RETHINKING YOUR SUPPLY CHAIN? START WITH THE WAREHOUSE

Forte

Category: Warehouse Management | Supply Chain
Source:
Supply Chain Brain

When supply-chain problems arise — such as short inventories or slow deliveries — fingers often point to the warehouse.

Especially amid the pandemic, the modernizing operation is a requirement for maximum productivity and happy customers, and automated solutions are a good place to start.

Staff Productivity

Collaborative robots (cobots) are engineered to complete repetitive and time-consuming tasks like picking and packing and bringing these bots into the warehouse makes it possible for employees to shift attention to tasks that have more significant business impact.

Similarly, augmented reality (AR) can make picking faster and easier for workers by adding a new dimension to the process. Head-mounted displays or smart glasses show the most direct route to the product or point out the exact location of the item.

When integrated with a warehouse management system (WMS) and order management system (OMS), these technologies also allow businesses to forecast, analyze and act upon fluctuating demand, such as seasonal- or global pandemic-induced surges.

Maximizing Space 

Even with the best tools, and inefficient work environment will delay the payoff. Warehouse space is known for being very limited — an issue magnified by COVID-19. New solutions are helping businesses make the most of their space.

For example, as research and development into tools such as robotic pickers or movable shelving increases, businesses may soon be able to make use of empty vertical space that was previously inaccessible to the human workforce. And investment in drones can help mega-warehouse employees work more efficiently, without spending endless hours trekking up and down the aisles. Utilizing technology that can bring the product to the picker, rather than the other way around, will greatly reduce the time required to fill orders. This means more can be fulfilled within the same time and without adding an extra headcount.

On the software side, paying attention to the insights learned from OMS and WMS technologies allows businesses to ensure that shelves are not stacked with items that are no longer popular with consumers, and that forecasting information is used when deciding which goods to order and in which quantities, so valuable shelf space is not wasted. No one could have predicted the shortages we have experienced during COVID-19, but in the future, we will be able to use what we have learned from the pandemic to more accurately predict what consumers will want in advance of future outbreaks.

The bottom line is that the warehouse is integral to driving efficiency in the supply chain, and businesses must invest in technology now to maximize future productivity.

Forte Warehouse Solutions. Bridging the Software Gap.  For more information contact us here.

 

 

 

 

 

 

FIVE KEY PROVISIONS YOU SHOULD HAVE IN YOUR SUPPLY-CHAIN CONTRACTS

Forte Supply Chain Consulting

“Contracts set expectations, guide the resolution of disputes, and outline how and when the parties’ obligations end. Getting it right is crucial.”

Smart partnerships and relationship management are critical to every supply strategy, but the supply-chain contract is what counts when questions arise, or things go wrong. Contracts set expectations, guide the resolution of disputes, and outline how and when the parties’ obligations end. Getting it right is crucial.

The exact provisions of supply-chain contracts will vary depending on the business and your industry. But certain provisions should rarely if ever, be excluded. Following are five key clauses that should be staples of supply-chain contracts.

  1. Protect your confidential information and company know-how. This helps you to maintain your competitive advantages. Achieving this in practice can be complicated since it requires both practical and contractual protection. These are the features of strong confidential information protection in a supply-chain contract:

Clearly define confidential information. Be sure to carefully detail exactly what comprises confidential information in your supplier contract. Consider including financial information, product pricing, business projections, designs, composites, molds, tools, equipment, details of other suppliers, and any specialized processes, among other things.

Limit access to any confidential information. This clause should outline the practical steps your supplier must take to prevent staff (or anyone else, including third-party vendors and subcontractors) from accessing your confidential information and know-how. These steps might include:

  • Physical barriers
  • Restricted access to digital assets
  • Security measures
  • Having third parties agree to the confidentiality provision in your agreement (or similar confidentiality requirements)
  • Assigning responsibility for maintaining confidentiality to a particular member of the supplier’s team
  • Ensuring that confidential information will be returned when the contract ends.

Detail who owns any intellectual property developed. Your supplier may develop I.P. while working on your project. The contract outlining your agreement should clearly assign rights to the I.P. to your company if you wish to claim ownership of it.

Outline auditing procedures. Best practice means putting in effort far beyond the wording of the contract. You should have the ability to visit your suppliers’ sites and review their records to ensure the measures required are in place and being adhered to. Your contract should outline how and when these audits may take place.

