Smart future for supply chain management

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Daniel Rösch, our Managing Director in Germany takes a look at the forces that are changing the face of the supply chain and explains why the demands for speed, accuracy and flexibility are set to increase.

Technology is changing the face of the supply chain – smart systems in the warehouse and the development of sophisticated logistics software have made for a more agile and responsive service. Connectivity and integration are now so deeply integrated that they are often transparent; tasks that would have once required human intervention are now handled automatically. Human error is being written out of the system.

And things remain in a state of flux – change has become an ever-present part of supply chain operations and the number of external factors driving this transformation are growing in number and complexity. It is therefore essential to know what’s happening now and also what is likely to happen in the future. There’s never been a more important time to start preparing for tomorrow.

A key force for change is sustainability. This comes in many forms and guises and a great deal of the sustainable agenda is supported by the force of law, both national and international. Emission regulations and escalating recycling targets are unavoidable realities and the force and scope of this legislation is growing; running a ‘green’ operation is now mandatory but with careful planning a logistics or warehouse manager can see a valuable return on investment – it just requires a little new thinking.

 

Legislative compliance

The first step, of course, is legislative compliance. And the best way to achieve this is to instigate strict environmental standards across the business. However, for energy efficiency or recycling targets to be met and continued companies need to develop and maintain robust performance goals and monitoring systems. As burdensome as this might initially seem, they can deliver valuable savings that impact bottom line figures as a result of reduced energy bills or decreases in waste management fees.

It is also important to communicate these policies to all interested parties, including customers, suppliers and employees, and to encourage their involvement. And don’t be afraid to communicate best practices – a problem shared is a problem halved, as the old saying tells us.

Behind the scenes another type of revolution is taking place. Data is being made to work harder by being freed from a fixed point – such as a laptop or office server – and moved to the Cloud. By transferring fleet management data, freight logistics information and order administration to the Cloud it is possible to access, share and combine this intelligence in new and increasingly productive ways.

 

Up in the clouds

Mark Hurd, the CEO of software giant Oracle, predicts that by 2025 around 80 per cent of enterprise software will run in the Cloud, up from just 24 per cent today. Significantly, he also believes that by 2025 almost all enterprise data will be Cloud-based. But it’s not just how and where you store your data – it’s also about how you combine it. Investing in high-level IT integration can help ensure timely and accurate order fulfilment and tracking while optimising truck and warehouse usage.

And it’s not just you that’s benefitting from all this data integration; your warehouse data – which was once your sole property – is now increasingly being shared with your customers, helping blur the lines in a partnership that was once heavily delineated. However, freeing up this information in a collaborative working environment saves time, increases responsiveness and offers a level of reactive and predictive insights that traditional demarcations simply didn’t allow. Making it work benefits both parties; building the trust that underpins data sharing should arise naturally from a good working relationship. The customer-connected supply chain should be at the heart of your operation.

Yes, IT investments can seem complex and confusing but a wisely implemented, Cloud-enabled suite of software can improve business agility and help drive down costs through better use of resources. However, it’s important to ensure a planned and appropriate upgrade path – IT, like every other part of a business, is in a perpetual state of change so choosing the right software partner is vital.

The chances are that many of your clients will have a global footprint with different products being directed to a diverse range of customers via different distribution channels, which in turn require different supply chain structures. For this to operate successfully there are a number of demands that need to be addressed.

 

Supply chain resilience

The obvious first issue is how can supply chain resilience be maintained and improved? As we’ve already seen, an investment in integrated software solutions and data sharing can help address this question by creating a responsive and open exchange of information. A second concern is harder to quantify but it’s just as important – what are the sources of supply chain risk? There are many answers to that question but one in particular stands out – the length of your supply chain, both in terms of distance and time taken to delivery.

The largest percentage of world freight travels by sea and there things are quite literally slowing down. A collapse in freight rates and ongoing over capacity has seen container vessels switch to part load operation, sometimes referred to as ‘slow steaming’. By running a vessel’s main engine at below full capacity it is possible to save significant amounts of fuel. Lowering an engine’s speed by just 10 per cent cuts engine power by 27 per cent, which reduces the overall energy needed for the voyage by 19 per cent. When you remember that up to 50 per cent of a vessel’s running cost can be fuel it’s easy to see why slow steaming has become so widespread.

However, these savings are not being passed on in full to customers. In fact, when you add in depreciation and an increased insurance bill to cover the additional voyage time your cargo can cost you more than before the onset of part load operation. This new reality for sea cargo has triggered a move to reshoring for some manufacturers. For many firms it no longer makes sense to manufacture in the Far East and China and have goods at sea for long periods. This change of thinking will doubtlessly alter domestic warehousing, logistics and transportation needs so it’s therefore important to maintain a dialogue with customers so that you can stay close to their plans.

 

March of the robots

Back on the warehouse floor things are getting interesting – mechanisation is progressing in leaps and bounds. Fulfilment systems are more complex and sophisticated than ever; the rise of the robot, in tandem with warehouse automation systems, is helping streamline processes that were once labour intensive, slow and susceptible to human error. An investment in a properly implemented conveyor and shuttle system will increase overall warehouse agility and responsiveness compared with traditional replenishment methods – it will also save you money in the longer term.

All this activity is, of course, fed back to back-office systems via wireless networks, barcode readers and RFID labels. From there the data can be used to manage reordering and warehouse usage, closing the information circle to create a self-monitoring, smart and integrated network operating seamlessly and out of sight. This is the heart of the modern warehousing and logistics operation.

We can extrapolate from current trends to produce a likely near future for the logistics and warehousing sector; and one thing is absolutely clear – we will be seeing even greater levels of software integration and process automation. The widespread use of autonomous warehouse robots will be a reality in the immediate future and driverless warehouse vehicles will follow on in their footsteps, although it will be a while before we start to see autonomous lorries on our roads; the Vienna Convention obliges European drivers to always be in control of their vehicle. That, of course, could change and autonomous vehicles continue to make headlines, albeit not always for the reasons their designers would wish.

 

Increases in automation

The obvious ramification from all this is that there will be less demand for human intervention, especially in the more mundane tasks, which of course adds flexibility to an operation. The staffing reduction could indeed be dramatic but so could the outcome of any system failure if there are no human hands as a backup. This underlines why it is absolutely essential to associate with proven and reliable technology specialists; if you can’t afford mistakes now you’ll doubly not be able to in the future.

And finally, the weight of environmental legislation is set to grow as will the pressure on freight rates – whatever else the future may hold, it will be more competitive and more regulated. There’s no need to polish the crystal ball to know that’s going to happen. However, companies that embrace change and stay alert to future trends will doubtless prosper. They are the ones that are investing today for a smarter and more responsive future; they are the ones who are partnering with technology experts and laying the foundations for what’s in store.

Speed, accuracy and flexibility – the three keys to logistics success – are set to get faster, more accurate and even more flexible. We’re ready to embrace the changes the future brings, allowing us to offer the best service possible to our customers. Are you?

21.02.2017
Daniel Rösch

Daniel Rösch

Managing Director

Raben Trans European Germany

He is a Managing Director of Raben Trans European Germany, a part of Raben Group operating in Germany.

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