Transportation
Article | April 26, 2023
The complexity of today’s supply chain has resulted in a highly fragmented supply chain ecosystem. Whether it is a global pandemic or an ongoing war, streamlining the moving parts in the supply chain management system is an immense feat in the current climate. The resulting shortage of materials, disruption of transportation, and delays have complicated the supply chain even further. Add to it the expectation to minimize expenses, optimize inventory, and enable quality and customer expectations, and stakeholders at every level of the supply chain are inundated with challenges.
This is where using advanced analytics in supply chain can be a game changer for many manufacturers. It can help them gain a deeper insight into their operations and how the supply chain is moving.
How Supply Chain Analytics Enriches Supply Chain Management
A 360-degree view of the supply chain is crucial for supply chain leaders. A lack of insight can cause costly delays and avoidable disruptions. Obtaining complete visibility in supply chain management, on the other hand, can be difficult. The immense volume of data that many organizations have to deal with makes it difficult to gain proper insight.
Supply chain analytics tools help in gaining a better sense of the aggregated data from different parts of the supply chain, such as procurement, ERP in supply chain management, warehousing management, shipping and logistics management, and many more. The more accurate the data is, the simpler it is to use advanced supply chain management analytics to forecast, predict, and plan better in order to maximize the supply chain’s capabilities.
Optimizing the Supply Chain: 3 Ways to Do so with Analytics
With the range of analytics applications in supply chain in use today, manufacturers have the opportunity to completely transform how to view, manage and strategize. Here are five data analytics supply chain tools to consider in the pursuit of optimization.
Demand Forecasting
Inventory management is at the heart of supply chain optimization. Not calibrating the inventory stock based on demand and supply for bestselling products and those that don’t move fast can cause either an overstocking or understocking problem. Either way, forecasting the right balance is difficult to achieve, but data analytics can make it simpler. The lack of the right products in stock can heavily impact the bottom line. According to a survey by Logility, 36% of supply chain experts consider inventory optimization the primary reason for adopting analytics. An integrated mapping of retail sales, inventory levels, and the flow of goods will lead to accurate demand forecasting.
This data can empower organizations to:
Strategize sales promotions
Define product pricing
Maximize budgets
Predict accurate inventory levels
Inventory management has a cascading effect on the supply chain, and advanced demand forecasting has helped many organizations achieve an optimum level of inventory for the right products.
Predictive Warehousing Maintenance
Machine Learning (ML), artificial intelligence (AI), and the Internet of Things (IoT) have been emerging technologies on the supply chain management landscape. By using a mix of these technologies, it is possible for manufacturers to deploy predictive maintenance in warehousing. Predictive maintenance is the process of assessing data generated from the past and in real-time to determine patterns and identify equipment failure and maintenance schedule before a breakdown occurs.
This helps manufacturers to:
Avoid heavy repair costs
Plan spare part supply
Slash downtime from equipment failure
Eliminate production delays
In addition to reducing production bottlenecks, predictive maintenance gives businesses the ability to manage their equipment and optimize their shelf-life.
Warehousing Efficiency
At the warehouse phase of the supply chain, analytics can help manage the supply chain in more than just one way. The warehouse workflow is just as crucial, as it facilitates a clear view of the condition of goods as well as the optimization of the warehouse space. In addition to warehouse space maximization, quality control is another challenge that warehousing management addresses.
Supply chain analytics can enhance warehousing efficiency by:
Ensuring the correct storage of goods based on their weight, fragility, and perishability
Aligning with resource management like equipment, vehicles
Identifying disruptions to storage before they occur
One of the advantages of supply chain analytics is getting a deep insight into the warehouse’s operation so manufacturers can identify gaps and take steps to make it more efficient.
Transportation Tracking
Real-time analytics of transportation and logistics is a crucial piece in the puzzle of supply chain management. For example, the data generated in relation to fuel consumption, weather conditions, and even traffic patterns can help organizations boost their logistics and carrier management.
It can help them to:
Schedule deliveries
Determine better routes
Evaluate current routes
Strategize their shipping schedule
To Wrap it Up
To put it simply, a deep insight into the supply chain, inventory management, and warehouse operations is a great way to ensure the supply chain is on track. Effective supply chain management software is an asset for an organization when it is able to leverage the insights and make well-informed strategies to further optimize the supply chain.
