Uncovering the value of supply chain integration

Today’s supply chains are under extreme pressure. From transportation capabilities and labor constraints to changing order profiles and more frequent disruptive events, maintaining predictable and cost-effective material flows has never been more complex and challenging.

Some solutions to these problems are obvious, such as the introduction of new technologies to improve performance and productivity. Robotics, autonomous vehicles, wearables and optimization tools are all enabling supply chains to get more out of their resources. But other less obvious solutions can be just as, if not more, effective.

The solution that may have the greatest potential to improve operations is to increase integration between both partners in the supply chain and supply chain processes. The former can be achieved through a relationship with a leading logistics partner (LLP); the latter by selecting an LLP capable of directly managing distribution center (DC) operations.

Value of LLP

An LLP typically performs some key functions in the supply chain, such as managing transportation, and also coordinates the activities of other partners in the supply chain, including suppliers, carriers, and other logistics service providers.

Coordination of transportation across the network is achieved through strategically placed control towers that serve as a hub for monitoring activity and integrating and analyzing data from that activity. Through the control tower, LLP can provide real-time visibility and analytics to manage transportation performance and control costs. The control tower also plays an important role in ensuring the supply chain anticipates and responds to disruptive events such as hurricanes and wildfires, eliminating or minimizing delays.

There is an important value in this coordination and visibility; however, even with this type of relationship, gaps remain between warehousing and transportation. These gaps can increase management overhead and limit the ability to exploit synergies between the two operations. They can be eliminated if the LLC is directly responsible for warehouse operations.

Advantages of LLP and DC integration

When an LLP manages warehouse operations, supply chain teams have a single interface to transportation and warehouse management systems, work practices are standardized across the supply chain, and resources can be managed more holistically. This provides the following benefits:

1. True all-through visibility

The term end-to-end visibility is often used to refer to visibility from the warehouse dock to the end customer. But end-to-end visibility should mean visibility across the entire supply chain, including inbound transportation, receiving, inventory management, shipping, and outbound transportation. DHL Supply Chain uses the MySupplyChain platform to provide this level of visibility.

MySupplyChain provides a single point of access for warehouse and transportation data and tools. It provides near-real-time visibility of warehouse inventory and allows tracking of orders across the network. It can be used to remotely manage inventory, monitor supply chain performance, analyze data to optimize operations, and streamline supply chain reporting. The platform also provides public access for customers to track their orders. A visibility and analytics platform like MySupplyChain is critical to realizing the benefits of an LLP relationship.

2. Optimized management

If separate partners manage transportation and warehousing, the organization should combine the two operations. This can be time-consuming and inefficient. It also taxes the IT resources responsible for setting up integrations with various trading partners. When an LLP manages warehouses, this burden is removed as the organization integrates with and manages only one partner. It also facilitates a more holistic approach to continuous improvement, as gaps between the two operations can be more easily identified and addressed through regular performance reviews that cover both operations.

3. Accountability of one party

Having one partner ensures that there are no conflicts between partners when problems arise. One party is responsible for end-to-end, timely and complete fulfillment and delivery, as well as order visibility.

4. Improved operations and resource utilization

Having a single partner ensures that both TMS and WMS are using the same set of master data, increasing confidence that transportation capacity can be matched to inventory. By taking a holistic view of operations, an LLP can better manage resources to reduce shipping and receiving bottlenecks during peak periods. There may also be opportunities to redirect investments to reduce costs. Changing warehouse loading processes, for example, can save transportation by increasing capacity utilization.

5. Improved agility

Under the management of a single partner, the supply chain functions as a cohesive single process that allows for faster response to market or business changes. For organizations considering divesting a business unit, having one party responsible for that unit’s supply chain greatly simplifies the process.

The necessary capabilities

One of the reasons that supply chain integration does not receive as much attention as other optimization strategies—even though it can often be of greater benefit—is that very few logistics providers have the scope and scale to execute this strategy effectively. . Here’s what to look for when considering a partner to integrate your supply chain operations:

1. Deep interdisciplinary experience

Acting as a single supply chain partner, it is not enough to have well-developed solutions in one area of ​​the supply chain. Logistics partners acting as LLPs and warehouse managers should have fully developed and mature offerings across the full spectrum of supply chain solutions, including design, warehousing, packaging and transportation.

2. Advanced technological knowledge
You need a partner that is comfortable working with best-in-class warehouse and transportation management systems, has deep experience in system and operator integration, and an easy-to-use platform for accessing centralized data. You’ll also need a partner that actively accelerates digitization in the warehouse by implementing productivity-enhancing technologies like autonomous vehicles and robotics.

3. Mature OMS
Some of the benefits of integration will be lost if the chosen partner does not have a well-defined and consistently implemented Operations Management System (OMS) that covers warehousing and transportation. OMS provides a framework for LLPs to translate supply chain objectives into efficient processes that support predictability and continuous improvement. By focusing on consistent standards, behavior change, and continuous management, OMS ensures reduced variability and maximized productivity.

4. Scale and reach
Make sure your partner has the resources to adapt to your needs and the ability to manage partners and operators worldwide as needed. When managing warehouse operations, especially in industries such as e-commerce, the ability to quickly and efficiently scale the workforce using established processes is vital to meet peak demands.

We take the next step

Moving to an LLP represents a significant evolution in supply chain management and may not be right for every organization. But for those implementing supplier consolidation initiatives, overwhelmed by the challenge of managing multiple partners, considering significant business changes, or seeking to reduce supply chain complexity, this can be a business-changing solution. The first step is a supply chain audit to help determine if this type of relationship is right for your organization.

To find out how DHL Supply Chain can unlock the value of supply chain integration as your LLP, visit www.dhl.com/supplychain/transportation