Category Archives: Supply Chain & Logistics

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The Internet of Things and the Supply Chain

 

By Morgan International Staff Writers

I suspect you have heard the phrase ‘Internet of Things’ or IoT. It refers to the connection of devices to the internet which up until recently have not been connected – cars, fridges, freezers, heart monitors, and so on. The list of connectable objects is growing all the time. At a more holistic level, the IoT enables integration of the physical and digital supply chain which provides great opportunities for businesses. This trend is revolutionising the supply chain in a number of exciting ways.

 

Asset Tracking

Rather than using barcode scanners to track and manage inventory, cargos will have a microchip and antenna. The microchip will store data about the cargo and the antenna will provide the connectivity. These tags are referred to as RFID. Another kind of technology in this space are internet connected trackers which make use of low power wide area networks, allowing companies to track items. This makes use of satellite trackers, meaning that an item can be tracked anywhere on the planet, even where there is no cellular coverage. There are also near field communication (NFC) tags.

 

Fleet Management

Businesses that operate a large number of vehicles are using technology to connect their fleet and make the process more efficient. The solutions use GPS and other real time tracking technologies. This allows businesses to ascertain where their vehicles are and when. These solutions are deployed in a number of ways. An example in a consumer setting is bus fleets with GPS so that bus wait times can be displayed at bus stops.

 

In Summary

The internet of things will transform the supply chain by providing connectivity and real time updates to where vehicles and/or products are. This allows businesses to react to external events such as traffic and make their supply chain more efficient and effective.

 

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How will the sharing economy effect logistics

 

By Morgan International Staff Writers

You may have heard a lot recently about the sharing economy. Although in its infancy, the shared economy is set to revolutionise logistics. So what is it? It is an ecosystem built on the basis of sharing human, physical and intellectual resources. It is very often enabled through technology as it joins the production, trade and consumption of goods and services by different people and organisations. In essence trade is not only based on monetary exchange – there are many other forms of value exchange such as swapping, exchanging, crowdfunding, open source, shared ownership, lending, borrowing, and so much more.

 

An example that most of you will be familiar with is Uber who have just launched Uber Freight which is being rolled out in the USA. It offers very attractive 7 day payment terms to drivers and enables them to carry a full load all of the time by utilising the app. So multiple customers are sharing the use of the space in the lorry. It is a simple idea powered through technology, bringing together multiple buyers with one seller at scale. This increases the capacity of freight as vehicles are less likely to be partially empty. This is great for the drivers, and the environment, as in theory less fuel will be used. It is also hugely beneficial for customers who should see their costs of freight being reduced. This simple example demonstrates that the sharing economy is making logistics more efficient, less impactful on the environment, and more cost effective.

 

We touched on the importance of technology – in fact the shared economy at scale and across borders would not be possible without the evolution of technology. It has been driven by the revolution of freight application program interfaces (APIs) which have allowed the matching of drivers, routes, and customers. This software also works across many transport modes (not just trucks) – it includes ocean, air, and rail – working out the optimum route.

 

In summary, logistics is set to transform even more drastically as driverless trucks become a reality. Expect to see the Uberization and further disruption of the industry as we move through the back end of 2017 and into 2018.

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3 Supply Chain Fails and Avoidance Strategies

By: Morgan International Staff Writers

The role of any Supply Chain Manager is to ensure the supply chain is robust and resilient. They should be well versed with the common pitfalls and put strategies in place to avoid them from happening, or being able to quickly recover if they do. These are our top 3 supply chain fails with avoidance and/or recovery strategies:

 

  • Over reliance on a supplier

When a fantastic supplier is found, it can be tempting to put all your eggs into one basket. The prudent Supply Chain Manager who inherits this situation would carry out thorough due diligence to ensure the supplier is a going concern. Thereafter they would look to try and diversify and have at least one back up supplier, because in reality even if they are financially sound there may be unforeseen circumstances that could shake the supply such as an act of God, or perhaps a takeover. Over reliance on one supplier typically puts them in a very strong bargaining position, and therefore to ensure competitive pricing a contract should clearly govern the relationship and cap any price increases. Strategic supplier relationships are hugely important, but it is purely good business to have a back-up plan.

 

  • Illegal practices

Nike has been dogged with allegations of illegal working practices in factories in their supply chain. In 2011 Nike admitted that there had been mental and physical abuse of employees at one of their suppliers producing Converse shoes in Indonesia. In fact an internal report showed that almost two thirds of the 168 factories producing Converse products worldwide failed to meet Nike’s standards for their suppliers. This is worrying to say the least, and the result it not only bad press, but also consumers choosing to buy elsewhere. The role of the Supply Chain Manager is to ensure that strict due diligence is performed on each supplier, and that audits are carried out regularly.

