Category Archives: Supply Chain & Logistics

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Supply Chain Optimization for Wholesale Distributors

 

By Morgan International Staff Writers

It is true that wholesale distributors are operating within a challenging global environment. Things have been tumultuous since the global economic crisis of 2007/2008 and widespread instability has impacted this industry, just as it has in many others. Wholesale distributors are experiencing increasing and/or unstable costs, shrinking margins, increasingly demanding customers, and new competitors coming from places that were not expected. These external forces are problematic for wholesale distributors, and to not only weather the storm, but hopefully to thrive, decisive action must be taken. The supply chain can be optimized to provide the answer in 4 key different ways:

 

  • Demand planning

Create a robust and forward looking demand plan, segmented at an appropriate level – i.e. by product, customer, geography, and sales channel.

 

  • Optimize inventory

This of course ties into point one – once you have a good idea of what the demand will be then you can plan the inventory to match the demand. This is basic demand and supply, and not getting stuck with stock that is not required and/or being short of stock that customers are willing to pay good money for.

 

  • Transport optimization

One of the biggest costs for wholesale distributors is usually transport costs. There are route planning tools available that can offer large cost savings by optimizing routes. Not only is it a cost saving opportunity, but it may be the difference between the customer getting their order on time, or not!

 

  • Integrate planning processes

We spoke about planning demand and supply, but a more powerful tool is to integrate that detail with risk and market change planning. This allows for a more predictable integrated planning process.

 

As is often the case, it is when businesses are most under pressure that to recover and to thrive they need to invest. This is the case here, as all of the suggestions have financial repercussions. This may mean needing to raise additional funding, but the success of wholesale distributors in the coming years will be dependent on investing in technology and planning.

 

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Is your supply chain healthy?

 

By Morgan International Staff Writers

Health is a term more typically thought of in relation to medical science – but in fact more and more frequently it is used in a business context. This is particularly true when it is a business system such as a supply chain, which in itself is an ecosystem, with various suppliers, customers, FX, and demand and supply. What we are seeing a lot of recently is businesses analysing the various components of their supply chain, assessing health, and then using this as a way to find the gaps/opportunities and then make changes so that the health improves. In many supply chains there is a tiered structure with primary and secondary, and even tertiary suppliers. Very often management for the secondary tier is managed by the primary tier, and the tertiary managed by the secondary. Therefore in that case the ultimate company would still be advised to set the standards for good health. The key areas of health to be aware of are:

 

  • Financial Health – Is the supplier viable and a going concern from a financial perspective? There are a number of factors that need to be assessed including the financial statements and all key ratios such as liquidity and gearing. Furthermore, company credit reports should be sought which will highlight any issues such a failure to pay invoices and so on.

 

  • Company structure – It is important to know if a supplier is part of a wider structure and who you are contracting with, i.e. who is responsible for the obligation to you. One aspect to consider is that in the event the contract is proposed to be with a smaller group entity, a parental guarantee may be sought.

 

  • Strategy – Is there a strategy for the short, medium, and long term? Does the business have a robust road map, and are they aware of how market forces may affect them?

 

  • Location – Is the supplier located in a high risk location? For example are they producing goods for you in a location known to be a target of terrorism? This of course could impact on their ability to deliver and in turn effect the health of the supply chain.

 

  • Compliance – Good suppliers will have robust policies and procedures and will be compliant with internal and external obligations. This may include those to regulators and to the governments, and also their obligations to their customers.

 

In summary, as with health in all respects, it is measured across a number of different factors. Regardless of who is managing the supplier chain, the company should set standards for health, and a good way to do this is by using a balanced scorecard which has both quantitative and qualitative measures.

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The Changing Relationship of IT and Supply Chain

 

By Morgan International Staff Writers

Most would struggle to think of any business department who have been immune to IT developments. Of course some business areas are more naturally a use case for positive improvements and transformation through IT. The supply chain, in my opinion, has for many businesses not had the cash injection in the IT space that other departments such as Finance and Sales have. Even in logistics businesses, up until recently, many were not working from state of the art real time systems. A lot changed with the likes of Amazon who have spearheaded the way in putting the customer at the heart of everything they do when defining their supply chain. They have invested heavily in technology to reduce the lead time of delivery of their products – and this may be set to get even faster with the introduction of drones. This has led to what was more of a transactional relationship between IT and Supply Chain departments, to a far closer strategic collaboration. These are three of the key changes:

 

  • One size does not fit all

There are many off the shelf systems out there on the market to be used for supply chain and logistics – I am sure we all remember the rise of the ERP. Many businesses undertook large implementations without real thought as to how the system would integrate with the current model, and how it would deliver value. Now, IT works closely with Supply Chain teams to find solutions that will provide strategic advantage. This may mean that an off the shelf product needs to be modified, or in some cases a bespoke development will be preferable.