  1. Detail your materials and quality requirements. Diverse supply chains help to meet consumer expectations, grow profits, innovate, and stay competitive. They also make it more cumbersome to manage and guarantee quality. Clear and concise supplier contracts can help to mitigate materials and quality issues.

Inclusion of a clause that details exact materials requirements can prevent suppliers from switching to lower-quality materials. You should outline the type, color, shape, size, weight, and acceptable sources of the supplies.

As for quality requirements, your contract should outline a firm minimum standard for quality. You should specify the purpose of the product, and detail that the products delivered must be fit for the purpose. Any quality-assurance tests required should be clear, as should the consequences of failing to meet the required standards.

  1. Protect your I.P. from counterfeits. The intellectual property law in any jurisdiction where you operate offers some protection from counterfeits if you register your I.P. there. This protection can be amplified by liquidated damages provisions, which offer strong incentives for suppliers to protect your I.P., and provision for immediate injunctive relief where it is being infringed.

Liquidated damages provisions outline that, where your I.P. is being misused, sold, or “held hostage” during a dispute or following termination of the contract, your supplier will be required to pay you a predetermined sum of money.

An injunctive relief provision gives you the ability to legally require your supplier to stop doing whatever it is they’re doing that contravenes the terms of your contract. In the context of I.P., your supplier would immediately need to stop selling counterfeit products.

Non-approved third-party sales should also be covered in the liquidated damages clause. This prevents your supplier from selling off any excess products or products you reject. You can also achieve this by requiring your supplier to provide third-party certification of destruction or return your products to you.

  1. Include conditions to promote contractual performance. The importance of carefully drafted performance clauses in your supply-chain contracts has never been more apparent than throughout the pandemic. Court appearances, and the negotiation of settlements relating to non-performance during the pandemic, will continue for years to come.

Provisions that promote performance can be beneficial in these cases. These include:

  • Performance guarantees from a parent company
  • Financial penalties for delays
  • Termination clauses for non-performance
  • Suspension or termination clauses for delayed performance
  • Escrow arrangements
  • Performance bonds
  • Rights that allow another supplier to “step in” where the supplier has failed to deliver
  1. Plan for the end of your contract. Supply-chain contracts should outline the circumstances under which parties can terminate a contract, and what happens once that termination occurs. You should be clear about what is owed to whom, and what steps must be taken both before and following termination.

Clear obligations from the outset minimize the risk of a dispute arising in the first place. If termination occurs, it sets clear expectations for what is to follow — again, limiting the scope of any dispute.

With these contractual protections and strong, strategic supply-chain relationships, you can better position your company for success in the future.

Forte Supply Chain Consulting Bridging the Software Gap.  For more information contact us here.

HOW TO TURN YOUR SUPPLY CHAIN INTO A PROFIT CENTRE

Forte Supply Chain Consulting

Category: Warehouse Management System | Supply Chain
Source: Supply Chain Brain

Supply-chain excellence enhances shareholder value because it controls the firm’s heartbeat — the fundamental flow of materials and information from suppliers to customers. But accomplishing that goal is not easy.

In traditional organizations, the supply chain absorbs 60% to 70% percent of the cost of inventory levels. It is time to adopt a different vision, one that’s suitable to the realities of the new era, draws on capabilities from around the world, improves resilience, and reduces risk from future disruptions. Supply chain leaders need to invite fresh perspectives that enable their organizations to respond quickly to global change.

In the wake of the COVID-19 pandemic, turning supply-chain operations from cost centers to profit centers was the last thing anyone thought about. Customers were looking to retailers to provide items that barely existed in the weeks before. In response, suppliers had to make critical choices about the right products, as well as the best way to shorten lead times and cut production costs.

Companies might be tempted to adopt conservative strategies during a crisis of such proportions, but that is a strategical error. To respond to the marketplace with flexibility and speed, organizations should embrace a start-up’s level of energy, hunger, agility, and aggressiveness.

Here are six tactics that supply chains can employ in the push to become profit centers.

Dynamic pricing. Dynamic pricing strategy models can produce a 5% to 10% increase in profit margins. This comes as a result of attaching unique, responsive prices to customer segments that move along separate demand curves, even for the same product or service.

B2B e-commerce. The e-commerce platform Sana finds that most organizations have “only 20% visibility into their supply chains, compared to the 70% to 90% needed to address key points of volatility where revenue and costs are at risk.” B2B e-commerce helps organizations meet business goals by enabling upselling and cross-selling, creating opportunities for additional revenue, and ultimately improving the bottom line.

