My colleague Shraddha and I were engaging with a global diesel engine manufacturer, trying to assess how we could alleviate some of the ongoing material shortages and delays in their inbound supply chain. In our discussions with the logistics leaders, it was evident that we could potentially address multiple points of distress such as planning, optimizing shipments, reducing freight costs and providing visibility into the state of the material in-transit.
Whilst we were seeing significant cost saving potential through better planning and optimization at the suppliers’ end; the manufacturer was adamant about fixing the lack of visibility. It took an embarrassing two or three meetings before the penny dropped for us. There was no point in trying to optimize for cost or build better loads if the manufacturer couldn’t get timely information on where their material was. This was essential for a host of downstream processes - such as production planning in the factories, stock replenishment in the parts distribution centers and for inventory planning purposes.
We then shifted focus to improving visibility and found out why they were facing the challenges. As was expected, fragmented data was the culprit. Information resided in silos, belonged to different entities in the supply chain, with limited potential of collaboration due to lack of a cohesive platform.
Let me take you through a quick example. As a process, suppliers in China or India would receive orders from manufacturers and then provide their dispatch plans to freight forwarders. The freight forwarders, in turn, would plan container loads, vessels (or any other mode of transportation) and sailing dates. If the planners needed to know the status of a particular critical material or part, they would call the supplier who would provide a simple but incomplete response on whether the material was dispatched, but could not provide any further details. The Freight forwarder was able to provide vessel sailing information and possibly container information - but unable to pin-point the vessel/container that has the exact material that the planners are searching for. The problem is exacerbated due to the inherent nature of these shipments which are multi-leg movements; i.e. supplier factory to port; port to port and finally port to destination factory/DC. The complexity gets compounded if there are multiple modes/transporters involved in handling the material. While the question we started with was fairly straightforward - getting an accurate answer was a painful task at best.
So, here are a few key learnings from this experience
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