 

  • No contract

A contract should not be seen as an admin exercise. It is used to agree to the terms of the engagement, and to govern the relationship. The process of agreeing the contract is in itself incredibly important so that the supplier and client are clear on their own roles and responsibilities, and what the consequences will be if they fail to deliver on those. Without a clearly written document, it is near impossible to ensure delivery is as expected.

 

In Summary
In any supply chain, simple or complex, there are inherent risks. The role of a Supply Chain Manager is to consider the exposures and to put in place various strategies to manage these in a suitable and practical way.

Source

http://www.dailymail.co.uk/news/article-2014325/Nike-workers-kicked-slapped-verbally-abused-factories-making-Converse-line-Indonesia.html#ixzz4ogYhUr00

 

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Fast Fashion Transforming Apparel Supply Chains

By Morgan International Staff Writers

Our love of throwaway fashion is driving significant changes to apparel supply chains. Consumers of today want low prices and fast response times. This is evident from the popularity of the likes of Zara, Topshop, H&M, Zara and ASOS. The latest buzz phrase is Fast Fashion which reflects this desire for low cost and fast delivery – which is happily gained at the expense of quality. These consumers know the fashion will be ‘throwaway’ to the extent that it is not expected to last more than a season – therefore a garment that will last a lifetime is not a consideration. Retailers more than ever before are now competing on cost and who can get the product to the customer the fastest.

 

The four seasons of fashion (autumn, winter, spring and summer) are largely a thing of the past as within the Fast Fashion model, there are frequent releases throughout the year. Some retailers such as ASOS and Topshop launch new products every day and this attracts the fashion conscious who want to wear the latest before anybody else has a chance to buy it. The other point of interest is that most of these retailers limit the order size of each product which creates hype and also reduces the chances of passing someone in the street wearing the same item. Furthermore, it maintains a cycle of individuals going in to look for a product that is gone, to buy an alternative, for another individual to see and want that item, to visit the store to find that item has gone, and so on.

 

Key considerations

  • Fast Fashion only works when design and manufacturing are integrated. By that I mean that the designers have to consider that what they are imagining can be manufactured cheaply, quickly, and won’t depend upon materials that will be timely to source.
  • Designers and inventory managers work closely together on a daily basis to see what is selling, and this allows them to respond to the market in almost real time.
  • The push to manufacture at a low cost can introduce supply chain risk in terms of the use of child labour by the factories. Therefore the retailers have a duty to ensure due diligence within their supply chain is robust.
  • Fast fashion requires great systems, processes and procedures that support the strategy.

In Summary

Fast fashion is here to stay and it is certainly a concern for the larger retailers who are not typically as agile. It introduces an interesting set of considerations for supply chain managers working in this space and it is certainly an exciting time to work in the industry.

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Is there a Supply Chain Talent Shortage?

By Morgan International Staff Writers

Some would have you believe that there is a lack of supply chain talent, whereas others claim it is not a lack of supply, but inadequacies of those demanding that talent. It is my opinion that the supply chain crisis is indeed a culmination of both of these factors which in unfortunate circumstances feed each other in a downward spiral. Let’s look at the key issues:

Supply outstripped by demand
This is not a new issue – there is more demand for talent than there is supply. In fact according to a recent survey by the University of Tennessee, 90% of CEOs believe they need to do more in order to attract supply chain talent. The statistics themselves should have graduates desperate to pursue a professional qualification in supply chain as the current ratio of supply and demand for jobs is 6 to 1. This is anticipated to rise to 9 to 1 in a few years’ time.

This begs the question – why is there such a great disparity? The answer is really rather simple and relates to the role changing from more transactional when supply chains were linear, to far more strategic as the supply chain has become more complex. In essence a large pool of professionals were unable to make the leap to a vertical global integrated role.

Lack of university courses
When you speak to successful supply chain professionals they will almost always tell you that they got into the profession by coincidence. In fact I am yet to meet anybody that told me they had these career aspirations before university. It remains an area that is rarely spoken about at school as a rewarding career option, and there are few well regarded university courses. Until schools and other institutions begin pushing supply chain and procurement, it is unlikely that it will become a choice for the brightest and the best.

High expectations
Those working within supply chain roles no longer just need to know about supply chain. They are expected to have experience of risk, finance, HR issues, compliance – and the list goes on. It is this fact that makes the role extremely interesting and exciting. However it also makes it a career that is difficult to obtain for those with experience that is not sufficiently broad.

In Summary
What better time to work within supply chain as a skills shortage will inevitably lead to higher salaries and career opportunities? It is an opportune moment to pursue a professional qualification in supply chain.

Source

http://tntoday.utk.edu/2016/03/22/supply-chain-program-launches-scholars-distinction-fill-supply-chain-talent-gap/

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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.