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Warehousing and Distribution
Article | July 11, 2023
Carrier management systems have undergone much evolution thanks to the exponential development in shipping and logistics technology. Although its primary mission was to assign, control, and track shippers and carriers, the industry's post-pandemic trends have reflected a variety of new best practices.
Traditionally, many carrier management systems were manually operated and made extensive use of paper processes that didn’t provide perks like real-time data, reporting functionalities, or the visibility to make informed decisions. Today’s carrier management systems comprise these features and go even further. They offer tangible improvements and advantages that impact the bottom line. Here are three things you should look for in a carrier management solution to make sure your digital transformation goes as well as possible.
Support for a Diverse Range of Carriers
To effectively manage your carriers, it’s essential to be able to keep up with technologies used by everything from small to large carriers. The ability to support modern technologies and EDI that are routinely used by larger carriers while also offering online portals and mobile-readiness is integral. A platform that supports a diverse range of carrier sizes helps streamline processes and eliminate friction between operational groups. It also offers all carriers on the system the ability to stay in the loop and access the same data for load and freight boards to keep the freight moving.
Performance Mapping Capabilities
The ability to track performance and keep an eye on crucial metrics is an important consideration for a carrier management system. Real-time data bolsters carrier relationships and equips you with the ability to control and manage factors like load capacity, location of your fuel and fleet, and intimate teams on issues like inventory, sourcing, forecasting, and dispatching in real-time. Not only does this positively impact shippers, but carriers as well. With an overview into their own performance, carriers are empowered to course-correct and respond to sudden hurdles in time. Shippers must be able to get access to the following metrics in order to have the upper hand in rate negotiations with carriers:
On-time performance
Data accuracy
Compliance
Status update timelines
Collaboration-Friendly Platforms
A flexible solution that allows shippers to work collaboratively ensures strategic flexibility. Monitoring the performance across different modes including truckload, intermodal, and LTL as well as parcel consolidators and shippers. Today, carrier management systems and other digital solutions are able to integrate these modes and offer superior capabilities when it comes to receiving updates from all modes in real-time. When combined with cloud-based solutions, carrier management can take efficiency to a whole new level.
To Conclude
The success of your supply chain and company depends on your partnerships with your carriers, which can also have a significant impact on your ROI, particularly as the market continues to transform further towards third party partnerships. In order to foster carrier performance, carrier management should be a significant part of your strategy.
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Warehousing and Distribution
Article | July 11, 2023
Efficient demand forecasting techniques transform supply chain management, help optimize inventory levels, streamline operations, improve customer satisfaction, and achieve a competitive edge.
Contents
1. How Accurate Demand Forecasting Impacts Business Operations and Profitability?
2. Navigating the Pitfalls of Traditional Demand Forecasting
2.1 Limitations of Manual Forecasting Methods
2.2 Inaccuracy and Inconsistency in Demand Prediction
2.3 Multiple Products and Markets Challenges
2.4 Influence of External Factors on Demand Forecasting
3. Advanced Demand Forecasting Techniques for Supply Chain Management
3.1 Statistical Forecasting
3.2 Collaborative Demand Planning
3.3 Demand Sensing and Real-time Data Analytics
3.4 Agile Supply Chain Management Practices
4 Summing up
1. How Accurate Demand Forecasting Impacts Business Operations and Profitability?
Accurate demand forecasting plays a vital role in determining the operations and profitability of a business. By anticipating future demand, companies can more effectively plan their production, inventory management, and supply chain activities to meet customer needs while minimizing costs.
Additionally, accurate demand forecasting can aid businesses in enhancing customer satisfaction by proactively meeting customer needs and expectations, improving customer experiences and increasing customer loyalty. To generate actionable insights that drive informed decision-making, businesses must leverage advanced analytics and predictive modeling techniques that combine data from various sources with industry-specific knowledge and expertise.
“Businesses that leverage advanced analytics and predictive modeling techniques for demand forecasting report an average of 5% improvement in their supply chain efficiency.”