A warehouse management system. A WMS allows companies to track every unit down to the lowest level of detail, resulting in improved order fulfillment and inventory accuracy. It makes inventory management faster, easier, and more efficient. A successful WMS implementation can provide an 18- to 24-month return on investment, with 5% to 10% in ongoing annual benefits. It can improve order fill rates, reduce freight, and labor costs, open alternative distribution channels, and lower work-in-process and finished-goods inventories.

Distinctive capabilities over competitive necessities. Create a competitive advantage by delivering value to customers in ways that competitors cannot match. Each successful company bases its strategic value proposition on its distinctive capabilities. Examples in the supply-chain arena include Amazon.com Inc., Apple Inc., McDonald’s Corp., and Starbucks Corp. Amazon’s supply chain embraces technology. Apple’s success is attributed to the strong relationships it has with suppliers. McDonald’s uses a “win-win” strategy based on mutual, positive outcomes for employees, franchisees, and their suppliers. Starbucks relies on a vertically integrated supply-chain strategy which traces each cup of coffee from the grower to the brew it sells to consumers.

Customer-centric over profit-centric. “The purpose of a business is to create a customer.” To ensure long-term business growth and success, supply-chain management should place customers at the center of a company’s strategy.

Improve the customer experience using personalization. Nike Inc. begins with the media wall. As customers’ smartphones connect to free, in-store Wi-Fi and the company’s app, Nike posts personalized content directly to the wall, including information on stock availability, recently searched-for items, push notifications, and tailored offers.

Create purpose-driven supply-chain ecosystems. Johnson & Johnson kept its supply chain running smoothly during the 2020 pandemic by capitalizing on a diverse pool of suppliers. The company has transformed its supply chain to ensure end-to-end traceability with the internet of things sensors, cloud computing, and advanced analytics driven by artificial intelligence.

Embrace a business-led digital transformation journey. Intel Corp.’s recent supply-chain data transformation has created a $208 million “sense-and-respond” platform, which provides self-service analysis to enable decision-making, improves data quality, and makes possible real-time analytics. Integrating these tactics creates a customer-centric operation that can take a business to the next level.

Supplier partnerships. The relationships that drive supply-chain success are human to human. Supply chains that are agile, adaptable, and aligned provide companies with a sustainable competitive advantage. For firms to meet newer demands, they need a strong supplier base built on trust and long-term relationships. Companies must be prepared to keep changing networks, and, instead of looking out for their interests alone, take responsibility for the entire chain. No technologies can do those things; only supply-chain leaders can make them happen. Suppliers are as passionate about your business as you are; they possess valuable expertise, insights, and ideas.

The supply-chain function is no longer just the part of the organization that buys parts and arranges for deliveries. Supply-chain excellence depends on cross-functional alignment, with the common goal of providing the highest availability of product at the lowest cost. The result is greater profitability and enhanced shareholder value.

Forte Supply Chain Consultants. Bridging the Software Gap.  For more information contact us here.

 

 

 

 

STOP DELAYING YOUR LOGISTICS SYSTEM BELONG IN THE CLOUD

Forte Supply Chain Consulting

Category: Cloud | Data | Logistics
Source: Supply Chain Brain

“Modernizing to the cloud allows logistics providers to scale horizontally, adapt to changes on-demand in real-time, more accurately track assets, and provide greater accuracy than traditional, manually tracked paper and pen systems.”

When we think of the logistics industry and the structure needed to make modern supply chains run smoothly, we often overlook the importance of the computing technology used. As the importance of our global supply chains is thrust into the spotlight during the pandemic, it may be surprising that many of the biggest players in the logistics industry today still run on outdated mainframe systems that can hinder their overall ability to drive agility and improve order accuracy — and this oversight can cost them in the long run.

As more and more competitors move into the logistics space, companies are forced to compete for customers, ultimately adding more weight to the importance of the tools that they utilize — especially as many of today’s customers accept no excuses for delayed shipments. Some of these companies utilize edge-in modernization and digitization strategies that only help to modernize the front-end pieces of their technologies to improve their overall customer experience, but the ones that will be most successful in the long term will be those that fully transition their legacy systems to the cloud.

Modernizing to the cloud allows logistics providers to scale horizontally, adapt to changes on-demand in real-time, more accurately track assets, and provide greater accuracy than traditional, manually tracked paper and pen systems. Whether it is freight shipments on tankers, trains, and planes or ground transportation en-route directly to the consumer, adopting cloud technology can keep companies agile by centralizing essential data and enabling them to reorganize wherever it is needed most.

