SUPPLY CHAIN AT YOUR FINGERTIPS
TRANSPORTATION MANAGEMENT SYSTEMS ARE HELPING SHIPPERS DATA MINE THEIR SUPPLY CHAIN AND SAVE BIG BUCKS
Levi Strauss & Co. has its supply chain all buttoned up. Well, it does now. The blue-jean giant that once popularized the slogan “Button Your Fly” was, for a time, running its warehousing on the fly, counting on Asian suppliers at the other end of its supply chain for periodic freight-location updates—a far cry from true visibility.
“We manually tried to put a picture together of that in-transit inventory,” says Sanjay Mishra, Levi Strauss & Co.’s director of Logistics, Global Strategy & Solutions. “As you can see, we were really loosely integrated.” Lacking a comprehensive picture of its supply in transit, the company’s warehouse suffered first. Operating costs shot up, service levels fell and labor costs went out of whack as managers were unsure how many employees would be needed at any given time.
“Our processes were fairly manual and very unpredictable. There was a lack of control on overall shipment,” Mishra says of the company’s dark ages. Like many companies with complex supply chains, Levi turned to supply-chain management (SCM) software for help—in this case provided by Amber Road. “The key element was linking our factories and distribution centers; that capability was lacking,” Mishra observed. “That’s the reason we started thinking about a change.”
That change was a total overhaul of Levi’s order tracking system, one that now standardizes data routinely received from its various vendors and suppliers, then automates key supply-chain components. Receiving information through electronic data interchange (EDI), the Amber Road software is able to consolidate the disparate bits of information into a cohesive reporting platform.
Scott Byrnes, vice president of Marketing for Amber Road, explains: “The way we collect our data is we have a cloud-based portal that has pre-connections with all of the extended trading partners—the brokers, forwarders, carriers—and when they reach certain points along the journey … they will make note, much like FedEx does.”
Despite the simplified view of large-scale operations, there’s still far too much for a company of Levi’s size to process. The way to manage is by exception, says Byrnes. “Another part of the process [is] establishing alert thresholds. … When you’re talking about literally 100,000 shipments a day, you cannot afford to have your eye on everything, so you’re only controlling by alerts. And those alerts are established by users within our system who say, ‘I only want to be notified when my shipment is 20 percent out of tolerance,’ which means it’s predicted to be late by more than 20 percent at the next benchmark.” These alerts, if unattended to, can be programmed to reach execs farther up the corporate ladder, even via text message to personal cell phones if necessary.
Cataloguing its supply-chain information over time gives Levi a giant repository to data mine, which it now uses for key performance indicator (KPI) reporting. If any one carrier finds itself too often on the wrong side of the 20 percent tolerance threshold, it may find itself on the outs with Levi.
“The way I would see this application having a very large impact along the supply chain is when you have a long view of processing over time,” says Mishra. “Over time when you create control like this, you tend to reduce availability. You measure your weak suppliers, your weaker carriers and you phase them out over time or improve them.”
BULK UP YOUR DISTRIBUTION!
In 2010, CytoSport, maker of Muscle Milk protein powder, had some heavy lifting with the type of problem its body-building consumers would love: It was bulking up too quickly. Thanks to partnerships with mega retailers Costco, Walmart, CVS and Target, the company was growing at about 25-30 percent year over year. That expansion, says Zack Galiste, CytoSport’s logistics supervisor, “changed a lot of things for us as far as sales and the different channels we were distributing to.”
Success, the company found, can be a double-edge sword—but one it was all too happy to fall on. “As we’re getting busier and the customers are putting greater demand on us … we were having problems keeping up with fulfilling orders or production, but the reason behind that is because we’re experiencing all this tremendous growth,” Galiste says.
To meet its increased demand, CytoSport turned to a transportation management system (TMS) provided by MercuryGate, which collected vital analytics the company needed to reevaluate its distribution and identify inefficiencies. Working with Tom French of Supply Chain Coach—coaches, not consultants, says the company— CytoSport decided to downsize from three distribution centers (DC) to two. Leaving its Northeast DC intact, the company closed one in Joplin, Missouri, and moved the third from Benicia, California, 80 miles east to Stockton.
“After we did the analytics we thought, ‘Wow, we can save six to seven figures just moving our operation 80 miles east,’” says Galiste. “[Stockton] had an abundance of warehousing and a lot of different 3PLs and companies that really wanted to compete for that business. There are two rail ramps out of there (Union Pacific and Burlington Northern Santa Fe).”
Jim Geer, senior Solutions manager at MercuryGate, says it is very common among clients to have the desire to see strategic planning up front, “to have the tools to determine where to source, where to distribute, pooling locations, and try to bring that in-house as much as possible.” As companies take on more of their own distribution, efficiencies identified through MercuryGate’s TMS allow them to expand operations without increasing—and even reducing—personnel.
Realizing the tangible savings, shippers can’t get enough data. “Just in a few years, the demand for sophistication has increased quite a bit,” says Geer.
And there’s quite a bit available. Amber Road’s Scott Byrnes points out there’s more to cargo tracking than simply “tracking” in the classic sense. “There’s cargo tracking, item tracking, shipment tracking or order tracking,” he says. “When I think of cargo tracking, I think of tracking my container, or asset tracking”—for which a GPS-based solution might be the most effective available because it would track the container anywhere in the world at any time via satellite. But is seeing the location of a container tantamount to supply-chain visibility?
“Where we take it is much more granular, more specific to a business requirement,” Byrnes continues. “Their customer wants to know right now where their order is and to be able to go in and type in their order number. … That order may be spread over a couple of shipments or a couple containers, but to be able to see where all that is by order, item or shipment, that’s where a lot of value comes in.”
All this isn’t to say there’s not a tremendous value in asset tracking, but to effectively see that singular data point as a piece of the larger puzzle, it would need to be tethered to an order being tracked to present the shipper with a truly useful view of its supply chain.
DOLLARS AND SENSE
“Savings are great,” says Aaron Ernst, sales engineer at RateLinx, a “big data” provider that funnels its TMS and freight payment and audit solutions into a single, simple dashboard. But times—and clients’ needs—are changing. “We used to sell on savings. Not anymore—We sell on data.”
If you ever go into cardiac arrest in Singapore, you can thank RateLinx when a local administers life-saving CPR. Its client, Nasco, relies on the software to invite carriers and 3PLs to bid on shipments of its CPR Manikins used to help train new emergency responders in the Asian nation. By funneling all bids—whether from a single carrier or 3PL such as C.H. Robinson that can bid with the best rate among its 20,000 partners—Nasco can easily select the lowest-cost carrier that fits its needs for a delivery to Singapore, or any of its worldwide export destinations.
But that’s only the beginning. While Nasco goes about sending its freight around the world, RateLinx builds a dossier that includes the company’s complete shipping details. What’s more important than the carriers Nasco chose? In some cases, the carriers it didn’t—which is why the dashboard includes visual data detailing lost savings in its users shipping program.
In essence, RateLinx is working not just to build cargo, shipment or order visibility, but a panorama of your supply chain’s financials. From the dashboard, users can see a simple pie chart outlining the portions of their freight spend for each mode of transportation. With a click, the user will see the location of origin (which distribution center is handling the bulk of your ocean-bound freight?), then the month, invoice location, carrier, even down to the invoice, each with subsequent clicks. As a result, users can see the long-term results and analytics of every transportation dollar it spends.
Whatever your visibility needs, one fact is crystal clear: The past 10 years have been a phenomenal time for shippers relying on software for logistics data, as needs have driven innovation and opened the door to greater sophistication that is again achieved as technology advances further.
Persistence Pays Off