 

  • SaaS

The rise of software as a service has created a particularly interesting dynamic. In the old world where SaaS did not exist, all systems change was typically tightly managed by the IT department. This did lead to some frustrations as Supply Chain teams wanted to move quickly, and often that meant outside of process. SaaS has shifted working styles as the supplier controls the service in their own environment, and hands over a level of control to the client. Very often, this control is managed by the business teams, and not by IT. This in itself has changed the relationship between IT and Supply Chain teams.

 

  • Partnership approach

The rise of SaaS has created tension in some organizations, but for many, the rise of cloud technologies, AI, big data, and other such technologies have created grounds for opportunity that have encouraged strategic conversations between IT and Supply Chain teams, in a way that had previously not been enabled through technology.

 

In summary, IT advancements are at a stage where they have a lot to offer the Supply Chain teams. This is driving changes in the way in which the IT and Supply Chain teams work together to derive value for the organization.

Acquire the advanced knowledge and skills to drive change with Supply Chain credentials.

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4 Routes to Green Logistics

 

By Morgan International Staff Writers

Most organizations appreciate that many of their customers and wider stakeholder base care about the environment. Some care to the extent that they are willing to do business elsewhere if they do not think decent environmental standards are being upheld. Within B2B relationships, the same is true, with expectations between suppliers about the right and wrong way to manage ‘green’ logistics. The first thing to say is that logistics aren’t impact neutral on the environment. The use of transport and fuel will always have a carbon footprint. So at this point in time, the efforts are to minimize the environmental impact caused by logistics.

  • Transport Management Systems

This is perhaps the most important of the methods that can be used to reduce the carbon footprint. A TMS is a piece of software that essentially helps with planning routes. It is used in a number of ways to reduce impacts:

  • Plan the most efficient routes with the least mileage, also given traffic conditions.
  • Manage multiple transport methods such as sea, rail, and air.
  • Optimize shipping loads.
  • Reusable cases

This is a fairly small adjustment, but by investing in and using reusable cases, it reduces the environmental impact of the logistics process. Furthermore, a well-made case will reduce the amount of damage in transit, and therefore the wastage of rework.

  • Direct thermal printing

Direct thermal printing is a greener option compared to thermal transfer printing, as it does not use ribbon. The issue with ribbon is that it is made which crude oil products and also their use produces harmful emissions.

  • Company culture

You can get points 1-3 right, but company culture will undoubtedly have a greater impact on the environment than these three combined. It is the employees of the organization that make the majority of decisions, that cumulatively will determine if green choices are made – or not. Therefore instil a green culture into the organization to ensure there is sustainable support for the environment

In Summary

As said in the introduction, being green is not an absolute. There are few businesses that are carbon neutral. Within the logistics space specifically, the aim of organizations should be to reduce their environmental impact. This will most effectively be done through direct action (points 1-3) and indirect through instilling the right culture into employees.

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Identifying Supply Chain Leaders

 

By Morgan International Staff Writers

Just because someone is not operating within the supply chain function, or is perhaps not of a certain pay grade, does not mean that they are not an influential supply chain leader. There are many informal leaders who are keeping the show on the road and are often decentralised and hard to identify. I guess you may ask, why do these individuals need to be identified by the organization? The answer is that if you do not know which human resources are important, how can you 1) ensure they stay, and 2) give them the tools they need to succeed?

What do Supply Chain Leaders do?

How can you spot a supply chain leader? There a number of tell-tale signs:

  • They prioritize certainty

Supply chains can be long and complex, with a number of touchpoints. If the end of that supply chain is delivery of a product to a customer, the organization will want to say with some level of certainty when the product will arrive. To make this possible, and accurate, full clarity of the supply chain is needed, along with agreed SLAs, and back up plans if there is an issue with any point in the chain.  A supply chain leader will seek methods to introduce certainty to uncertain areas of the supply chain.

  • They plan in line with culture

The plans might be strategic or tactical, but they will always align with the organizational culture. They will support the vision of the organization and the overall direction.

  • They seamlessly manage stakeholders

In any supply chain, there are a large number of stakeholders, including the customer. A supply chain leader will find a way to manage competing priorities.

  • They mindfully balance risk and reward

Within any supply chain, there will be opportunities, but that may come with a level of risk that outweighs the reward. For example, swapping out a logistics partner to a cheaper alternative will save money, but there is a risk of undermining service. A consummate supply chain leader will weigh up the potential gains against the risks.

In Summary

Individuals exhibiting the signs outlined above tend to earn trust and the confidence of those around them. This means that regardless of their position within the organization, they are an important supply chain leader. These individuals need to be identified and nurtured by the organization so that they continue to deliver this important value.

