Visibility & DC Security Guards

Here is an interesting new use case from a recent customer deployment.

The distribution center (DC) guards are required to review the seals and seal #’s on the containers entering the DC location. They’ve had some problems recently because the guards don’t always have the most up-to-date info. During a management meeting, one company employee thought, “hey, I bet this data is in our visibility application! Why couldn’t the guards log in and look at the seal #s for each container?” SO, they took it a step further and created a report (“show me all the containers coming into the DC in the next X days”) and scheduled to have the report sent to the guard’s group email box everyday. Now, the guards print out the spreadsheet and check off the containers/seal numbers when the containers enter the DC.

Clever.

SKU Visibility without Orders

Yes, it can be done! Clients often associate “SKU-level tracking” with orders. Sure, the association makes perfect sense. Orders house SKU information, so logically you need orders to get that level of detail.

Remember though, that advance ship notices (ASNs) can deliver the same control. Most 3PLs can send ASNs with SKU detail, so you can get SKU-level control without actually having orders in your visibility system. The advantage? Leverage connections from your 3PL without having to integrate your ERP/OMS with the visibility system. This cuts down on internal IT resource requirements, and speeds your time to value.

SKU-level visibility without orders — it’s a reality. Ask your provider.

Was your summer vacation an office staycation?

Brian Wilcox, Solutions Consulting, GT Nexus -

I’ve been thinking about an odd combination of subjects lately – logistics and summer vacations.   As the U.S. Labor Day holiday is almost upon us, many are asking the age-old question “Where did my summer go?”  This year the question is even more poignant as companies are reducing headcount and asking everybody to achieve more with less.  For many, the push for greater productivity and added responsibility has led to reduced time spent on traditional summer activities and holiday time out of the office.   From my customer interactions, I know logistics/supply chain teams have certainly been affected by this environment. Those that rely on visibility information via phone calls, web sites and emails are especially under pressure and spending more hours in the office to compensate for fewer colleagues to complete the work. 

At the cross roads of company visibility needs, logistics/supply chain groups are relied upon to quickly respond to product and/or shipment status inquiries.  Questions can come from buyers needing the status on particular orders, from accounting needing data on container demurrage bills, from customer service needing to answer back-order inquiries from irate customers, and so on. The logistics department is consumed with visibility issues, often because other departments have no reliable tools to answer their own questions.  For companies that utilize technology to gather supply chain data and provide access to stakeholders via the Web, the reduction in visibility inquiries into the logistics team has allowed scarce resources to shift efforts to thinking strategically, improving processes and finding cost savings.  

I’m not entirely sure that easily accessible and reliable visibility tools and reporting have allowed those involved with supply chain visibility to take a deserved occasional break from the action, but I know a few folks that would like to find out during a few days off…

Supply Chain Visibility: How far do you go?

I was talking to a North American-based retailer last week. They have a traditional push-supply chain, whereby they place discrete purchase orders for anticipated demand. The overwhelming majority of their products are sourced from China, and are brought into the United States.

However, the key contacts at this company were very focused on gaining access and control across the various levels of their supply chain. Meaning, they not only wanted visibility between themselves and the next-most immediate seller, but also to that party’s underlying provider, and then the next party’s underlying supplier. In all, there can be up to five (5) levels of these buy/sell relationships.

So, the question really became: how far back in the supply chain do you need to go? It’s a difficult question to answer. Ideally, I suppose, you’d like to have visibility and control “all the way back!”. But doesn’t that violate the boundaries of your commercial relationship? If you are a buyer, and the seller chooses not to reveal their source, is that OK? There are some cases where that information must be revealed, like for ISF/10+2 data elements (I am thinking of the traditional supplier/factory relationship in Asia). But, for other scenarios, I am not so sure.

What do you think?

Guest Blog: Sleeping Well at Night

David Rink, Solutions Consulting Director, GT Nexus –

I spend a lot of time talking to customers about visibility into their international supply chain. The more I talk to them, the more I realize that visibility means different things to different people. One company only needs container visibility (where is the box).  Another company needs to know where the box is and what’s in it. And then other companies have visibility once the shipment is in motion, but are blind before that.

There is a common trend.  A significant blind spot exists before the shipment leaves its origin (at the supplier/vendor).  I’m always surprised that this is such a black hole, and even more surprised at the number of excel sheets, emails, and post-it notes that are attempting to track this.  It’s like we’ve moved back in time to the 1950’s.

