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4 Techniques to Fix Digital Breakages in the Supply Chain – Part 2

 
 

Next Gen Insights | Antony Francis |
18 May 2021

In part 1 of this article, we surveyed the current expansion of the global logistics sector and discussed how and where digital breakages occur within the supply chain. We also looked at two specific breakages around insufficient data use and connection and how to fix them. In the following, we will proceed with two more breakages to be aware of.

Breakage #3: Insufficient stock information 

A significant advantage for retailers is the ability to inform customers about the back-order status of products and the efficient allocation of inventory when replenishment orders arrive. One of the worst dissatisfiers for consumers and customers in the supply chain is to receive the message “Dear Customer, the items you ordered are out of stock”, with no indication of when the product will be in stock again.

The fix: know and use inventory levels and ATP solutions
Basic inventory management applications only manage in/out quantities without accounting for orders in process and future deliveries. In e-commerce operations with higher velocity, it is vital to be able to inform customers of their order status. Available-to-promise (ATP) algorithms integrate all inventory movements, existing and prospective, so that you can promise your customers an exact delivery date. As a result, post-delivery customer survey results are substantially improved.

Breakage #4: Documentation delays in the importation process

Part of the importation process is the information associated with each inbound shipment. It is typically a document matrix where information is shared and repeated in a multitude of documents. Being alerted when critical documents, which are needed to complete the document matrix, are delayed or missing is vital.

The fix: synchronise the document workflow
This is where operational dashboards come into their own. With international shipping, timing is everything. Miss a departure, and you have lost time in store to sell the goods. Getting all the documentation together to move with the shipment is absolutely critical. So, building a dashboard that monitors the various documents and when they should be completed enhances this process. To start with, you need to map the processes that will feed information into the dashboard. The application can then report (green/yellow/red) as the departure date approaches, improving documentary compliance. Perhaps the most critical data feed is the HTS system (Harmonized Tariff Schedule). Since each internationally shipped product has its own HTS code, if the wrong code is used, delays ensue and, in some cases, significant fines as well.

SOLUTION: ADOPTION OF CLOUD-BASED SOFTWARE

Breaking down silos and moving applications to the cloud will enable greater data availability across the extended supply chain, allowing organisations to drive smarter decision-making. As the cloud-based applications will be integrated, you will be able to avoid the manual re-keying of information in each silo, as the relevant information is passed forward from each process electronically, and data fields are updated automatically. These process changes allow for the deployment of personnel and resources elsewhere, for example to focus on more strategic tasks, and improve the accuracy of information passed along at each step.

Cloud-based software has become a key driver of digital business transformation, not only in the supply chain but for organisations overall. However, if you were to poll many traditional businesses, they would admit that their primary means of communicating with supply chain partners is still through outdated legacy systems and processes, such as phone, fax, and email. Companies cannot simply switch over and say, “we’re in the cloud now”. Systems must be developed in parallel and run side by side to prove that the output is correct. Only then can old processes be eliminated.

SOLUTION: THE DATA CHALLENGE

Everyone is talking about ‘data’ and its impact on the supply chain, but data alone will not solve all your problems! It is easy to assume that data is going to answer all your questions about supply chain performance, but the reality is that data, to a degree, is a misleading term. The challenge is not managing data; the challenge lies in realising the insight that your data offers, and how it can enable your organisation. With the right tools in place (event managers, dashboards, etc.), organisations can gain visibility into the supply chains to identify areas of concern as well as areas of potential growth to make them more streamlined.

One example would be the addition of yard management tools to the intralogistics operations within a warehouse’s four walls, integrating advanced ship notice data (ASN), which enables a seamless flow of goods from yard gate to unloading into receiving operations. The improved accuracy flows through to the put-away process inside the warehouse. Downstream, this accuracy is felt when it comes to replenishing the pick face.

LOOKING AHEAD IN SUPPLY CHAIN 

In 2019, retail e-commerce sales worldwide amounted to $3.35 trillion and are projected to grow to $6.39 trillion in 2024.

As a result, supply chains are being tested as never before. Covid-19, Brexit, and tariff wars have also created a surge in online buying and have brought supply chain matters front and centre.

One final recent example is the breakage in the semiconductor supply chain, caused by a surge in demand for connected devices like phones and smaller computers and the increased use of automotive electronics like displays and in-car systems in even the most basic of automobiles. Lease times have stretched from 12 weeks in February 2020 to 22 weeks in March 2021. Continued offshoring of semiconductor components and the shortage of parts have led to the shutdown of several global automobile assembly lines. This prompted a call to develop US-based production and increase the strategic reserve inventory of electronic components, which will in turn change the supply chain and force organisations to adapt.

Antony Francis

SME for Supply Chain and Logistics

Antony has spent the last 25+ years helping organisations improve their supply chain processes and logistics operations by integrating automation and technology to accelerate and scale service to customers. He has a deep understanding of fulfilment operations: brick-and-mortar and e-commerce, returns processing and product refurbishment and repair. Throughout his career, he has had the opportunity to travel to over 43 countries. When he isn’t jet-setting around the globe, Antony enjoys books on European history and is passionate about opera and wine. He is also bilingual in English and French.

 

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