 

 

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Product Innovations to Optimize the Supply Chain

By Morgan International Staff Writers

When we discuss the supply chain, we typically focus on the parts of the supply chain, such as the warehousing, transport, tracking, and so on. These are the areas that typically gain the most attention when seeking supply chain innovations and/or optimizations. However, the product itself that is within that supply chain has a huge influence on the efficiency of throughput. Of course there will be some supply chains where the nature of the product is pre-determined and change is outside of the control of the supply chain manager. An example might be a small distributor of Dell laptops. The distributor in this case is unlikely to have any influence over the manufacture of the product. However, a business that manufactures their own product and then manages the supply chain, will have a far greater level of control over the product design. It is unlikely to ever be full control due to various factors such as regulation, quality standards, customer demand, and manufacturing restrictions.

These are a list of key focus areas for product improvements:

  • Design to manufacture – The design of the product should be reflective of the speed and ease of production. The quality and cost factors should be considered and balanced.
  • Assembly – The product design should consider and minimize where possible the number of components and also the complexity of the assembly process.
  • Design for maintenance and/or disposal – Consider what happens when products come back into the supply chain via reverse logistics. This may be due to a fault or a natural end of life. For repair and maintenance purposes, the design should consider ease of disassembly. From a disposal perspective the design should take into account disassembly with the goal of obtaining the parts that can be recycled or reused quickly and easily.
  • Standardization – Avoid designing products that have parts that are hard or expensive to source. Where multiple products in a range have the same component, make sure it is exactly the same to drive economies of scale.
  • Environment – Consider the environment when designing the product. This might include recyclable/reusable components or perhaps less or biodegradable packaging. Consider where the components themselves are sourced from to reduce carbon footprint.

In Summary

Whilst focus may often not be on the product itself within the supply chain, there is an abundance of opportunity to optimize the product in such a way to make the supply chain itself more efficient. This in turn will drive a number of business benefits such as quicker delivery to customers, and reduction in costs.

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5 Reasons Your Business Needs an FM Professional

By: Morgan International Staff Writers

There are plenty of organisations out there that do not appreciate the need for an FM professional and tag the responsibilities onto another role. Very often the Office Manager will also undertake the FM responsibilities. This article is not underestimating the abilities of Office Managers or indeed any other individuals who are not FM professionals that take on the role. However, what we do know is that having a qualified Facilities Manager will undoubtedly offer additional benefit to the organization as they typically are better equipped to manage the responsibilities and contribute to strategic benefit. There are many reasons why your business needs an FM professional, but these are our top five:

 

  1. Economies of scale

By centralising all FM activities with one FM professional, they are able to see the picture and look for opportunities for synergies – this might be for example placing multiple outsourced services with one provider whereas it was carried out in-house or by multiple suppliers previously.

 

  1. Centralisation trumps decentralisation

If you decentralise the FM role to a number of individuals, coordination will be very difficult, and having a holistic view will be almost impossible. By centralising responsibilities to one individual, it is easier for senior management and the board to oversee FM activities.

 

  1. At the cutting edge

An FM professional will typically be passionate about their industry and be at the cutting edge of technological change that can offer service improvement and/or cost reduction to the organisation. This might be through the internet of things, big data, automation, and so on.

 

  1. They consider environmental impacts

As part of the formal training an FM professional receives, they will learn about organizational impact on the environment, and potential ways to reduce that footprint. We all know that corporate social responsibility is not only a hot topic at the moment, but is also hugely important for the sustainability of the planet.

 

  1. They look at FM strategically

For many years, FM was seen as an overhead to be managed and cost controlled. It covered rent, rates, utilities, and so on. However smart FM professionals know that they can offer strategic benefit to the organization. Examples are providing working spaces that make employees more productive, and renting out underutilised office space to generate income.

 

In Summary

Realistically, very small organizations may not have the money or appetite to hire an FM professional. Yet for most organizations with 20+ employees it makes economic sense to have a qualified FM professional dedicated to ensuring the strategic value of facilities managed is derived.

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Be a Logistics Superstar

By International Staff Writers

There are a number of technology changes positively affecting the logistics industry which for all intents and purposes have the limelight. In this context, how do professionals in the industry find a way to stand out? The purpose of this article is to give you some ideas of where to look in your own supply chain to look for that low hanging fruit, to make change, and get recognised for it.

Packaging
This one seems innocuous but not only is packaging itself expensive, but over packing increases the weight and size of the product, and therefore increases the cost of shipping it. Therefore this is a good place to start to check that the packaging is appropriate for the product. Don’t forget, awkward packaging or oversized packaging will also increase storage costs.

Inventory Control
Money tied up in stock tends to be high and organizations do typically have a strong focus on inventory management. However, there are other models that shift who owns the stock and when. So rather than storing a lot of inventory, some suppliers may be willing to hold stock and deliver it in a just in time fashion. This automatically reduces the cost of stock on the books – so should be considered.

