The concept of a supply chain seems to suggest strong links between supplier, manufacturer, distributor, and customer. But supply chain logistics professionals know this is often far from the truth. Even inside an individual company, the links between functions are weak. In the same plant, the shipping dock is not coordinated with the production planner, purchasing is not aligned with manufacturing and warehousing feels that everything flows down hill from production. We will look at some of the links in this internal supply chain and how they impact logistics performance and then introduce a new class of system that can plan across silos.
Distribution is often the recipient of product it does not need to fulfill customer orders. Distribution managers are faced with the problem of where to put this product that has been pushed to them. Unfortunately, there are elements of this in many supply chain operations causing overflow space in large warehouses and incur transportation and handling costs shuffling the product to its new home.
In the sad but true category is the story of the pushy purchasing manager who got a promotion by getting a different bottle supplier for a filling plant. The supplier was miles away and unable to keep up, forcing the production lines to be scheduled based on what bottles could be delivered. This purchasing decision to switch suppliers, which is not uncommon, saved little and created a rift between manufacturing and purchasing while creating a dysfunctional supply chain with more of the wrong inventory filling hastily secured outside warehouse space.
Price does not equate to value. This tenet is true in logistics as it is in other areas. Unfortunately, the transportation procurement groups often don't heed the transportation operations team. The result of this is losses like smaller payloads for the so-called cheap carriers. This excess cost shows up in total cost but not in the price.
At headquarters, Distribution Requirements Planners create movements from plants to DC's. They do this without regard to supply chain costs or the products themselves. Take, for example, the case of store-ready displays that cannot double stack inside a truck. Instead of mixing them with other products that they can stack on, planners ship straight loads that neither cube-out nor weigh-out the truck. In one recent example, the shipping plant identified a 30=% savings for being smarter. Unfortunately those up the information supply chain ladder chose to ignore this advice from the trenches.
The internal supply chain doesn't have to be dysfunctional. There are easy ways to improve communications and create a linked internal supply chain. Reward everybody in the supply chain using the same set of metrics. In this way, purchasing prospers when manufacturing succeeds in lowering total product cost. Coordinating planning and execution requires planning systems to link to execution systems " or better, use the same systems.
Optimizing the internal supply chain requires logistics systems that go far beyond the simple transaction-oriented WMS, TMS, or load builder. There are two categories of optimization systems that generate the biggest return: Distribution Master Scheduling and Vehicle Load Building. Distribution Master Scheduling generates optimized plans for optimizing all activities after production. Working in 10 minute increments, the capacity constrained system provides plans that make what is planned be what is executed. The same is true for Vehicle Load Building. This optimizer creates the shipment that fills out the load (weight/cube or both) and provides the warehouse with detailed pick lists and loading instructions to ensure everything fits legally and damage free.
When you consider a transportation consultant, Transportation | Warehouse Optimization have been working with some of the top companies in America, finding practical solutions that have resulted in saving millions of dollars. They take a long-term view and keep the client as top priority. Contact them at www.TransportationOptimization.com for transportation cost reductions or solutions to warehouse challenges. While visiting their website, sign up for their exclusive free Truck Loading Manual that can SAVE YOU MONEY and offer you the perfect Operator Manual for lift truck operators. Transportation | Warehouse Optimization - Solutions that work. Solutions that save. - 15266
Distribution is often the recipient of product it does not need to fulfill customer orders. Distribution managers are faced with the problem of where to put this product that has been pushed to them. Unfortunately, there are elements of this in many supply chain operations causing overflow space in large warehouses and incur transportation and handling costs shuffling the product to its new home.
In the sad but true category is the story of the pushy purchasing manager who got a promotion by getting a different bottle supplier for a filling plant. The supplier was miles away and unable to keep up, forcing the production lines to be scheduled based on what bottles could be delivered. This purchasing decision to switch suppliers, which is not uncommon, saved little and created a rift between manufacturing and purchasing while creating a dysfunctional supply chain with more of the wrong inventory filling hastily secured outside warehouse space.
Price does not equate to value. This tenet is true in logistics as it is in other areas. Unfortunately, the transportation procurement groups often don't heed the transportation operations team. The result of this is losses like smaller payloads for the so-called cheap carriers. This excess cost shows up in total cost but not in the price.
At headquarters, Distribution Requirements Planners create movements from plants to DC's. They do this without regard to supply chain costs or the products themselves. Take, for example, the case of store-ready displays that cannot double stack inside a truck. Instead of mixing them with other products that they can stack on, planners ship straight loads that neither cube-out nor weigh-out the truck. In one recent example, the shipping plant identified a 30=% savings for being smarter. Unfortunately those up the information supply chain ladder chose to ignore this advice from the trenches.
The internal supply chain doesn't have to be dysfunctional. There are easy ways to improve communications and create a linked internal supply chain. Reward everybody in the supply chain using the same set of metrics. In this way, purchasing prospers when manufacturing succeeds in lowering total product cost. Coordinating planning and execution requires planning systems to link to execution systems " or better, use the same systems.
Optimizing the internal supply chain requires logistics systems that go far beyond the simple transaction-oriented WMS, TMS, or load builder. There are two categories of optimization systems that generate the biggest return: Distribution Master Scheduling and Vehicle Load Building. Distribution Master Scheduling generates optimized plans for optimizing all activities after production. Working in 10 minute increments, the capacity constrained system provides plans that make what is planned be what is executed. The same is true for Vehicle Load Building. This optimizer creates the shipment that fills out the load (weight/cube or both) and provides the warehouse with detailed pick lists and loading instructions to ensure everything fits legally and damage free.
When you consider a transportation consultant, Transportation | Warehouse Optimization have been working with some of the top companies in America, finding practical solutions that have resulted in saving millions of dollars. They take a long-term view and keep the client as top priority. Contact them at www.TransportationOptimization.com for transportation cost reductions or solutions to warehouse challenges. While visiting their website, sign up for their exclusive free Truck Loading Manual that can SAVE YOU MONEY and offer you the perfect Operator Manual for lift truck operators. Transportation | Warehouse Optimization - Solutions that work. Solutions that save. - 15266
About the Author:
Tom Moore and his associates at Transportation | Warehouse Optimization will help you reduce freight rates and save you money. Transportation | Warehouse Optimization consults with companies such as Procter & Gamble, BP and many other CPG companies. They can help you reduce freight rates and save money.
