How far software can help you in managing transportation costs and optimise delivery time/cost?

Ever increasing customer expectations, supply chain becoming more and more complex driven by globalization, increased volatility and shrinking margins have put much higher pressure on managing your shipping costs and time. This, when combines with shortages of drivers, trucks, railcars, ocean slots, ports and escalating fuel costs, becomes a nightmare for a supply chain executive.
A lot of organizations have already embraced technology to get better visibility into their transportation budget and operations. It has helped them in keeping the transportation costs checked and manage consolidation & globalization of outsourcing suppliers. But, the question I raised in one of the recent discussions at a supply chain forum, that how far software alone can help you in this regard? Is the software enough to take out of all operational issues or you will need to transform the practices also in your organizations to reach the goal? Of course, there are no prizes for guessing that both the approaches are required but what should take precedence? Can there be strategy around this?
While, the software will promise a lot like providing logistical processes control and visibility, optimising planning cycles using real time data, shortening of time duration of planning and fast adapting to changing regulations but most of the promises will hover around your capability to exploit the software using process discipline and providing right data set as the input to the software. For example, one of the CIOs shared that they deployed the best available solution for transportation management but still there was no improvement in on-time deliveries (in-fact it went down for first 3 months) or hardly any improvement in load optimization. After lot of drill down, they found that the sales team was not following any process for entering orders – means they used to keep on entering orders in the ERP but lot of these orders were not to be fulfilled ultimately. It means, there were a large number of cancellations in reality and these were not flowing to ERP and hence the transportation management solution was planning for those orders also which were not to be shipped. Due to this, the logistics team had to do lot of rework in re-planning after taking out the orders manually and the results of load optimization were also impacted. The sales team was adamant that they will not change their process just to meet process of the software and kept on working the same way. Normally, the CEOs will never bother much about the software and will always thing that it is the job of the IT Team to ensure the software works as per business needs and this organization was no different. Without looking at the reality, and not listening to the CIO, the CEO branded the software solution as useless and a liability. It is at this time, that the CIO had to escalate even beyond CEO and a consulting company was hired to really clear the mess.
After spending 3 months and consuming lot of organization’s resources and money, the consulting company gave the same recommendations and sales team had to change the process in such a way that they will cancel the orders which are actually cancelled by customers and rest of the orders which are not fulfilled even after 2 months, will be cancelled by ERP itself. The results after this change were humungous. Within 4 months, the on-time deliveries were improved by 14%, they were able to reduce number of planners by 20% and allocated them to other areas, cost per tonne got reduced between 10 – 15% and host of other non-tangible benefits were achieved. The software is same but a small tweak in process became a game changer for them.
It may not be the case with all of us but the point that came out of this story was software alone can do nothing – it will only provide you capabilities to do certain automations and bring visibility but ensuring that input going to the software is as good as the software, will bring the desired change.

No comments:

Post a Comment

Your thoughts are welcome