The Rise Of Enterprise Logistics
Forward-thinking business leaders are increasingly seeking ways to gain an umbrella view of their enterprise to reduce waste, improve productivity and save time. Efficiently removing waste from the supply chain requires knowledge, technology, analytics and continuous improvement methodologies that connect the end-to-end customer value stream from raw materials through delivery to end customer.
Enterprise Logistics Providers see from end-to-end across the enterprise and up and down the value stream, allowing them to quickly locate roadblocks in the process and take corrective action to remove them. For example, with visibility and industry expertise, the 3PL has intimate knowledge of all trade lanes and understands the congestion issues and pinch points that hinder product flow through the supply and demand chains. Using this information, the 3PL balances service with cost by managing the process of bypassing congestion points, selecting the right trade lanes and assigning carriers with the best transit times.
North American manufacturers, distributors and retailers increasingly rely on data-driven visibility to deliver breakthrough business intelligence needed for enterprise optimization. While some logistics providers are vertically or functionally focused with limited capability, Enterprise Logistics providers employ tools that provide total process visibility from overseas manufacturing facilities to the North American customer’s door. That overarching insight brings a competitive advantage to shippers in the form of reduced logistics-related costs, improved customer service and increased working capital.
If inventory is not turning as expected, an Enterprise Logistics Provider can help clients quickly relocate inventory to address geographical deficiencies or seasonal sales fluctuations. Companies use lead times to calculate inventory necessary to meet delivery requirements of customer orders in the sales pipeline. Increased inventory adds cost to a company’s bottom line. Conversely, increased inventory velocity removes costs from the equation.
Multiple processes impact lead time, including manufacturing, production, packaging, distribution and transport. Each step of the process produces waste, which extends lead times. To shorten lead times, 3PLs with LEAN expertise can identify and remove wasteful steps. Two such examples include lowering the number of touch points from end-to-end or reducing the number of steps in the manufacturing process without generating defects.
The confluence of faster data access, better analytical tools and proven continuous improvement solutions promotes timely and data-driven business decisions. These practices help companies reduce the length of the “cash to cash” cycle–the time required to convert expenditures created by orders and inventories into cash that can be reinvested into the business. The strategic advantages that emerge can be game-changing.
Eric Lail is vice president, Client Services and Continuous Improvement, at Transportation Insight. Eric is one of only 200 Shingo Prize examiners in the world and has led LEAN journeys for companies ranging from $5 million to $8 billion in sales.
Rick Brumett is vice president Client Solutions at Transportation Insight. He has more than 30 years of logistics and supply chain management experience at companies such as Walmart and ABF Freight System.
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