Reprinted from SUPPLY CHAIN DIGEST, June 27, 2007
Expert Insight: Supply Chain InView by Ann Drake
What We Don’t Know Can Hurt Us
How Information Sharing with 3PLs Benefits Both Sides
As logistics pros, we generally agree that collaboration is easier to talk about than to achieve. To keep it from being an unreachable ideal, we can take a closer look at key elements – one of which is information sharing. Knowing more and knowing earlier absolutely helps managers make smarter, faster decisions. In fact, through collaboration, comes information that drives revenues and efficiencies across the supply chain.
Each segment of the supply chain suffers when there is insufficient access to accurate data. Retailers need to know all they can about consumer purchasing patterns, or else they are likely to order less than the actual demand (resulting in lost sales) or order excess inventory (resulting in carry costs, warehousing costs, and/or markdowns). Improved technology used by retailers, such as POS (point of sale) systems, tracks purchasing patterns in real time and feeds information to analytical tools that help the retailer anticipate demand.
On the manufacturing side, there are ERP (enterprise resource planning) tools that combine demand data with actual shipping data to efficiently plan production and place inventory in the best location to support the expected demand.
How does the 3PL fit into this information sharing scenario? Through reporting and visibility tools, we can help identify and provide critical information. It’s a two-way street.
The advantage of keeping the 3PL in the loop is that better decisions can be made regarding tactical issues, such as planning and utilizing human and capital resources throughout the supply chain. As logistics and supply chain professionals, if we remain alert and proactive – and have full access to whatever information is available – we can provide “dynamic management” with built-in flexibility. We can accommodate daily shipping peaks and enable transportation managers to use the most cost-effective modes and carriers.
For example, with reliable information, managers can spread the volume over the week. If the same volume hits the warehouse without warning, it could lead to overtime, late shipments and detention costs – even temporary gridlock in the warehouse as product is picked and staged for customers and carriers that were not prepared for the spike and arrive late. With a timely “heads-up,” the warehouse management team can shift labor, bring temporary labor in, get an early start on the volume spike, and prioritize work to ensure that the consumer need is met at the right cost.
Challenge yourself to think about the data your organization could be sharing with its partners and the types of data you wish you were getting on a more timely basis from your partners. This list might include forecasts, promotion plans, new items, product deployment strategies and impact, customer changes, CPU vs. delivered, VMI, hours of operation, and specific shipping or receiving requirements. As collaboration gains momentum, it may be our job to educate manufacturers and retailers that keeping US in the know benefits THEM.
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