Where should international shipment visibility start? Is it when the product departs the port of load? Is it when your origin consolidator/forwarders receives it? Or should it start when the product leaves the origin supplier/vendor? Well, the answer is most importers need visibility before the product actually leaves the origin supplier/vendor.  Heck, if the supplier doesn’t produce the product, then it’ll never make next Friday’s sailing of the Emma Maersk.

Essentially, visibility farther upstream in the supply chain can reduce problems farther downstream.

Think about it this way. Say every partner in your supply chain performs better than expected.  For example: your consolidator stuffs the container and gets product to the port a day quicker than normal, your ocean carriers transit time is 1 day quicker than normal, your inland haulage is 1 day quicker.  All of this outstanding performance is negated if your supplier “fell down”,  and will be a week late shipping the product.

A great visibility system needs to start as early as possible. This is typically from the issuance of the order from the buyer to the seller. It should ensure that the seller accepts the dates and quantities, etc. that are listed on the order. Tracks the start of production, end of production, quality approval, etc. Alerts can be generated to notify interested parties that things aren’t happening as intended. Proactive measures can be taken earlier in the process so that un-due pressure isn’t applied to your other logistics partners.

There are lots of benefits to visibility at this level, such as supplier scorecarding, reduced expedited shipments, customer service, etc. But the biggest benefit of all might be your ability to sleep well at night with your hair still on your head.

Visibility at the Right Level

Getting visibility right requires many things. You need partners that can send data, a platform that can receive it and an application that can make sense of it. These are well understood concepts, but there are endless failure points — too many to list here. Among these considerations, is the “level” at which events are recorded. I came across this concept today while talking with a prospective client.

They are an exporter, based in North America, that ships goods via ocean containers to their clients all around the world. They have a visibility system in place today, one that gets status updates from partner ocean carriers. Sounds good so far! But, this system was designed in a way to track status events at the “bill of lading level”. Essentially, the system gets EDI updates (like vessel depart and vessel arrive) and assigns them to a shipment. This system’s definition of shipment is a bill of lading (BL). The results of this arrangement is that even if there are four (4) containers on that BL, all of them get updated with the same event.

So, sure enough, there was a shipment destined for Australia. This shipment (BL) had four (4) containers, and they all departed Los Angeles at the same time. But, after they arrived Taiwan, only three (3) of them made the transhipment to a subsequent southbound feeder vessel. The ocean carrier, rightfully so, sent a “depart transhipment” update for the BL and the system assigned that event to the shipment/BL. The exporter’s customer service department was unaware that one (1) container was left behind in Taiwan, while the others moved onto Australia.

About a week later, the end customer called the export customer service team asking about the last container. They were in a panic, reaching stock-out levels for this constrained (high demand) product. The customer service representative looked into the system and confirmed that “all containers departed Taiwan last week”. This, of course, was not the case. As a result, they had an unhappy customer on their hands.

This could have been avoided by tracking the status events at the right “level”. In this case, and most others I can think of, the ocean events should clearly be at the container level (not at a higher BL or vessel level). Sounds like common sense, but this is not the way this system was architected. By the way, the system is a very well known license-and-install ERP application.

Anyway, be sure to think through this while designing your visibility application. And, if you’re in Taiwan, please be sure to let me know if you find that container.

Importance of Transhipment Events

I spent a day recently with a well-known beer manufacturer based in Latin America. They operate on a blended model: some product lines are built-to-stock, and some are built-to-order. They only have less than ten manufacturing plants in their home country (where their corporate headquarters are), but they export to well over 50 destination countries. Some of these supply lines are plant-to-DC, and some are plant-to-customer. One interesting challenge they had was how to successfully divert ocean container shipments (that were already on the water) based on a change in demand.

This how they explained the story: sales orders were loaded into containers, and then shipped to a customer’s location (example: Italy). Along the way, the customer changes their mind and would prefer if the beer was sent to another country (example: Sweden). If the container was moving through a transhipment port (example: Algeciras, Spain), and there was enough lead-time, then they would make arrangements for a diversion. While this is an external customer shipment example, the same scenario holds true for an internal plant-to-DC move.

There were three issues for this company in this scenario. First, they can’t easily get a firm itinerary for the containers in-motion (“what containers are expected to hit a transhipment port at all during their journey?”). Second, even for those that they know have a transhipment in their trip plan, they can’t see when they are anticipated to hit that location (“when will the transhipment-bound containers hit the relay port?”). Third, they can’t see the containers that have already discharged at the transhipment port (“what containers have already arrived at the relay port?”).

