, staging and more. It also can cut down on wasted time. When trucks don’t arrive on schedule, transportation managers don’t need to scramble to find cost-effective replacements. An automated system can provide a list of available options, capacities, costs and timelines, and trucks can be outfitted with GPS devices to improve predictability.
All of these efficiencies convert into better prices, faster turnarounds and more reliable services for customers. Companies that are still doing manual transportation management can generally save from 4 to 8 percent when they begin using a TMS. But the savings are a secondary metric. The primary benefit lies in the improvement of the customer experience, thanks to mass customization of service.
Mass customization of service requires splintered supply chains and complex execution, which is achievable when you use a TMS to segment and aggregate data to create multiple, customized delivery paths. Customers get exactly what they want – and they know when to expect it.
For example, point-of-purchase material – in-store displays and fixtures – used to be shipped in packages containing everything a store might require at their particular site. The result: stores didn’t use all of the signage and components sent. Today, they get a customized package containing only what they need, reducing waste and weight shipped.
That level of service improves customer relationships. Argo has worked with companies where 40 percent of the customer service calls are: “Where’s my product?” If you deliver what they need and let people see in real time where their order is, you eliminate calls and free up critical resources to be deployed elsewhere.
Data technology can also help manufacturers measure and diminish the environmental impact of end-to-end supply chains, while also saving money and keeping customer prices in check. Optimizing routes, delivering direct-to-stores rather than to centralized warehouses, and also localizing production are all ways to reduce emissions. Steps also can be taken to reduce the size and weight of paper and packaging.
Sustainability metrics are not just lip service to corporate values. Increasingly, buyers demand insights that help them understand and minimize the environmental impact of the products they stock. A TMS can help you provide those metrics, while aligning with your customer’s goals.
There is a technology solution for every kind of company. Legacy players once defined the space, but now newcomers offer more choices for finding a right-sized vendor. The key is being tech-ready. The more efficient and effective you become on the service side, the more everything else goes away – cost, waste, long timelines.
So what does the future hold? Technology already measures hours instead of days and pennies instead of dollars. Hypermetrics will make it possible to measure minutes instead of hours and tenths of a cent instead of pennies.
The good news is that right now ╤ once you find the right fit and are able to successfully transfer to a centralized data and technology platform – you have a great deal to gain.
Tony Donofrio, head of Argo Consulting’ s supply chain practice, has more than 30 years of supply chain experience. He has a reputation for taking on tough challenges, creating growth opportunities and outperforming the competition. For more information, visit www.argoconsulting.com.