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Logistics Intelligence + Efficiency = Competitive Advantage
By: Simon Kaye
Posted: June 7, 2011, from the June 2011 issue of GCI Magazine.
An intelligent supply chain creates competitive advantage through seamless integration that meets business requirements. The objective is efficiency: minimizing downtime and obstacles to delivery while maximizing uptime as shipments get to their required destination. The key performance indicators (KPI) that define this efficiency are familiar to and regularly measured by all companies in the beauty industry, emphasizing preparation for on-time delivery with minimal delays and maximum shipment control. By contrast, inadequate preparation, reflecting incomplete information about shipments and shipping requirements, is the most costly and preventable cause of logistics inefficiencies. Using supply chain intelligence to know what to plan for defines competitive advantage.
A look at key factors shaping intelligent and efficient logistics processes demonstrates that proposition. Technology, sustainability, processing, customs and security concerns all have been transformed in less than a decade. The beauty brand owner that is not transforming its logistics processes to accommodate them will have a dysfunctional sourcing and shipping effort that is a competitive disadvantage.
Information technology with trace-back capability is essential for supply chain intelligence. Such computerized tracking must give businesses along the supply chain a common platform to capture and report on shipment information and history. The latest logistics software uses “cloud computing” solutions through web-native architecture, optimizing the entire transportation process so carriers can exchange information, regardless of the format used, in order to combine shipments for lower cost, and share shipment status with carries and trading partners.
Comprehensive electronic tracking that aggregates loads and routes is a planning solution that reduces fuel consumption and cost. It facilitates up-to-the-minute route and load scheduling to take account of everything from weather conditions to just-in-time shipment adjustments. An intelligent supply chain will use cutting-edge electronic systems to improve both fuel efficiency and cost effectiveness, by eliminating guesswork and backtracking to find misplaced shipments. It affords maximum flexibility in route and load planning so that delivery problems and energy consumption are minimized, saving fuel, resources and time.
The availability of information online and in real time can largely eliminate the need to print out paper reports and forms that create inefficiency, delay and waste. For example, the International Air Transport Association (IATA) E-freight initiative to send shipment documentation electronically before the cargo itself arrives, reduces standard cycle time by an average of 24 hours. By eliminating thousands of tons of paper a year, the IATA estimates that the E-Freight initiative can save up to almost $5 billion annually.