A supply chain founded on green principles must have comprehensive information on everything from fuel efficiency to aggregating and optimizing loads and routes, for planning that reduces both the fuel consumption and carbon footprint of shippers. Such information makes up-to-the-minute route and load scheduling possible in the face of changing weather conditions or just-in-time shipment adjustments.
A green supply chain aims to prevent a lack of information caused by incomplete or missing shipment data, the inability to retrieve data when needed, or an inability to adequately integrate systems. The result of those events is a colossal amount of wasted time and energy spent chasing information which ought to be readily available, creating a systemic inability to identify and correct problems. An electronic tracking system, including a transportation management system (TMS) and comprehensive reporting functionality, can address these inefficiencies.
Why TMS is Green
TMS technology with trace-back capability is essential in today’s green logistics infrastructure. Such computerized tracking must give businesses along the supply chain a common platform to capture and report on shipment information and history. The integrated information exchange must be usable across the supply chain, so information can be retrieved at any stage. Furthermore, the system must be designed for flexibility, taking into consideration the varied documentation and quality requirements of multiple customs regimes and related national security concerns.
A green TMS provides three levels of competitive information:
Level One: Evaluating and selecting transportation purchases for operational effectiveness and cost efficiency. The selection goal is to help manufacturers and importers consolidate freight while aggregating shipments so they can lower their costs and shrink their carbon footprint. It should enable companies to select the most suitable carrier and communicate shipment information to for-hire carriers and trading partners.
Level Two: Allowing customers and their suppliers to initiate and authorize both the original transaction and any subsequent changes. The intelligence system software should show what has been shipped or is due for shipping, what is in transit, and how any given shipment is performing against the appropriate timetable. With links to their own information, logistics personnel should be able to cross-check and validate progress and timing of shipments and measure this using real-time key performance indicators (KPIs).
Level Three: Giving users “real world” search criteria to determine shipment status. That includes vendor or consignee identities, country of origin and destination, and most importantly, a manufacturer’s own purchase order and SKU codes. In addition to real-time information, it should provide historical data that can be used as a benchmarking tool for shipment performance.
As a result, shippers always know the status of the shipment, and can immediately identify any disruption that requires remedial action. This eliminates information-chasing and energy-wasting delays at ports, air cargo terminals and customs inspection points.
A TMS can eliminates this inefficiency by helping to aggregate and optimize loads and routes for transportation planning.
Pharma Tests TMS Sustainability
Consider pharmaceuticals, a $500 billion business sector where this kind of “green efficiency” can be the ultimate competitive advantage. Drug production guidelines of the Food & Drug Administration, the European Medicines Agency and other regulators for cGMP (current Good Manufacturing Practice) impact raw materials, in-process goods, packaging, labeling and finished goods as well as the manufacturing, testing, documentation and product release processes.
The production of pharmaceuticals requires validating every aspect of the receiving, analysis, storage and handling of drug actives, excipients and other elements. And ensuring cGMP compliance to those standards must be integrated with the normal considerations between supplier and manufacturer. These include demand forecasting, stock levels, production plans, maximum and minimum inventory levels, reorder points and order quantities.
The supply chain needs for pharmaceutical manufacturing are thus both complex and delicate, going beyond mere efficiency to require total quality in handling and care. For example, it is unacceptable for chemicals or excipients to expire before the manufacturing process takes place, because their shipment was delayed or they were not shipped with proper temperature and humidity control. Additionally, every state has its own license requirements and timetables for what can come in or out of the pharma production plant, and when this must happen. License requirements and special storage needs present one of the greatest challenges for both suppliers and third-party logistics partners assigned to build and implement supply chains strong enough to withstand the hardest knocks and unexpected events.
It is estimated that 80% of the active ingredients for drugs sold in the U.S. originate in the global sourcing chain outside the country. As a result, there has been growing pressure to disclose much more sourcing information than the existing Food & Drug Administration rules require. New labeling standards could include sourcing disclosure for biological agents and bulking agents, each of which has its own supply chain around the globe.
A TMS can help optimize the entire end-to-end transportation process and enable carriers to exchange information independent of the data format. As a result, shippers get accurate, real-time information. The result changes the logistics paradigm from emphasizing cost alone to emphasizing service and reliability as cost drivers—and as elements of a green transport strategy.
The TMS functionalities in such a system include software as a service (SaaS) and cloud-computing solutions, and work with a full range of interfaces around the clock at substantially lower cost to:
➤ Perform optimized consolidation of freight
➤ Combine shipments to lower transportation costs
➤ Select the most suitable carrier to handle shipments
➤ Communicate shipment information to for-hire
carriers and trading partners.
This IT approach can help pharmaceutical shippers source production materials and get finished goods to market faster, cheaper and with greater, more sustainable efficiency. A sustainable supply chain will use systems that improve both fuel efficiency and cost effectiveness. It eliminates the guesswork and backtracking to find misplaced shipments and affords maximum flexibility in route and load planning, to minimize energy consumption and delivery problems. By saving fuel, energy, resources and time, supply chain sustainability based on the latest TMS technology can be a competitive advantage.
Simon Kaye is founder and CEO of Jaguar Freight Services (www.jaguarfreight.com), providers of supply chain solutions with offices in London, New York, Paris, Hong Kong and Shenzhen, and an operations network in Europe, North America, South America, Australasia, Asia, the Middle East and Africa.
