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Next-Gen Supply Chain Management: There is No Single Solution

Posted - April 16, 2015

Next-Gen Supply Chain Management: There is No Single Solution

Major transformational change in supply chain and logistics is certainly not a frequent occurrence, but it has happened with regularity throughout history. For example:

  • The advent of the steam engine and the related rise of railway and steamship lines.
  • The invention of diesel and turbine engines resulting in the supplanting of steam-powered vehicles with oil-fueled locomotives, trucks and airliners.
  • The construction of limited-access super highways and the rise of trucking services.

And now, the new-age supply chain will take the next leap forward through integrated technology-enabled solutions.  Because unlike the earlier examples listed above, ‘Next-Gen’ productivity improvement and optimized supply chain performance will actually come from technology-enabled solutions rather than mechanical or engineering inventions.

In the recent film The Theory of Everything, Steven Hawking sets a goal of finding a “single, elegant equation that explains everything” in relation to the universe. And although supply chain certainly faces a somewhat less complex, and less daunting task, it still needs a fully integrated, systemic approach to managing the business. And while marvelous in concept and exciting in theory, true end-to-end (e-2-e) supply chain management has lagged behind the technological ability to deliver it. Unfortunately, there is no single, unifying solution or “silver bullet” that supply chain professionals can turn to.

Unlike Dr. Hawking, supply chain management doesn’t need a single, elegant solution. But, if we are to truly transform it, we do need the ability to envision, design and blueprint a solution for operationalizing e-2-e transportation management, if not for the entire supply chain. And transportation now accounts for about 63% of total supply chain cost, so it is vital to get this right!

The critical capabilities stem from the ability to see what is going on across the entire patch – from the shipper’s dock all the way to the store shelf – with SKU-level visibility. Then, and only then, will a supply chain professional and his or her internal customers be able to get a comprehensive picture of the inventory of the products they are responsible for, including what’s on the shipper’s dock, at the consolidator, on the ocean vessel or stack train or truck, in the DC and on the store shelf.

Two significant benefits stem from this next-gen, comprehensive picture:

  1. The ability to manage inventory much more efficiently because it all can be seen, down to the individual SKU-level.
  2. The analysis, evaluation and tweaking of roadblocks and delay points in the supply chain can be done on a continuous-improvement basis to enhance performance.

The end goal, of course, is a more reliable, predictable supply chain, which in turn relates directly to the ability to reduce safety stock and overall inventory. But how exactly do we meet this goal, and what are the steps to achieving a true next-gen supply chain?

Stay tuned for part 2 of this series to find out.

What are some best practices for next-gen supply chain management that you’ve seen in your organization?