The Trouble With Legacy Systems

Systems that continue to rely on mainframes hinder an organization’s ability to move to cloud-based applications — ultimately reducing their ability to become more agile and innovative, scale appropriately and maintain a competitive edge against other players in the space. In addition, maintaining these systems costs companies much more money in the long term due to a mix of factors, including a limited pool of talent and an even smaller pool of skilled developers that can assist with updating and maintaining these systems, and other budgetary concerns. This is because legacy systems often include expensive licensing fees that were bundled in with the original code, leaving companies to constantly renegotiate these agreements, which can be especially costly and time-consuming. As a result, getting off these mainframes should be the first step for companies undergoing a digital transformation.

As today’s business demands continue to shift, logistics companies running on their legacy systems will continue to hold back as technology continues to develop and become even more advanced.

Cross-Sector Setbacks 

Continuing to avoid the issues driven by legacy systems can seem like a logical business decision when aiming to cut costs, but their hidden issues can build up into much larger challenges over time — and these issues will come to light sooner rather than later. In fact, earlier this year we saw this play out in the government sector during the most stressful moments of the COVID-19 pandemic. Most states within the U.S. still utilize mainframes to administer necessary services, and despite their failing technologies, continue to put off modernizing to the cloud. Widespread panic ensued after many states realized their outdated systems could not handle the influx of unemployment benefits requests caused by so many sudden job losses — knocking these services offline entirely and leaving states scrambling to find the necessary solutions to repair their broken technologies.

Logistics companies are vulnerable to parallel scenarios, especially in the face of so much uncertainty surrounding traditional delivery systems and various travel and import restrictions imposed on certain regions. As a result, the ability to adapt quickly has never been more important for the logistics industry — but if organizations continue to delay their modernizations to the cloud, their overall flexibility will continue to be negatively impacted down the road.

A Modernization Strategy

Many logistics companies are fearful of the “rip and replace” method of modernizing legacy systems, also known as “rearchitecting” or “re-engineering”, where companies do away with their legacy systems entirely and then try to recreate their wealth of functionality with newly written applications. This method not only requires significant financial resources and manpower but the potential for lost business intelligence, downtime for customers, and the steep price tags that come with this strategy eliminates its benefits. In fact, the failure rate of these kinds of projects is as high as 70% according to a study by Deloitte LLP, with consequences of billions of dollars lost. Many companies are also unaware that there are alternative options for automating the modernization process. In fact, conducting a deep, automated assessment with qualified professionals before beginning a project for IT modernization can alleviate the anxiety that comes with change and ensure companies are pursuing the best-fit strategy for their needs.

Following a system assessment, setting — and sticking to — a detailed timeline for modernization is one of the most important aspects of a project and is vital to ensuring businesses successfully complete it. The disconnect between aspirations and execution can be tied back to fear, which means that fear causes more than just discomfort — it is costing companies major long-term savings.

For organizations looking to make a change, fear has no place in their long-term IT goals. Rathercommitting to action and identifying a modernization strategy that is free of the risk of downtime for their specific systems is essential for confident project management.

When pursuing a modernization project, most organizations follow one of four following strategies when beginning the data migration off their mainframe:

Rehosting: In this process, companies get rid of their outdated mainframes by transferring their unchanged procedural codebases and primary functions into a new computing environment. This ensures that companies can retain key legacy knowledge from within their existing systems while ensuring they can thrive in a fast-paced business environment.

Rewriting: In some cases, starting over in a modern environment is the best approach for a company. In the rewriting process, professional developers manually re-create the existing legacy system and its applications within a newer, more optimal environment for a business function. However, this approach holds a high risk of failure and tends to hold a significantly higher price point and longer project duration than other strategies.

Automated refactoring: This approach involves IT experts migrating a system’s procedural codebases to modern, object-oriented languages using specialized tools crafted specifically for the job. If a company needs immediate cloud migration and cloud-ready application stacks, this tends to be the most effective strategy.

System replacement: When companies pursue a system replacement, this approach is often viewed as an emergency exit, as the entirety of the legacy system and its applications are taken offline and out of service. The system is then replaced with off-the-shelf software solutions from third-party vendors, which are expensive and not designed to meet each company’s unique needs.

