How to turn a complex manufacturing supply chain into a competitive advantage

You can read this article in 11 minutes

As consumers, we take for granted just how complex the first few miles of the supply chain can be. Leaders at large, global manufacturers, however, know this complexity all too well. They’re faced with finding the best suppliers in the right regions, balancing resilience via multi-sourcing against efficiency, using the best routes, lanes, or carriers, and more.

How to turn a complex manufacturing supply chain into a competitive advantage
Photo by Sam Moghadam Khamseh on Unsplash

The strategy of embracing complexity is rooted in the idea that competition and network diversity generates value and incentivizes cost and service. However, the issue quickly becomes apparent: Am I actually achieving the resilience I set out to accomplish? Can I prove to my stakeholders that our work is effective?

These challenges are collectively known as the network uncertainty factor, and it often stands in the way of delivering a world-class operation.

The Network Uncertainty Factor

Network uncertainty can cause supply chains to leak value and frustrate staff and customers, leading to lost revenue and higher costs.

Manufacturers have limited data about their network. When you have a limited set of performance analytics based on a small fraction of the available network or little to no network benchmarking data, decisions are often a best guess.

There’s too much uncertainty to make accurate decisions, paralysing organisations and leaving them to operate with a model developed long before today’s supply chain factors. For manufacturers, tackling this uncertainty presents unique opportunities.

The Opportunities for Global Manufacturers

Although some level of transportation visibility and digitisation has become table-stakes, you may be surprised to learn that 68% of manufacturing decision makers still don’t believe they have access to the right information and insights to make informed decisions.

Many lack a single source of supply chain intelligence —global end-to-end tracking that seamlessly connects each leg of a multimodal journey on an integrated, user-friendly platform. By having all of your data in one intelligence platform, you can reduce fines, track emissions, improve carrier, lane and facility performance, and facilitate collaboration across your supply chain.

According to Gartner’s report, “Critical Capabilities for Real-Time Transportation Visibility Platforms,” these capabilities constitute Level 5 complexity — capabilities that large global enterprises must have to effectively manage their supply chains.

With a solution that tackles this level of complexity, business leaders gain a deeper, clearer picture of supply chain operations — uncovering new paths to ensure supply chain operations are helping achieve business objectives.

Opportunities for Manufacturers

  1. Accurate Demand Planning & Forecasting

There’s no more fundamental concept in commerce than the supply-demand curve, and for a good reason. Over-projecting demand can lead to excess costs, losses and warehouses full of goods, while under-estimating demand can result in non-maximised revenue and unhappy consumers.

For the most part, forecasting has looked at a few trailing indicators – historical sales, high-performing regions, SKU velocity – and mixed it with a few leading indicators – economic projections, product cycles, demographics – to make a best guess at forecasts. For many companies, uncertainty is simply a part of doing business, it’s baked into their financial forecasts. But how do you aggressively minimise the impact of uncertainty when demand planning and forecasting?

There is no crystal ball to deliver perfect predictions, but what you can do is lean into the concept of network agility — flexing your strategy and operations to meet the unpredictable demands on your business.

Supply chain intelligence platforms can help network agility by delivering insights that truly mean something to your daily operators. Rather than seeing a broad view of each load, knowing where individual items are at a given moment and having highly accurate estimated arrival times can help you avoid a stockout or missed customer commitment.

For example, the ability for 3M’s supply chain to meet demand spikes was put to the ultimate test in 2020, when Covid-19 caused demand for masks and respirators to skyrocket to more than 40x above pre-pandemic levels. Visibility and supply chain intelligence from FourKites was a key part of 3M’s success, helping the company calculate more accurate cycle times and more than double its global production in a matter of months.

Evolving From Root Cause to Predictive Management

No one likes having conversations that start with, “Here’s what we should have done… .” Additionally, those root cause investigations — looking backwards in your supply chain management timeline to find out what happened — siphon valuable time from your daily operations.

Visibility is just a way to extract data. Whether you’re tracking and tracing via carrier EDI or using a robust real-time transportation visibility platform (RTTVP) that automatically aggregates supply chain data, the underlying product is simply data. Next-generation supply chain intelligence platforms like FourKites add a layer between network data and the end-user. This layer uses machine learning and artificial intelligence to isolate key insights and patterns that send cues to operating teams that something is off or there’s a hidden opportunity.

