Sunday, February 1, 2009

Profit comes from Effective Supply Chain Management

By Larry Emsweller

If you lag behind in technology, you are putting your efficiency at risk. Supply chain management is simple if you are shipping one thing at a time, but when shipping multiple SKU orders, they need to be directed to the proper shipping point. A competent software management tool can maximize your direct plant shipping opportunities. It can save you time and efficiencies that will save you money.

Another reason - you may be dealing with product that is incomplete. For example, how do you determine to ship from the plant if only 95% of the product is at the plant site? Also, how do you get the remaining product to that location to make the shipment complete? It is difficult to do, so most companies will give up. They revert to old antiqued practices and find a location with all the stock and send the order from there. You can lose out on a lot of business this way ultimately minimizing market share.

This is why companies like Procter & Gamble use a sophisticated supply chain management program - DMS (distribution master scheduling) - called AutoScheduler from Transportation l Warehouse Optimization to optimize direct shipping by:

A. Pre-positioning inventory to maximize DPS B. Determining the best place to ship any order from C. Re-deploying the inventory to ensure the shipment is complete D. Establishing the dock and staff schedule to perceive the customer service goal of on-time, every-time

This requires more timely decisions. Many management systems use the KISS principle. It is easier for the user of the system. The creation of optimized rules to determine where orders will ship from is often done by strategic location analysis. This is done every few years and looks at a variety of functions. The end goal is to make the system as efficient as possible - saving time and money. Supply chain management requires constant scrutiny.

What is needed is a timely, capacity balanced optimization system that performs the sourcing analysis in near real-time and determines that the order should ship from the Chicago plant. There are tools for distributed order processing - but most of those are designed for the likes of catalog shippers. In the catalog world, if there is insufficient inventory in one location, then the order will be redirected to another. Most applications that tackle the more substantive issues of ship point optimization in companies shipping truckloads of consumer-packaged goods have been custom built. One new entry in the market is AutoSPA (Automatic Ship Point Assignment), also from Transportation l Warehouse Optimization. This system looks at the total cost of delivery - from producing plant to customer - as well as potential costs for product expiring in one location and being scrapped.

At the same time, AutoSPA can limit the number of shipments that can be made from any site. For example, if there are 200 shipments to be made in the South East, there is no sense in overbooking the Miami DC when Atlanta is idle. Rather, Miami should work to its capacity leaving some volume for Atlanta.

Savings here are significant for ship-point assignment, up to nearly twice as much as DPS alone. This is huge in supply chain management - well worth doing.

Sign up for the exclusive free Truck Loading Manual that can SAVE YOU MONEY and offer you the perfect Operator Manual for truck operators at www.TransportationOptimization.com. While there, request a call back from one of the premier transportation consultants in the industry, Tom Moore or one of his associates from Transportation | Warehouse Optimization. Working for many companies in the top Fortune 50 - like Procter & Gamble and BP - they understand your unique problems and can help you solve them. Transportation l Warehouse Optimization - Solutions that work. Solutions that save. - 15266

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