Is your operation structured to ensure the next link in the supply chain is more efficient than the last?

By Bryan Wyatt | Senior Manager, Transportation | Chainalytics |

It’s common knowledge that every company is a link in a much longer supply chain, merely one stop in a longer journey. However, companies often focus only on their individual link in the chain and are more concerned with keeping their own house in order, giving little or no thought to the next link down the line. The exception, of course, is the link prior to theirs, as it impacts inbound operations by potentially adding expense and inefficiency.

Companies often fail to look downstream to ask, “How can I make the next link more efficient?” But why? This assessment is especially important when the next link in the chain is the last mile delivery. Retailers need to look at not only how they can improve their own operation, but how can they improve the final link in the chain, even if it means creating some adjustments in their own operation. The supply chain industry is in desperate need of a paradigm shift—a shift away from managing metrics of a 4-wall operation, to measuring outcomes— surrounding customer satisfaction and loyalty.

Shifting your operation to focus on the customer

Start with the long haul

So what are some ways we can do this? Start by improving the transit time for outbound freight. It may sound simple, but that also what makes it effective. Begin each day by pulling freight for the deliveries that are furthest from the distribution center (DC). Then pull freight for deliveries with the shortest distance from the DC after the longer-distance freight is complete. This ensures that items with longer travel distances are on the first truck out and will meet the cut off for the transit requirements.

Support your carrier—pre-sort

Companies should also look at pre-sorting and loading trailers according to the state zip code. This will improve the operations of your carrier, especially those set up on a hub and spoke structure. Pre-sorting allows for decreased mis-sorts by the carrier while in the field and fewer times the freight is handled, equaling less damage. And less damage equals lower operational expenses for the carrier. If you’ve partnered with a carrier, these lower expenses can be shared between the two companies, and at the end of the day, you’ll increase customer satisfaction because they receive their freight in good order and within the committed delivery date.

Yes, audits can be good

These types of processes are easy to follow during normal or slower volume periods. As seasonal spikes occur, it’s very easy for companies to fall back on old operational habits. Need motivation? Keep in mind if you neglect the next link in the supply chain and only focus on your own productivity, you’re passing inefficiencies down the line—right to your customer.

It is important to make sure these processes are clearly documented and can be easily followed by all the staff. Equally important as documenting the processes, shippers must periodically audit the operation to ensure processes are properly followed. The audit must be a formal process, handled internally by a neutral party or by your transportation team partnered with the operations team.

A scorecard should be developed so there is a clear assessment of operational status. The scorecard should remain standard year-over-year so everyone remains familiar with the format and clearly understands what is working and where processes may need to be reinforced. The scorecard should be shared on a regular basis with all levels of management and the audit should be conducted bi-annually throughout the year.

Be a student of the carrier business

After awarding business to a carrier, shippers typically stop reviewing the operations of key carrier partners. This is a significant oversight of a crucial step in ensuring a solid transportation network. During the carrier selection process, it’s critical to emphasize the need for transparency—ensure your carrier is willing to provide examples of their documented processes.

Additionally, shippers must ensure they have a clear understanding of the carrier’s audit process. They need to understand the cadence for the process itself and review as well as to how the carrier captures when a process is not being followed properly. Ultimately there needs to be a clear understanding of the corrective actions taken to bring the process back in line.

Shippers should demand that they are provided with a formal review of the carrier’s operations. It is important that transparency occurs on both sides as this is a good opportunity to build a strong, trusting relationship between the carrier and the shipper.  Shippers should also share the audit findings of their operation and provide a forum to discuss ways to improve both links in the chain.

Remember the Big Picture

The ultimate goal should be customer satisfaction. Shippers need to remove the blinders and understand their single operational goals impact the entire supply chain, sometimes negatively.  A holistic view of the entire supply chain must be taken to reach best in class customer service and lean operational costs that benefit all parties involved, not just your organization. Furthermore, carriers need to be more vocal when a lack of transparency occurs on the shipper’s end and address problems constructively as they arise.

Understanding how your inefficiencies or business model impacts the next link in the supply chain allows for the discovery of a collaborative solution. Instead of playing the blame game along each link in the supply chain, evaluate where areas for better communication exist so that each stop in the supply chain complements and enhances the next one down the line.

Bryan Wyatt–senior manager of Chainalytics’ Transportation Competency–has over  20 years of hands-on experience in transportation operations, strategic sourcing, data analysis and logistics planning.

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