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Supply Networks: Creating a New Opportunity
By Angela Yochem, CIO, BDP International and Lance Malesh, CCO, BDP International
Some times new technologies are used to make our processes faster and better, but there are other times when technology advances allow us to change the foundations of our business. In the logistics industry, we are in the midst of one of those times.
For years, logistics providers have collected data about their customers’ supply chains - manufacturing schedules, supplier facilities and constraints, customer lists, and so on - used as part of a traditional logistics service. Although this is the data customers need to make better business decisions, those customers have not gone to their logistics services providers for that sort of insight. Forward-thinking logistics providers are starting to offer services across the entire supply chain, and are moving traditional logistics services upstream in the planning process. This is a shift that relies on both technology innovations and human logistics expertise, and it’s a change that can revolutionize the way companies move goods around the globe.
Foundational to this change is the notion of a supply network vs a supply chain. As we think about managing data and goods flowing between a network of entities, we can start applying network optimization and advanced analysis techniques to the traditional supply chain with great results.
Whereas traditionally a logistics provider could watch for surges in demand for a product and notify manufacturers to eliminate potential delays in delivery. Today we can anticipate demand surges based on a variety of factors both in and outside a customer’s control, and proactively manage decisions based on parameters optimal for that customer.
“Logistics providers bring human expertise to the table to help clients with decision making”
We can also provide network analysis and optimization services. At BDP International, we built a network optimization model for a client and ran the client’s data through a regression cycle, leading to the discovery that significant efficiencies could be gained if the customer cut manufacturing facilities and moved to a hub-and-spoke model. The customer followed our recommendations, streamlining time-to-market and saving millions of dollars in the process. In addition, this client now has a major advantage in using customer service as a differentiator from its competitors, since it has cut delivery time from 7 days to 3 days.
When logistics providers help clients make changes with this kind of impact, we’re no longer just another vendor. We’re partners in the client’s business success.
Why is now the time for logistics companies to expand their services? The simple answer is that the tools are in place to make this expansion possible. These tools include some amazing technologies, including:
Sensors: Sensors are not only automating much of the logistics information that used to rely on paper forms; sensors are also adding multiple new data points along the supply chain. For example, wearable sensors such as smart glasses and integrated voice speakers give warehouse workers access to hands-free information, and wearable technologies may help warehouse staff navigate through these enormous spaces through connections to GPS mapping systems, keeping staff from getting lost and saving additional time. Sensors can also help ensure safely in the transportation of chemicals or other potentially hazardous materials. Wearable technologies for drivers--such as biometric sensors which monitor vitals--can help immediately recognize health problems or fatigue which might adversely affect job performance and thus the transportation of goods.
Cloud Computing: Many logistics companies have adopted cloud-based technology infrastructures that give users faster implementation times at a lower up-front cost with on-demand computing power. The cloud allows logistics providers to have real-time information about their customers’ shipments while mitigating risks to data integrity.
Advanced Analytics: Powerful new methods of analyzing customer data have enabled true insight into the supply chain. The whole process--from demand planning to acquisition of parts/materials, movement of supplies to plants, distribution of goods, and storage choices--can be represented by the underlying data, and when new methods of analyzing this massive amount of data, surprising insights can result, such as more efficient trade flow paths or optimal operational staffing models.
These technologies are transformative when used together in support of a customer’s strategy.
Perhaps more important than the technologies are the people behind them. Logistics providers bring human expertise to the table to help clients with decision making. The new services we can provide (procurement services, compliance services/regulatory considerations, information management and integration, among others) are dependent upon logistics experts using the technology tools available to them.
While large companies used to rely on industrial engineers from within their ranks to determine the optimum trade paths and the like, many of the leaders of these companies are realizing that it’s more efficient and effective to outsource these decisions to logistics providers. Logistics providers bring a unique systemic perspective on how goods are moved globally and the ways in which technology can enhance and disrupt transportation channels.
Traditionally, logistics was the first place companies looked to save money, and in many cases they tried to use logistics to make up for inefficiencies throughout the earlier part of the cycle. Now, in order to have sustainable savings, companies need to look at the process as a supply network rather than a supply chain. Technology innovations make this network possible. The supply network, managed by logistics experts, help companies focus on the impact of each component throughout the network and the ripple effect of changes to these components.