“We’ve used the FourKites platform as a vehicle to elevate us, and the business, through technology and visibility.” says Alex Jankowsky, Program Manager, Supply Chain Optimization, at Ingersoll Rand. “This type of technology has been a game-changer to share real-time visibility with our customers and also with our operations. Now even if a shipment is going to be late, at least everyone has the insights they need at their fingertips.”

Platforms like FourKites collect and analyse data across all modes, carriers, lanes and nodes in the supply chain are collected and analysed to give your business a competitive advantage. Your teams will be able to root-out issues as they occur and before they make an impact on cost or service.

Optimising Time to Recovery

Supply chain leaders are increasingly tracking their time to recovery, a measure of the time it takes operations to return back to normal after a disruption causes downtime. For manufacturers, even an hour of downtime can have significant financial ramifications. The ability to quickly get production back on track can make or break your profitability, and your company’s reputation.

The most sophisticated manufacturing supply chains leverage advanced AI and machine learning to predict disruptions and late deliveries before they even occur, so they can ensure production stays on track. With the tools in place to understand their real-time supply chain operations, companies can quickly mitigate the impact of unexpected disruptions, shortening time to recovery and minimising downtime, or avoiding it completely.

For example, if inbound inventory is expected to be late to a factory and halt production, supply chain leaders can quickly quickly hone in on the impact of the disruption. Then teams can implement a recovery plan and communicate potential delays to relevant stakeholders and customers. If the manufacturer knows well in advance their inventory will be late, they can source it from another supplier or facility.

Real-time visibility from FourKites has been a crucial tool for Cardinal Health to proactively mitigate risks and disruptions across its supply chain, according to Karen Betancourt, Cardinal Health’s Vice President of Logistics.

“For our manufacturing line, where maybe a load of resin is coming in and we know we’re within 6 hours of that equipment being shut down, getting down-to-the-minute accuracy for these ETAs has been critically important.”

Mastering Landed Costs

The art of tracking landed costs – and ultimately reducing them – is a tale as old as supply chain management itself. Tracking container, linehaul, fuel, accessorial and other fees along the way help paint a clearer picture of your underlying costs; but with a diverse set of suppliers and carriers it isn’t easy.

“FourKites has improved our carrier scorecarding process,” says Kim Segal, Director of Global Transportation at Zebra Technologies. “That was a very manual, time consuming creation process, and now we can not only create it faster, but by having the extra milestones, we’re really able to zoom in on what was the true root cause of a shipment delay.”

Measuring a Supply Chain’s Financial Performance

It’s no secret that competition and complexity offer simple methods to reduce costs. The issue comes when harmonising the different legs of your cargo journey and carrier network into an accounting view that allows you to track the individual financial performance of each load, PO, SKU, etc. How do you promote the aggregation and standardisation of data between links of your supply chain and those who service them?

Supply chain intelligence platforms are built with a robust network relations protocol, ensuring that the aggregation of data is accurate, timely and always at the highest standard of security. This allows businesses to not only track performance of their freight, but slice and dice accounting and financial indicators as well.

Beyond this, a clearer picture of financial performance helps identify key areas that are haemorrhaging cash from your supply chain budget. Did you know you had a container dwelling at a port for 26 days? Did you know a specific carrier has a 37% higher detention rate than your average? These line-item costs accumulate rapidly, are hard to contest and can quickly weigh down a supply chain budget without the ability to proactively manage them.

Visibility. Insight. Intelligence.

As manufacturers continue to press forward in their endeavours to reduce costs, manage relationships and increase market share, tools that not only support achieving goals but help identify them will help businesses gain the competitive advantage.

McKinsey shares that a tire distributor in North America realized savings of 10-15% in logistic costs using analytics-based distribution network optimisation. Meanwhile, collecting and analysing data along the supply chain enabled an advanced industrial company to reduce inventories 20% and increase planner productivity 20–30%.

These cost savings and productivity improvements are possible thanks to enterprise-level software reaching a new peak, enabling businesses to turn their supply chain into a competitive advantage. If your business is being faced with tough choices, tough questions or a tough road ahead, make sure your investments are truly working for you.

“My advice is to find a visibility provider that matches your culture and values, and is passionate about what they do. I’ve engaged with the FourKites team and they have a fundamental, deep interest in the problems that we have. It’s tough to find that. Your business is dynamic, you need a partner that’s dynamic too.” says Tom France, Vice President, Global Distribution, Logistics and Transportation, Trane Technologies.


Photo by Sam Moghadam Khamseh on Unsplash

Trending articles
Trending articles