SCM Spotlight: Why Play Blind? Open Mind

In the Bhagavad Gita, passages often start with the Sanskrit words “Sanjaya uvaca:” (“Sanjaya said:”).

Interestingly, Sanjay was not present at the battleground where Lord Krishna gave the ultimate sermon. Sanjay, confidante of the blind King Dhritrashtra, was with him at his palace. Sanjay was blessed with Divine vision, to be able to see with his eyes as if he was present in the battlefield. Sanjay delivered the unbiased commentary till the end of war. Dhritrashtra was always ‘blind’ to the consequences of the war. Alas, the Divine-vision support invoked nothing more that emotional outbursts of the king; Television (OTT) does likewise in current times for the customer (king) today.

“No news is good news!”, many army generals took solace in this position in historic times. Till recently, this adage continued to hold good for the support sectors and functions like fire department, and our dear logistics department. ‘Avoiding failure’ (read bad news) was of paramount importance. Failure was defined principally by sales loss. To ensure best stock availability, considering demand and supply variability, safety stock formulae put to action. Companies defined certain inventory levels at all nodes of the chain. These inventory stockpiles provided the logistics manager a comfort and security. Come visit the logisticians fortress (read warehouse), and you will sense the security of inventory backed with the infrastructure & people capability for an efficient warehouse operation.

Supply Chains have been continuously working to strengthen a fail-proof logistics set-up to ensure best OTIF (service) performance. Cost versus Service balance has always been critically reviewed, debated, and laid to rest only after SLA signoffs. However, Inventory cost (capital) generally got lesser weightage in this much warranted balancing effort of conflicting KPIs. Now with comfort inventory (safety stock), do you really need visibility of inbound shipments? Other than the month-end peak sales time, your inventory levels would protect you from the invisible shipment delays…right?

Well, the market analysts currently are keeping a hawk-eye on the inventory levels shared in companies’ respective annual reports. Subsequently, many company boards are handing down inventory reduction targets.

The pan-industry direction stipulates Supply Chain managers to let-go the comforts of higher inventory. The question that comes to mind therefore is “can we reduce inventory without compromising service or cost?”

Information must replace inventory. Agile, responsive actions backed with better Supply Chain visibility shall help achieve the new inventory targets.

“Visibility is the ability to track and trace”.  Such has been the Supply Chain/ Logistics stance regarding SC visibility until a few years ago. And then came the e-commerce retailers. Players across the chain experienced (as online shoppers) the tracking and reporting capability on these portals. The visibility provided by e-retailers is overwhelming. Looking at ‘my order status’ is akin to lovelorn eyes beholding the pathway, anticipating the beloved’s arrival. Every small movement of your package between the collection centre, DC, delivery station is dutifully recorded and shared. A common customer would wonder why they are playing ‘passing the parcel’, within the same city. Is so much information of much use to the shopper? How much information is enough and appropriate?

How much visibility does a pilot need to land safely in fog? The least restrictive ILS (instrument landing system) is CAT-I, for which the minimum runway visual range (RVR) is 800 metres. Should the visibility be lower, the airport operations would come to a halt. Otherwise, the Safety risks are too high. With improved visibility tool, a better CAT-III system, the pilot can land with RVR of zero! Of course, the trade-off is between the costs and minimum requirements.

We take similar Supply Chain decisions regularly. Investments in visibility tools would also be driven by the benefits (service, cost, inventory) and what may be mandated by customers and regulators. Ecom-retailers, Modern trade customers have always demanded EDI, ASNs, advance appointments…more visibility, feeding into the joint effort to drive operational & planning efficiencies.

Inputs from suppliers and transporters using IoT technology offers immense benefits. Various tracking options exist, including RFID technology and connected IoT sensors to track and monitor the location and status of stock in-transit or while being processed at factory/ warehouse. In addition to real-time tracking, these devices can also monitor temperature, moisture, shock loads and other parameters essential for ensuring the safety quality and integrity of the shipment.

As you would infer, Visibility does bring transparency and accountability across the chain, reducing costs from penalties, delays, product value loss (especially in time/ temperature sensitive shipments).

In the post-Covid times, visibility has gained significant importance as customer buying patterns are changing unpredictably, carrier capacity availability is dynamic and the need to expedite shipments is regular and at an all-time high.

I would like to enumerate below some more benefits of SC Visibility:

  • Better on-time Case fill performance
  • Better customer experience: Advance information of all-is-well or oops scenarios, helps customer prepare/fashion his chain accordingly.
  • Reduced operational costs and efficiencies
  • End to end transparency and visibility. Fuller use of TMS and control towers.
  • Carrier performance visibility
  • Visibility also to the vendor partners on their bills processing and payments
  • Going paperless is a founding stone to visibility here

Another very popular visibility tool is Google Maps.  Not only it suggests the routes from one location to another, it has various features that make it a mighty powerful visibility tool. With some preferences added to your account, it would give customized feed as per your location. You can share your location with friends, you can choose from between route options based on travel time, tolls etc. It is now building in AI powered Virtual assistant.

Phew, now there is a lot of inspiration for SC Visibility companies to imbibe. The key lies in our ability to make productive use of loads of historic and current information (big data). IoT and machine learning would play an important role in making insightful, intelligent, error-free, real-time, agile decisions.

Our visibility tools could build-in more intelligence basis past performances and strengths of respective logistics partners, and this would help make real-time, dynamic decisions while awarding business and placing indents.

Past trends along with real-time data could be fed into the central engine algorithms for predictive analysis. This will help reduce the dependence on the static safety stock inventories. We can make our SC leaner with renewed confidence of delivering higher service levels.

With the intelligent tools, we could have accurate options for the business-critical scenarios. Example, the visibility tool with predictive analysis, would be able to tell us the ‘carrier-route-cost’ option if we want a shipment to reach earlier by 4days. This would help make faster, better decisions leading to a more efficient supply chain.

With the newfound powers, visibility tools would expand to provide the following benefits (list not extensive):

  • Drive higher sales
  • Predictive analysis (visibility into future): Avoid SC disruptions
  • Real-time KPI tracking & disruption alerts
  • Smart Automatic follow-up
  • Reduced Safety Stocks
  • Improved Supply Chain planning
  • Use of dynamic routing, delivery promise to customers
  • Zero inter-depot transportation (muda)
  • More cross-docking/ flowthrough opportunities
  • Team messaging
  • Supplier portal
  • Flexible cloud-based data hub
  • Secure real-time and historical data visibility

These are exciting times. The limit to what SC-IT (information technology) can deliver is… only the limit to what you can imagine!

This article has been authored by Shammi Dua, Lead-Supply Chain CSL at Unilever

(All the views expressed in the article are of the author’s own and do not represent any organisation or association.)

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