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f+h Intralogistics 1/2015

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f+h Intralogistics 1/2015

Optimizing, controlling

Optimizing, controlling and monitoring the value chain Source: Gartner Markus Meißner What were the most important topics for the logistics industry in 2014? According to a survey among the members of the Federal German logistics association (Bundesvereinigung Logistik), it was all about increasing costs and more demanding customer requirements. Plus, companies’ supply chains are becoming more and more complex and international. Supply chain visibility continuous transparency across the entire supply chain is at the core of this challenge. Five steps towards supply chain visibility Markus Meißner is Managing Director at AEB GmbH, Stuttgart/Germany The staged model by the Gartner market research institute provides a range of measures for comprehensive supply chain transparency 1 Integrating supply chain partners 2 Technical collaboration 3 Collecting relevant data 4 Operative collaboration 5 Scenarios Companies must be structured in a way that allows interfaces with external partners Relevant information and interfaces must be identified at a technical level and operating procedures as well as measures must be defined Information identified as relevant must be collated and compiled Includes communication between supply chain partners using different channels and collaboration within specified processes Different scenarios can be simulated using the collected data, thereby contributing to process optimization Supply chain visibility has several dimensions, including the visibility of inventory levels. Normally, companies aim to reduce inventory levels to hold only the minimum stock required while simultaneously increasing their supply capacities. However, long delivery times and low inventory levels make the supply chain susceptible to disruptions. In order to be able to respond quickly and efficiently to supply chain disruptions, companies require visibility of the entire inventory, of the status of deliveries and shipments, as well as functioning interfaces with supply chain partners. Only then are they able to change from, for example, sea to air freight, or order stock from another warehouse. Based on the transparency of inventory levels, the continuous tracking of the flow of goods, shipments, and orders is a key aspect of supply chain visibility, particularly with regards to the potential impact on availability and service quality for the next step within the network. Transparency on service agreements and targets concerning lead times and continuously updated delivery times help to identify deviations and potential performance issues at an early stage, enabling companies to take immediate action. Restricting costs and risks In addition to a transparency of inventory levels, transparency of costs also represents 14 f+h Intralogistics 1/2015

LOGISTICS MANAGEMENT an important dimension in the supply chain when it comes to cost reductions. Only if you have an overview of your cost drivers will you be able to cut spending in the long run. In this context, transport costs account for the largest share of costs within the supply chain. Any company wishing to take appropriate steps towards optimization should identify the cost drivers within its own supply chain and ask the following questions: n What are the freight costs of any given product? n How high are the transport costs for supplying my key accounts? n Which route makes up the largest share of costs? The results then enable companies to initiate specific measures, such as new tenders or negotiating more cost-effective service levels for less critical products. A further, vital dimension of supply chain visibility is transparency of risks throughout the supply chain. The key questions are: which areas within the supply chain carry the greatest risk? Which measures and precautions should be implemented against which risks? However, it isn’t easy to answer these questions. Only when dependencies and their effects have been identified is it possible to take suitable countermeasures as part of risk management, e.g. multiple sourcing (several suppliers per item) or higher safety stocks for individual components and items. Integrating supply chain partners In many cases, companies only have an overview of internal company production processes, but not of the entire supply chain. However, integrating external partners, such as suppliers or logistics service providers, is crucial to achieving comprehensive and continuous transparency throughout the supply chain. This also forms the basis for the model by the Gartner market research institute, which lists five layers for comprehensive transparency (table). Due to the growing complexity of today’s supply chains, monitoring their performance results in large amounts of data, which can hardly be managed, let alone Companies which have achieved a high level of supply chain visibility also benefit from higher supply chain performance levels evaluated, manually. That’s why it is almost impossible to optimize supply chain transparency without deploying software. Sophisticated visibility software is usually designed as a solution that collates the information from all supply chain partners. Standard adapters and methods enable fast, easy and cost-effective integration of suppliers and transport service providers in processes, systems, and information flows. The resulting, consolidated information can be applied to different scenarios to optimize processes and may also be shared with customers. The resulting process transparency helps to improve service levels and meet increasing customer requirements. Operative supply chain visibility – meaning an overview of all processes within the supply chain, from suppliers to end customers – leads to higher service levels, better protection from risks, and cost savings and can therefore give companies a significant competitive edge. It is hardly surprising that this topic has been on supply chain managers‘ agenda for a long time. Photos: Fotolia/processing: VFV Grafik www.aeb.com How software can help Any software deployed to provide comprehensive support for supply chain visibility should offer the following components and functionalities: n Integration platform translates information from different sources into a uniform format. n Information platform provides the information collated from different sources in one central hub. n Supply chain planning all sub-processes, including milestones, must be mapped in the software to enable optimization. n Monitoring milestones and lead times define the event chain and form the basis for proactive monitoring. n Alerting a system that triggers alerts is required for notifications and performance monitoring, e.g. in the event of disruptions or non-compliance with milestones. n Reporting bthis function collates, consolidates and evaluates data from all integrated systems. This facilitates process optimization and retrospective analysis of disruptions. Source: AEB About AEB AEB is a leading provider of supply chain logistics software and has been delivering solutions to customers for over thirty years. The company has over 6,000 customers worldwide and is headquartered in Stuttgart, Germany, supported by offices in the UK, Switzerland, Singapore and the US. AEB’s core product – Assist4 – is the comprehensive solution suite for all logistics processes in global business. Assist4 offers a complete set of business services for end-to-end logistics, including international goods movements, making it possible to standardise and automate business processes in supply chain execution. The software also creates transparency and provides a reliable basis for making the right decisions about the planning, monitoring, control and continual optimisation of supply networks, even beyond the boundaries of the business. The software suite offers full functionality via a wide range of modules including Visibility & Collaboration Platform, Order Management, Warehouse Management, Transport & Freight Management, Customs Management and Compliance & Risk Management. f+h Intralogistics 1/2015 15

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