Moving away from legacy mainframes to the cloud is essential for the evolving logistics industry as they juggle more responsibility and stricter customer demands than ever before. However, learning to manage various cloud solutions at once will give companies an edge as more and more competitors start to move into the logistics and shipping space. The world’s logistics industry is counted on to change lives and keep our society running smoothly and the best way to ensure quality service and continued growth are to invest in cloud infrastructure.

Forte Warehouse Solutions. Bridging the Software Gap.  For more information contact us here.

 

HOW AI IS TRANSFORMING GLOBAL SUPPLY CHAINS

Forte Supply Chain Consulting

Category: AI | Data Technology | Supply Chain
Source: Supply Chain Brain

“Fortunately, technology has advanced to the point where it can help organizations more effectively manage their global supply chains without the need for additional labor, physical space, or expertise.”

The modern supply chain is an intricate animal that incorporates many different organizations, people, processes, and technologies. Add the word “global” to the equation, and those complexities become even more difficult to manage. Moreover, with disruptions like the global pandemic wreaking havoc on the world’s supply chains, the need to balance resiliency with profitability has become mandatory for most organizations.

Fortunately, technology has advanced to the point where it can help organizations more effectively manage their global supply chains without the need for additional labor, physical space, or expertise. From predictive to prescriptive, from decision support to decision automation, artificial intelligence is transforming supply-chain activities in new ways.

Performing tasks in a manner like human brains, AI-enabled technology can sense and respond to specific features within its environment. It can learn to solve problems such as delivery delays and weather-related disruptions in unexpected ways, recognizing the nuances of speech and exhibiting some form of human-like creativity.

The Perfect Blend

As companies deploy new solutions that both address current supply-chain challenges and prepare those intricate networks for the post-COVID-19 world, AI is taking center stage in many of these implementations. From driverless trucks to delivery route optimization to demand forecasting, AI is being applied in many aspects of the supply chain. The transformation has been accelerated by the pandemic, as companies deploy new technologies within the span of months to meet the new demands of commerce.

Widely expected to transform supply-chain operations over the next five years, AI processes the wealth of data generated by operations, enabling quality control, predictive maintenance, and supply-chain optimization. In recent years, all manner of cloud-based applications for enterprise resource planning (ERP), manufacturing execution systems (MES), and warehouse management systems (WMS) have been imbued with AI and analytics capabilities.

Using AI, companies can make smart predictions about future needs for raw materials, work-in-progress components, and demand for final products. AI also helps manufacturers to execute the vision of the smart factory.

Measuring the Benefits

As an enabling technology, AI also provides the foundation for autonomous planning, predicated on internal as well as external data from suppliers, customers, demographics, and broader economic indicators. In addition, predictive maintenance analyses the historical performance data of machines to forecast when one is likely to fail, thereby limiting time out of service and identifying the root cause of the problem.

“By combining predictive AI with smart human oversight and decision making,” Here Technologies points out, “cognitive-era technologies can transform the supply chain and day-to-day distribution operations.”

According to statistics 61% of executives report decreased costs and 53% report increased revenues as a direct result of introducing AI into their supply chains. Lower inventory-carrying costs, inventory reductions of up to 75%, and lower transportation and labor costs are among the biggest areas of savings. In today’s consumer-driven sales environment, AI also helps ensure that the right products get to the right place at the right time — the modern-day “Holy Grail” for manufacturers, distributors, and retailers alike.

A Silent Partner

Much like a silent business partner who works in the background, supporting the organization without personal recognition, AI is a stealthy technology partner that does its job without much prompting. In fact, many companies might not even realize they are already using AI to forecast product demand, run their transportation activities, or manage customer communications. That is because technology vendors have been steadily blending more AI into their solutions over the last few years — a trend that will continue in 2021 and beyond.

For now, just 12% of supply-chain professionals say their organizations are deploying AI as a supply-chain management tool. Yet the market continues to grow and is expected to reach $10.1 billion by 2025. The global pandemic may push more of these companies to explore their options, at a time when more technology vendors are adding AI to their supply-chain management platforms.

With AI, companies can optimize the wealth of data that exists within their operations, and use that knowledge to work smarter, better, and faster. This in turn allows them to future-proof their supply chains, improve responsiveness, minimize risk, deliver a better customer experience, and increase visibility across the end-to-end supply chain. Such big wins will help companies around the world to build more resilient, agile supply chains that thrive in any business condition.

Forte Supply Chain Consulting Bridging the Software Gap.  For more information contact us here.