(Source: A survey by Deloitte)
Supply chain businesses frequently rely on sales data from the past, which may not be sufficient in the complex and rapidly changing business environment. Businesses might not observe an improvement in operations and profitability if they rely solely on conventional methods.
2. Navigating the Pitfalls of Traditional Demand Forecasting
As businesses strive to optimize their supply chain operations and meet customer demand, traditional demand forecasting methods can often hinder their efforts. In this context, it is essential to navigate the pitfalls of such techniques to achieve success in supply chain management.
2.1 Limitations of Manual Forecasting Methods
Manual forecasting methods have limitations that can affect demand forecasting accuracy in supply chain management. Frequently based on historical data, these methods can overlook emerging trends in supply chain management and alterations in customer behavior. In addition, manual processes are time-consuming, prone to error, and incapable of incorporating real-time supply chain data. As a result, businesses struggle to optimize supply chain operations and meet customer demand.
In addition, traditional forecasting methods can influence the ability to accurately predict demand, resulting in overstocked inventory, delivery delays, and, ultimately, poor customer satisfaction. Inaccurate demand forecasts can also result in poor purchasing decisions and increased carrying costs, negatively impacting profitability.
2.2 Inaccuracy and Inconsistency in Demand Prediction
Inaccuracy and inconsistency in demand forecasting pose significant obstacles in managing the supply chain. This is the case in the dynamic business environment, where market conditions can change rapidly, making it challenging for companies to keep up with shifting demand patterns. As traditional demand forecasting methods depend heavily on historical data, they produce inaccurate forecasts that do not reflect real-time market changes.
In addition, inconsistency in demand forecasting can also result in a mismatch between supply and demand, leading to missed opportunities or excess inventory. As a result, creating an effect on company’s bottom line in addition to customer satisfaction.
2.3 Multiple Products and Markets Challenges
Accurate demand forecasting is crucial to the success of supply chain management. When there are multiple products and markets to manage, it becomes a challenge for traditional demand forecasting. Different products and markets may have varying demand patterns and drivers, making it difficult for businesses to accurately forecast demand.
Manual processes and siloed data can hinder visibility and the ability to identify cross-product or cross-market trends, making supply chain optimization operations and meeting customer demand more complex. Managing multiple products and markets is one of the challenges of traditional demand forecasting when businesses operate in various markets with varying customer preferences and demand patterns for products.
2.4 Influence of External Factors on Demand Forecasting
External factors can significantly impact the demand forecasting accuracy for supply chain optimization. These factors are often unpredictable, and conventional methods may not account for them. The external factors affecting the supply chain include natural disasters, economic recessions, and sudden changes in consumer behavior.
In addition, political and regulatory modifications, such as tariffs or trade agreements, can affect the supply and demand of particular products. Therefore, businesses must incorporate these external factors into their demand forecasting models and advance the process, as traditional demand forecasting methods cannot predict accurate future demand patterns and ensure optimal supply chain operations.
3. Advanced Demand Forecasting Techniques for Supply Chain Management
To avoid the above-mentioned pitfalls, companies need to adopt advanced demand forecasting techniques that enable capturing and analyzing huge data from various sources to generate accurate and real-time demand forecasts.
3.1 Statistical Forecasting
Statistical forecasting is an advanced method for demand forecasting in supply chain management that utilizes complex algorithms and statistical models to analyze historical data, identify trends, and generate forecasts. This method employs numerous statistical techniques, including regression analysis, time-series analysis, and exponential smoothing, among others.
Statistical forecasting can help businesses overcome some of the limitations of traditional manual forecasting methods because it is more objective, data-driven, and capable of identifying trends and patterns which are not apparent with manual forecasting methods. As a result, by utilizing statistical forecasting, businesses can increase demand forecasting accuracy, optimize inventory management, and better align supply and demand, resulting in enhanced customer satisfaction, greater efficiency, and lower costs.
3.2 Collaborative Demand Planning
Collaborative Demand Planning combines intensive forecasting algorithms to predict future demand and a set of ML techniques to achieve better demand forecasting. It involves collaboration between suppliers, customers, and other stakeholders. The advanced data and insights sharing technique improve the comprehensive understanding of demand drivers and trends, leading to more accurate demand forecasting. The collaborative approach enables real-time adjustments to demand forecasts, which can help businesses respond promptly to market conditions and customer demand changes.
