If there’s one thing 2020 has proven, it’s that supply chain logistics can’t be managed on autopilot. Timely, up-to-date data and analytics are how you maintain resilience in your supply chain during a crisis, but more importantly, they’re also how you drive efficiency in your day-to-day operations. Efficiency, agility, and responsiveness, in turn, can drive both profit and growth. Finding a third-party logistics (3PL) partner who can deliver that level of technology and analytics throughout the supply chain is crucial.
What Is a Logistics Company?
A 3PL partner is simply an outside company you can call to manage those portions of your supply chain you aren’t equipped to operate yourself. Depending on your circumstances, you might contract with a 3PL to provide extra “flex” capacity during peak season; to handle shipments and deliveries outside of your immediate geographic area; to upgrade your ability to deliver within Amazon-like timeframes, or simply to avoid the capital-draining task of building your warehousing and IT capacity in-house.
Whichever scenario corresponds to your own needs, partnering with a top-tier 3PL enables you to leave your supply chain management to specialists. At the same time, you focus on running your own business. A large part of the expertise you acquire through that partnership is directed toward data and analytics.
A 2018 article in Material Handling & Logistics identified five steps toward harnessing big data’s potential in the supply chain:
- access to the relevant data,
- integration of the data from across multiple “siloes,”
- harmonization of the data for consistency and quality
- defining how the data will be used to guide decision-making, and
- running analytics to deliver the necessary insights to decision-makers.
Of those five steps, deciding how to use the data is entirely your responsibility. The remaining four depend mainly on your 3PL partner’s capabilities.
Better Data for Forecasting
Accurate forecasting is at the heart of supply chain management. Your internal systems can generate valuable insights on the portion of your supply chain you control. Still, those portions outside of your control are reliant on reporting from your logistics partner.
If that reporting boils down to “Your product is in transit,” you’ll be hard-pressed to operate efficiently: it’s the logistics equivalent of “the check is in the mail” and is equally unsatisfactory. You, your suppliers, and your clients all need more granular and detailed information, so you can time re-orders and production runs to take advantage of sales cycles, seasonal fluctuations in demand, and other pertinent factors. If your partner offers the cross-platform integration needed to aggregate data from across multiple suppliers’ and shippers’ systems, you’ll be equipped to generate significantly better forecasts.
A recent study conducted in Germany by McKinsey found that the application of AI to those data could reduce forecasting errors by up to 50 percent, limit the resulting potential for lost sales, and still enable inventory reductions of 20 to 50 percent. The American economy is similar enough that domestic companies should realize similar efficiencies.
Differentiate Between Suppliers by Quality and Consistency Measures
You have multiple potential suppliers for a given SKU, most of the vendors you’ve dealt with before. How do you choose between them? The answer lies in your history with each vendor. Applying analytics to the data encapsulated within your supply chain’s history can tell you which ones consistently deliver their product on time, with fewer errors.
You can also extrapolate from that information, building just enough flex into your ordering and fulfillment schedules to compensate for each vendor’s expected error rates or history of shipping delays.
EDI Enables Data Integration and Transparency
That degree of data integration doesn’t just happen. It requires the supply chain company you partner with to have a robust EDI capability and exchange information with companies using any supply chain management system – SAP, Oracle, Infor, or what have you – using a full suite of ANSI X.12 protocols.
Your orders and shipments can be tracked from the first supplier to final delivery to your client, providing a remarkable level of transparency. Not only will you always know where your orders and deliveries are, but you’ll also be able to share that information in real-time with clients should the need arise. Neither of you would ever again need to settle for a vague “in transit.”A 3PL partner with a full suite of EDI capabilities bridges any gaps in your compliance strategy. Speaking to CIO Applications after being named one of the magazine’s Top 3PLs in 2018, Taylored Services’ CIO, Tom McCormack, identified this as one of the company’s key differentiators.
Draw on All of Your Data, All of the Time
As part of a 2018 analysis of big data’s potential in supply chain management, KPMG surveyed executives about the role of data analytics in their planning. One of the concerns they expressed was the difficulty of reacting to data-driven insights as they arise in a timely fashion. That task is more difficult if you have to wait for the necessary data.
If your planning cycle includes waiting for reports, you aren’t leveraging the right logistics partner. In an ideal scenario, you’d have access to all of the reports you need – inbound receiving, pending and shipped orders, order exceptions, inventory reports, receiving reports, SKU velocity, and your preferred KPIs – at any time, in real-time, 24/7.
With Taylored Services, you’ll have access to that data through executive dashboards on our web-based interface or – if you prefer – scheduled automated emails.
Get a Personalized Consultation
Third-party studies and analysis from industry “thought leaders” provide, at best, a rough guide to the ways you can leverage technology to improve your operations and decision-making. For a detailed assessment of how automation, AI, and analytics can fuel your future growth, you’ll need to get down to specifics with a top-tier 3PL.
After the disruptions caused by the global pandemic, you should have new insight into the shortcomings of your current supply chain and the changes you want to make as the “new normal” asserts itself. It’s an ideal strategic moment to break with the past.
Contact Taylored Services today to request a consultation and learn how you can leverage our investment in industry-leading technology to drive efficiencies and revenues as the economy rebounds.
References:
- https://www.mhlnews.com/technology-automation/article/22055381/using-data-to-improve-supply-chain-operations
- https://www.mckinsey.com/~/media/McKinsey/Industries/Semiconductors/Our{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20Insights/Smartening{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20up{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20with{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20artificial{4c4f03b91cd9576fd99f221c8ec5638e80a399c7c28249074e73a48353523d39}20intelligence/Smartening-up-with-artificial-intelligence.ashx
- https://logistics.cioapplications.com/vendor/taylored-services–cid-2141-mid-116.html
- https://advisory.kpmg.us/content/dam/advisory/en/insights/pdfs/2018/supply-chain-big-data-part-1-shaping-tomorrow.pdf