For the second year in a row, peak shipping season is feeling less like a surge and more like a speed bump for many manufacturers.
And that, in turn, means more attention is being paid to S&OE (sales and operations execution) to manage the near-term horizon and “all the issues stemming from actual demand and supply — the reality of supply chain that is never as polished and refined as the S&OP plan,” as Gartner sums it up.
The good news is that an increasing number of manufacturers — armed with insights fueled by real-time data and more connected ecosystems — are better equipped than ever to make the most of a lackluster season. Here are some of the best practices the more advanced manufacturers are implementing to minimize the cost-to-serve and preserve margins.
Carrier consolidation. With capacity being a little bit more available, shippers are consolidating their primary carriers. I've spoken with two CSCOs recently who were adamant that carriers with a spotty record for on-time deliveries or who don’t offer real-time shipment visibility aren’t going to make the cut. The data shows that carriers who prioritize visibility are experiencing healthy growth in shipment volumes while others face declines.
Understanding order position and inventory position. Manufacturers are analyzing the orders that need to be fulfilled immediately versus those that can wait. It’s not uncommon to put inventory on a truck or container just to fill out the shipment, but not everything needs to be delivered right away. Managing the mix is one part of optimizing inventory and delivery costs — and this is one of many examples of where you need data from multiple systems.
Avoiding the “spreadsheet trap.” Manufacturers who have embraced real-time visibility solutions are proving to be more agile than those still downloading data from multiple systems to spreadsheets for analysis. By the time the data is collected and downloaded and sorted and sifted it’s become stale, the conditions on the ground have changed. It’s too little, too late.
Training and incentivizing teams to work together. S&OE isn’t just about logistics. It’s not just a matter of getting something delivered. It’s about fulfilling orders and maintaining inventory levels. And yes, all of this orchestration and optimization depends upon having high quality, reliable data available from multiple systems in real time.
But it also means having the right tools and the right people to analyze that data in order to make smart assessments. The most effective manufacturers are investing in training and incentivizing teams to work collaboratively across organizational lines, ensuring that KPIs are orchestrated across teams and do not create competing priorities.
Always have a Plan B. Contingency plans are crucial. There's going to be extra inventory left over. It's tough to find warehousing. No forecast is ever totally accurate. Hurricanes will keep happening, and the next disruption could be moments away. Scenario-planning is the surest defense.
Sharing data. Getting a handle on what truly drives demand and understanding lead times are crucial for manufacturers who aspire to greater agility and better execution. And that requires sharing data beyond the four walls of the company. For example, a manufacturer can massively benefit their operations by tracking raw materials inbound to their plants. Without that foresight, supplier surprises or disruptions can bring the manufacturing line to a standstill. But, with real-time visibility into the status of supplies, they have the ability to source product elsewhere, schedule a different manufacturing run, or adjust in any number of other ways.
Manufacturers can't prepare for everything, but they can prepare to be more agile when the inevitable disruptions occur. The increased interest in data-sharing across manufacturing enterprises and ecosystems is a welcome development for a sector that initially was reticent to share information. At the end of the day, when you share data, you give your entire community an opportunity to solve a problem or seize an opportunity. Everybody wins.
Tom Gregorchik is vice president of industry strategy at FourKites.
Timely, incisive articles delivered directly to your inbox.