In addition, using advanced analytics and machine learning algorithms can help identify patterns and trends that would otherwise go unnoticed. That enables businesses to optimize inventory levels, reduce under and overstocking, and enhance customer service levels. In the dynamic business environment, it helps transform the supply chain that is better equipped to meet the ever-changing demands of customers.
3.3 Demand Sensing and Real-time Data Analytics
Demand Sensing and Real-time Data Analytics are advanced demand forecasting techniques that can assist businesses in overcoming the challenges that multiple products and markets pose to the supply chain. By utilizing real-time data from various sources, such as social media, point-of-sale systems, and weather reports, businesses can better understand customer demand patterns, adjust inventory and production planning, reduce delay, and increase responsiveness.
In addition to implementing demand sensing, businesses can begin with sell-in data obtained from supply chain planning or an ERP system in supply chain management and then incorporate all relevant data sources and external factors to broaden the forecasting horizon.
3.4 Agile Supply Chain Management Practices
Agile supply chain management practices are a collection of methodologies and strategies emphasizing supply chain operations' adaptability, responsiveness, and flexibility. These practices involve utilizing real-time data analytics, collaborative planning, and other advanced technologies to enable businesses to respond swiftly to changes in customer demand, market conditions, and other external factors.
Adopting an agile model allows the organization to act swiftly and decisively and achieve successful business outcomes despite adverse conditions. Agile supply chain management practices can give companies greater visibility and control over their supply chains, enabling them to adapt more effectively and efficiently to fluctuating market conditions in the context of external factors influencing demand forecasting. By cultivating a culture of continuous improvement, innovation, and customer value, agile supply chain management practices have the potential to transform into modern supply chain.
4. Summing up
Demand forecasting accuracy is crucial for supply chain management and profitability. Manual forecasting methods hinder operational optimization and customer demand fulfillment. Customer satisfaction, purchasing decisions, and carrying costs suffer from inaccurate forecasting. In order to avoid these pitfalls, businesses can leverage statistical forecasting and collaborative demand. These methods recognize trends and patterns, optimize inventory levels, reduce over- and under-stocking, and improve customer service using advanced analytics and machine learning algorithms.
As the supply chain evolves and becomes more complex, businesses must adopt advanced demand forecasting techniques. Implementing these techniques will enable businesses to optimize their supply chain management by better-aligning supply and demand, resulting in increased productivity, decreased costs, and ultimately increased profits.
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Software and Technology
Article | April 19, 2022
The unsurprising investment eagerness of venture capital funds is manifesting in an automation tech glut in the distribution center space. Motivated by enabling trends like labor and land shortages, DCs are amid an automation transformation. Never has defining an automation strategy been more important.
There’s no shortage of VC cash available to logistics tech startups
With a brightly shining spotlight centered on supply chains for the past two years, it’s no surprise that total funding in logistics startups has seen a dramatic increase – growing at over 70% CAGR (Compound Annual Growth Rate). Logistics technology startups raked in over $25 billion in the first three quarters of 2021. That’s more than half of the total amount raised in the whole of 2020, and the incentives for continuing investment persist.
The rise of the of the “micro” DC
“Micro” is a relative term. The size of a micro fulfillment center (MFC) can range from 5,000 to 50,000 square feet. Those reduced square footages allow location in dense urban areas, typically within 40 miles of most of their intended customers. In addition, smaller footprints lead to reduced rents compared to a standard customer fulfillment center (CFC), and the proximity to consumers makes for lower final mile delivery costs. It’s no wonder that MFCs accounted for more than half of the logistics real estate leasing activity in the third quarter of 2021. The “urban logistics” trend is fueling demand for these highly automated, smaller locations.
Vertical logistics integration grows ever more fashionable among retailers
It’s a very “in” thing right now, these acquisitions and partnerships, and they won’t be going out of fashion soon. For example, American Eagle took in Airterra and its parcel optimization tech and third-party logistics (3PL) provider Quiet Logistics.