If this company had answers to all of these questions, the value would be significant. They could become a better supplier to their customer by helping them meet dynamic changes in demand. Additional transportation charges could be avoided during that last leg (i.e. an additional move form Italy to Sweden). They could reduce the risk of the product becoming obsolete, due to its perishable nature (beer goes bad after a certain number of days, and remember: beer does not ship overseas in temperature-controlled containers!). Last, if they could solve this, then they could even start shipping immediately, without a known buyer in mind. This maneuver increases the velocity of sales and, ultimately, impoves their cash conversion cycles as well.

All of that, based on a little old transhipment event. Go figure..!

Give & Take: Supply and Demand

I recently spent a day with a regional supply chain team from a global durable goods manufacturer. We were reviewing their pain points and key challenges. Among other items, the team described to me how there were competing interests inside the organization. On one end was supply, and on the other end was demand.

On the supply side, in this case their own manufacturing plants, the team was driven by factory-focused objectives. These were dynamics such as production floor optimization, manufacturing throughput and union labor requirements. The plant teams were being measured, in essence, by producing as much product in the most cost-effective way. This usually resulted in a produce more, produce faster and ship it out approach. “Good for them, but it hurts us by the time all that inventory gets to us” the team lead said.

Meanwhile, on the demand side — at the destination markets on another continent — the import supply chain teams had to cope with this bloated inbound product flow. Often times, because they lacked a robust visibility system, they’d be surprised by the containers. Worse, since they didn’t have a need for all of the products, they had to hire temporary warehouse space to store the un-needed goods. The supply chain team then described what the ideal solution would be — there were two main parts.

The first was to have tighter collaboration around the shipment planning process. Specifically, they wanted to have influence on the product mix inside of each container, and to select the right transportation plan. Sometimes the answer might be ”get it here fast” and other times it’s “take the slow boat!” But, in the current process flow, they didn’t have any participation in these decisions.

The second request was to have better in-transit visibility. If the import teams could see what was coming at them, they’d have more time to plan for the inbound containers. Some might be diverted, and in other cases (with enough advance warning) they could make cheaper warehousing arrangements. Last, if shipments were late, having an updated ETA would significantly improve their overall operations.

So, in summary, by having the supply (manufacturing teams at origin) and demand (destination consuming markets) more synchronized it would lead to better overall operations. But, to achieve this, it all starts with upstream and updated visibility. It’s a give & take approach.

Hi-Tech Visibility: Air to Ocean

I’ve heard a couple of hi-tech companies talk recently about making major shifts in their supply chains. Specifically, they’ve been exploring how to make a wholesale change from airfreight to ocean for certain product lines. Of course, this is a major departure from the traditional approach, where the default mode was always airfreight.

The value that can be achieved with this change is significant — mostly around lower freight spend. On average, as you recall, airfreight is roughly 7 to 10 times more expensive than ocean. Of course, these companies will see much longer transit times, higher variability and increased inventory carrying costs (assuming FOB terms-of-sale or similar), but the idea is that it all nets out in the ROI model. But, one thing is for sure, these companies will need serious visibility to make this work.

I see it this way: on the airfreight side since the transit times are short (2-3 days at most), whether a company gets events in real-time is not as important, because the flight itself will commonly arrive before most forwarders can send the visibility data! On the ocean side however, getting events along the supply chain will become MUCH more important as the complexity of the move will increase significantly. More partners, more hand-offs, more points of failure. At a high level, ocean is less reliable, and therefore more risky. If a hi-tech company makes this shift, they need a good way to ensure that things are going as planned.

Everything Together in One Place

When sizing up visibility projects, I often hear customers focus on the international supply chain. This, of course, makes sense as most customers do in fact have heavy off-shore sourcing networks. Additionally, these long cross-border supply lines are typically the source for high cycle time averages with lots of variability. But, there are other inbound needs as well. The place that I have seen customers often overlook is their domestic supply chains.

So, while the supply base itself is in places like Denver and Chicago rather than Dalian and Chittagong, the key challenges remain the same: knowing when orders will ship, when they actually ship and when they will arrive. The data sources are different (domestic 214s rather than ocean 315s, for example), as are the players (truckers, not airfreight forwarders or steamship lines). At the end of the day, regardless of geography, key users of the system want one place to see all inbound moves — international and domestic alike. Simple concept, but often overlooked.