Outsource
If you operate a complex supply chain but your organization’s core business is not logistics, you might consider the business case for outsourcing it to an organisation who specialises in it. This would not be a decision taken lightly, but it is absolutely worth consideration as another organization may not only be cheaper and more efficient than you are, but it may free up valuable resources for core business.
Embrace Technology
I said at the beginning that in a sense logistics professionals are competing for attention against technological advances. However, it does not have to be this way. You can be the supply chain manager who presents the advantages of new technology and builds the business case for its implementation and is therefore regarded as the superstar behind the change. Technology is key to automation, and that allows a wide raft of savings to be made.
SUMMARY
I would encourage supply chain professionals not to feel overshadowed by technological change within the industry, but look for other avenues to shine, and also embrace technology and champion it. It is a very interesting time to work in a supply chain/logistics role, and for more information on course and qualifications within the supply chain management space, please take a look at our website.

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Tech is Transforming Logistics

 

By: Morgan International Staff Writers

Logistics has consistently been seen as one area of supply chain that can offer organisational cost savings and increased efficiencies. This has ranged from route planning software, to more efficient vehicles, to sat-navs to avoid traffic on the roads. However, we are once again on the cusp of some major changes that are set to revolutionise supply chain logistics.

 

CLOUD SOLUTIONS

It is difficult to talk about technological transformation at the moment for any industry, without talking about cloud. Cloud based logistics systems are real-time and are globally accessible, whatever the time of day or night, and wherever you are located (as long as you have an internet connection). This means that throughout the entire process, key stakeholders such as customers, drivers and account managers can view the status of a shipment and can intervene if required.

 

Furthermore, the great thing about cloud is the speed and relative low cost of scaling up and down. That means a logistics company can scale for additional demand literally at the click of a button. This was close to impossible with traditional IT systems.

 

RFID

RFID stands for radio frequency identification and it is set to transform logistics by extinguishing the use of barcodes. It is a technology that uses tiny computer chips that are smaller than a grain of sand to track items from a distance. Each chip is linked to an antenna that remotely identifies it – up to 30 feet away. When a shipment arrives, all items can be simultaneously scanned, counted, and registered to the organization’s systems – without a need to individually scan barcodes.

 

IoT

The IoT at the most basic level refers to connecting objects to the internet in a useful and integrated way. An example would be having technology within vehicles so that they can connect to the logistics system – which will likely be cloud based. Having all aspects of the supply chain integrated improves shipment workflow and should result in happier customers.

 

SUMMARY

The logistics industry will never stand still and some of the technological advancements being implemented are positively transformative and disruptive – and should improve efficiencies and the speed of getting goods from A to B. It is a very interesting time to work in a supply chain/logistics role, and for more information on course and qualifications within the supply chain management space, please take a look at our website.

 

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Waving Goodbye to Supply Chain Fraud

By Rebecca Langdon

It is an unfortunate fact that supply chain fraud takes place, and can be an expensive and unforeseen cost of doing business. One of the roles of a supply chain professional is to ensure that there are robust policies and procedures in place to make fraudulent activity very difficult to carry out. Don’t forget this activity might happen from within the business, or outside. We are going to look at a few common avenues from fraudsters with recommendations to resist their attempts.

 

Scenario 1 – A business stakeholder hands out contracts to their friends/family

This is one of the most common types of supply chain fraud. A business stakeholder who has control over budget or signing off invoices will offer a contract to their friends/family. This might be in exchange for some sort of monetary payment outside of the formal transaction, a gift, or simply to help them out. The issues are that the vendor might not be suitable, or the best people for the job. Furthermore, they are unlikely to be the most cost effective option, and I suspect limited commercial negotiations will take place. Finally, the business stakeholder may not do the appropriate due diligence or implement a robust contract.

 

Solution 

Make it company policy to run tender processes or at least some sort of formal due diligence before vendors are appointed. The brevity of the procedure will typically be governed by the value and risk of the product/service. Furthermore there should be a gift policy.

 

Scenario 2 – Vendors over invoice for products/services that have not been consumed

Most supply chain managers will have been in the situation where there are a huge amount of vendors, invoicing at different times, on different terms, and against varying commercial structures. This can very easily lead to incorrect invoices being approved. Now they may be incorrect because the vendor genuinely made a mistake or perhaps they are attempting to defraud you.

 

Solution

Somebody needs to be responsible for understanding the commercial arrangement with the vendor, and then checking every invoice against that. For some vendors this will be simple as there will be a fixed fee, but for others that are based on consumption it will be a little more complicated as the business will need to track for themselves what they use (or at least be able to confidently validate the vendors number). There are also an abundance of really useful AP systems that can help with wider validation between PO’s and invoices.

 

Summary

Attempts at fraudulent activity are not going to go away, despite the potential repercussions. A qualified Supply Chain professional should be equipped with the tools and knowledge to build robust policies and procedures.