Target started early. They bought Grand Junction, a software platform that helps retailers determine the best delivery method and track carrier performance, in 2017. Their 2020 acquisition of Deliv brought with it same-day delivery routing technology that they’re now applying to their 2021 purchase, on-demand delivery service Shipt. Target uses Delivs’ tech to generate more efficient routes for Shipt.
Kroger has partnered with UK’s e-grocery specialist Ocado to build automated CFCs across the US and expand their retail footprint. The first CFC opened last spring in Ohio and their second in Florida later that year. They plan to open 20 CFCs over the next three years.
“The proliferation of DC automation solutions and modalities, the rise of MFCs in high-density urban areas, the increasingly automated vertical integration of logistics, and the need to rapidly expand order fulfillment capacity have all, in combination, advanced the need for and application of clearly defined strategies concerning the implementation of automation technology. Do not operate without one.”
Vikas Argod, Principal, Supply Chains Operations practice at Chainalytics
Coping with shortages in warehouse space and labor availability
Third quarter, 2021 US demand for industrial real estate exceeded supply by 41 million square feet. This pushed the national vacancy rate in the fourth quarter down to a record 3.7% in the Cushman & Wakefield US National Industrial MarketBeat report for Q4 2021. Who knows what the record might be when the Q1 2022 report breaks in a few weeks?
On the labor side, the December 2021 US unemployment rate was 3.9%, lower than in December 2019 (3.6%) yet reflecting a tighter labor market. Labor force participation rates are at 61.9%, nearly 2% below February 2020 levels, because of lingering effects of the COVID-19 pandemic. The rising wages and signing bonuses of the past year offer silent testimony to the ongoing constraints in today’s labor market.
Both trends will remain with us for the near- and mid-term, making an automation strategy a necessary part of your DC operations as you attempt to mitigate the effects of both. In addition, warehouse labor shortages are most pronounced in markets with high distribution center densities – Greater Memphis, In-land Empire, Allentown, PA, et al.)
Building the capability to rapidly open DCs at scale
No other factor drives home the need for a coherent DC automation strategy like this one. Let’s explore it with an example.
We’ll call this “A Tale of Two Companies.” One jumped on the automation bandwagon without hesitation – not a bad thing – but applied no strategic groundwork. The other is, well, Amazon.
Company one responded to increasing demand by creating DCs in their usual, strategically located fashion. However, with automation, the lack of a logical strategy led to adopting “the best that money could buy.” So, while these DCs work fine on their own (most of the time), each employs unique implementations from a variety of vendors, with little to no overlap of methods, capabilities, and management procedures between DCs. It’s functional, but a needlessly complicated hodgepodge.
On the other hand, it definitely looks like Amazon has a standardized automation strategy. One that can easily adapt to exploit the individual physical specifications of any space. This makes it simple to arrive and equip it with a standard package of automation solutions. That’s probably how Amazon blanketed the US with over 400 new DCs in just the last two years. They waste no time or money on repeating unnecessary decisions along the way.
Now, we all can’t have the resources of an Amazon. However, the rise of on-demand warehousing companies like Stord and Flexe allow organizations to dramatically decrease the cycle time of standing up additional fulfillment capability.
Developing an automation strategy will feel familiar. It begins with benchmarking, order profiling, current performance drivers, EBIT targets, and theoretical evaluations of newer technology options. All this leads to the creation of a decision framework for DC automation. The goal here is achieving alignment among the leadership on critical capabilities to focus on. These include rapid fulfillment, labor shortage, capacity constraints, safety challenges, or sustainability. Those that commit to this process will start slowly but finish with a strategy that will underpin thousands of decisions and enable sustained rapid growth.
If, in the end, you decide that automation is not right for your operation, that’s a perfectly valid strategy as well. So long as you have a method to evaluate all of your options, and you base your decision on cost-service-sustainability trade-offs, the right strategy for your organization may be no automation at all.
There’s no point in chasing shiny robotic objects if automation makes little sense.
The rise of automation and the multitude of technologies to choose from require the development of a strategic decision framework. Contact us and see how Chainalytics – an NTT DATA company – can be your guide in developing this critical part of your foundation for growth. Our top supply chain talent, enabled by proven, leading-edge digital assets – tools, methods, and content – deliver actionable insights and measurable outcomes to some of today’s largest and most complex supply chains.
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