Supply chain technology used to be about boxes. These boxes, commonly labeled ERP, TMS and WMS, often appeared within a bigger box representing a company whose idea of a system was a hierarchy of these boxes connected by lines.
If ever outside-the-box thinking is needed, it’s now—and it has to happen among technology vendors and their customers, all of whom enable the lines of communication within and between all supply chain boxes. That’s the kind of thinking that deals with what-ifs:
• What if a driver shortage impedes transportation capacity?
• What if my company gets acquired and my supply chain goes global?
• What if a natural disaster disables a key supplier? Or disables us?
• What if I have to locate and reroute a critical shipment in-transit?
• What if I have to trace the source of product contamination?
This article is about how those lines in the supply chain are kept pulsing with information to answer questions such as these.
Transportation’s Diminishing Capacity
As vice president of information systems for Dart Transit Co. (www.dart.net), Dan Lyddy is hoping that better use of technology will help his company attract more truck drivers and enable him to do a better job of getting those drivers back home every night to be with their families. That’s a critical issue now that issues like hours of service rules and detailed background checks make it tougher to find qualified drivers—and to meet on-time delivery demands.
For the old school drivers Lyddy grew up with in the old days of long-haul transportation, weeks on the road were normal.
“That’s not too attractive to a 23 year old person right now,” he says. “As long as the pool of drivers is as short as it is, we’ll have to work more closely with the shippers to make sure we make most efficient use of the time of the drivers we do have.”
That requires more efficient planning of loads and it’s around that function that Dart built a new division made up of a series of transport relays. In this scenario, every operator drives 500 miles a day, 250 miles out and back. Communicating among these operators is constant so they know freight availability all the way through the network and can plan at the beginning of their day when to arrive for pickup.
“Using their hours of service most efficiently is important,” Lyddy adds. “We have a waiting list of drivers to take advantage of this.”
By putting tracking technologies on the trucks and making more real time information available Lyddy is hoping to improve collaboration with shippers to better manage appointment times and best utilize drivers and equipment. He admits that’s still a struggle.
“Shippers need to know how to be better staffed at least a few days ahead of time and we want to hold off making those appointments as long as possible so we can more efficiently use the truck,” he explains.
But Lyddy understands that his customers have time demands too, and information technology is helping Dart meet them. For example, Dart is a truckload carrier and Lyddy says he’s seen a rise in demand for dedicated services. While his company is dedicating power units and fleets of trailers to certain customers, he’s also working with them to fill gaps in their networks using the shipments of other customers. That requires a direct connection to these customers.
“The data is passing directly between our servers and theirs and we’re no longer using a value added network,” Lyddy explains. “A big difference between what we were doing before we went with the Extol (www.extol.com) B2B system and what we do now is we’ve been able to make this system part of ours. It’s connected to our same databases and grabbing information more efficiently. The prior solutions we had were their own silos and you had to pass information through flat files to get it out there and it was inefficient.”
Business’s Growing Complexity
Dan Singer, vice president of supply chain operations for Averitt Express Supply Chain Solutions (www.averittexpress.com) is also trying to meet the rising demand for dedicated fleets while the driver pool shrinks. This request catches many carriers off guard because it is coming from clients who’ve never been interested in dedicated fleets before. Singer says shippers are more aware of the effects of the Federal Motor Carrier Safety Administration’s Comprehensive Safety Analysis (CSA) process which is expected to take unsafe drivers off the road but also shrink capacity.
“I’m seeing more shippers on the retail side and in pharmaceuticals that historically were not using dedicated fleets,” he says. “But to make dedicated fleets cost effective I need to have a guarantee of backhaul. So by using collaborative networking it gives us the ability to provide the backhaul for a shipper that historically only shipped one way. It allows us to make a dedicated fleet more cost effective.”
But dedicated fleets are just the tip of the service iceberg for transportation providers like Averitt. Carriers have seen many customers go through mergers and acquisitions, making information flows and points of contact more diverse. While this is a challenge for both shipper and carrier alike, for the carrier it’s also an opportunity to add value to their service offerings.
“Averitt works with a lot of customers who are multi-divisional and in many cases those divisions have been the result of growth by acquisition,” Singer explains. “So you get many different operating platforms and disparate systems that don’t necessarily talk to each other. That has led to an opportunity for a service provider, if they have the right model, to come in and offer a single operating system that doesn’t require the shipper to revamp their systems.”
Using Oracle Transportation Management (OTM) (www.oracle.com), Averitt set up its own service called ATOM, Averitt Transportation Operation Management (see sample screens on this page). Oracle provides visibility, critical event reporting and alerts, but these services aren’t required by all Averitt customers—which is why Averitt put them under the ATOM umbrella.
“We sourced with another partner, ONE Portal (www.myoneportal.com), which allows us to come in at the ground level,” Singer says. “If all they need is the ability to electronically generate a bill of lading, we have that functionality. This platform is very customizable and we rolled this out to more than 30 customers. It allows us to start at the ground level, with bill of lading (BOL) and shipment tracking, all the way through to settlements.”
Singer believes one of the most important value propositions a carrier can bring to the table is working through a software as a service (SaaS) model. It can relieve customers large and small from having to make separate capital expenditures for a variety of software platforms and consulting engagements.
Manufacturing’s Global Anxiety
A cloud doesn’t have to originate with a transportation provider. Manufacturers with a constantly growing global footprint need to take control of their supply chains, especially if they are outsourcing more of their manufacturing functions to partners in other countries.
That was the idea behind the Kenandy (www.kenandy.com) business model. Kenandy is a new cloud-based service provider that combines core manufacturing functions for inventory management, engineering, purchasing, production and requirements planning.
Sandra Kurtzig, Kenandy’s CEO, says that because more manufacturing companies are doing as little manufacturing as they can and outsourcing as much as they can, they are only using 15-20% of their current supply chain management system capabilities.
“A multi-tenant model, where you can share information with vendors and suppliers and customers is the only way to do this effectively,” she says. “Companies have gotten as much performance as they can out of just improving performance in the organization; now they need to be able to get information quickly from their partners. If there’s a tsunami and all of a sudden they can’t get certain purchase orders from Japan, they’ll have to be able to quickly figure out who else can supply those parts. In this system we’d have other manufacturers who can manufacture this part and what modifications would have to be made to the part in order to make it compatible.”
Another challenge with offshore manufacturing is dealing with small vendors in Korea, China and India that can’t offer U.S. partners visibility to what’s going on.
“This system will not only give transparency between the mother company and these subsidiaries offshore,” Kurtzig says, “but it also gives these small companies structure, the same kind these U.S. companies got 25 years ago. These offshore companies can also get information in their own languages.”
Key performance indicators in this case also enable companies to compare how they’re doing within their community to certain industry benchmarks.
As for all partners in a global supply chain, performance is the ultimate indicator of how well practices and technologies are applied, not of how many boxes populate their networks.