The Supply Chain Puzzle: Piecing Together Efficiency

Uncover the intricate world of supply chains as we journey through the essential components that drive efficiency and resilience. In this episode, we dissect the challenges businesses face while navigating the complexities of logistics and how emerging technologies shape effective supply chain systems.

Discover how communication plays a key role in building customer trust from order placement to delivery. Gain insights on balancing risk and costs while managing inventory effectively—essential knowledge for any business leader. We delve into the urgent need for dual and multi-sourcing strategies amidst today’s unpredictable global landscape, emphasizing that flexibility can be a game-changer.

As reverse logistics continues to present challenges in the e-commerce sector, we explore the systems that top companies successfully employ to streamline returns, respecting both their bottom line and customer satisfaction. The discussion underscores the growing necessity for new skill sets in the supply chain workforce, highlighting not only how individuals can adapt but also why businesses must invest in their teams' development.

Let’s take a closer look at sustainability strategies in delivery, the importance of enhancing partnerships, and how technological advancements open new doors in supply chain management. Subscribe now, engage with us, and become empowered to tackle these modern supply chain complexities head-on!

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Chapters

• 10:13 Supply Chain Advantage Explained
• 44:16 The Backbone of Fulfillment
• 1:02:18 Balancing Risk, Cost, and Uncertainty
• 1:49:07 From Order to Delivery: The Supply Chain Journey
• 11:12:38 Facing Tariff Disruptions and Risks
• 19:33:31 The Future Skills for Supply Chain Success

Transcript

Tony Hines: 0:06

Hello, tony Hines. Here You're listening to the Chain Reaction Podcast. All about supply chain advantage. Great episode coming your way in just a moment. We're looking at supply chain efficiency and how technology can help Stick around, stay tuned, stay informed.

Tony Hines: 0:32

Chain Reaction. Much of what happens in supply chains is to do with fulfillment. It's about getting the goods to the customer and doing that on time, complete, without problem, doing it smoothly, effectively and, of course, from the supply point of view, doing it efficiently. And that means using the best possible technology to do that. And we have to balance uncertainty, risk, risk and cost. And we have to make sure that our supply chains are resilient. And ensuring resilience depends on managing inventory, optimizing that inventory. It demands that we employ technologies which enable us to deliver on time. So, whether that's planning software to route the orders and routing those orders is important, making plans for every stage in the delivery process, right from when it's manufactured or arrives at a particular port of entry through to the final customer. And that's what we mean by the chain, the final customer in the chain. It's the end-to-end supply chain that we try to manage effectively through that process.

Tony Hines: 1:56

Of course, it all begins with an order and when we have the order, that starts a chain of events, a supply chain of events. The first thing that happens is the order comes in. We check the availability of inventory, we match inventory to the order, we pick, pack, process, dispatch and deliver. And then there are a range of choices. We've probably already planned for how we're going to deliver these items when we receive orders, but we can't be sure where the order's, from, how many, what the quantity is and what the delivery date is. And there's also the issue of making sure that we get paid for the goods that have been ordered. And so we'll have payment processes in place, with checks on the credit worthiness of the customer to ensure that we are going to get paid. Now, if you put yourself in the place of being the customer, you very quickly realize the difference that good systems, good processes and efficient delivery make to your experience as a customer of a particular company that has an efficient and effective supply chain. You will know immediately when you go up there.

Tony Hines: 3:18

Communication is the big ticket item. It's the one thing that sets the company that you deal with apart from the rest. So you go on the system, you search for a product, you find the product you want, you place it in your basket and then you check out the specification of that product to see if it meets your requirements and if it does, does you place an order. And at the time you place the order, depending on the type of account that you have, you'll either get credit until the order is received and the payment terms that you've been given will show up on the invoice. It's usually made clear on the website as you proceed through the order process what the price is, what the delivery cost will be, if there is any, what the payment terms are and how to pay. That will probably be shown throughout the order process, but the key thing is the thing that gives you confidence after you place an order. That, of course, is assuming that the product and specification met your requirements and the price met the requirements too. But the one thing that's clear is you will receive a communication immediately to tell you that your order is placed, and once you get that communication, that gives you confidence that you're in the system. It also gives you details of how to undo the order, in other words, how to cancel the order before dispatch if you need to. So if in the time between placing an order you find another product that meets your needs and you suddenly think I don't need that anymore. I need to cancel that order. You don't want to have to search around for how to do that and find it incredibly hard to cancel the previous order. Otherwise you'll have to wait for delivery and return at the point of delivery, which wastes everybody's time. So it's important that that information is up there and it's clear to the person making the order.

Tony Hines: 5:29

But immediately you place the order, you might receive a communication that says we've checked availability. The stock is available. Then it might say that it's been picked, packed and ready for delivery. Then you might get a further communication that says it's dispatched or it's due for delivery. Then you might get a further communication that says it's dispatched or it's due for dispatch, and then you'll be told when it is dispatched and how it's travelling to the destination address that you specified. And you'll be able to check with many retailers or with many businesses operating a slick system where your delivery is up to at any point in time between the dispatch date and arrival at your destination. And that's what sets the great companies apart from the good, average and less good companies who operate supply chain processors, of course, in the background, they will have checked out your credit. If they don't deal with you already, credit processors will have taken place through the payment process systems and they'll have estimated the risk that they're taking by dealing with you. Or they might ask for payment up front, in which case might be a credit card or a direct draft, but whatever it is, it will have been checked, approved and processed efficiently.

Tony Hines: 7:02

There are many things, of course, that make the supply chain complex, and it starts right at the order processing. If you haven't got proper systems set up, if you haven't got technology to help to make the delivery process smooth, if the customer doesn't receive regular communications which again technology can help with receive regular communications which again technology can help with and take the laborious task of doing those things manually away from the organization, it's just done automatically through a system that works like clockwork. From the supply side, of course, what can you do? What sort of levers do you have? Can you flip a switch to make things better in your supply chain? Well, to some extent you can do. It begins with the kind of networks you have, and that comes down to sourcing, manufacturing arrangements, the manufacturing hubs you have access to, the capacity, the inventory management systems, the range of products that you deal with and the lifecycle processes involved and, of course, how you can collaborate to leverage value in the supply chain All important to minimise risk, reduce cost, make the supply chain efficient and resilient so it's not taken apart by shocks and disruptions. Let's begin with the sourcing network.

Tony Hines: 8:29

We often think about whether we can source from a single supplier or whether we need dual sourcing or multi-sourcing, and of course, that isn't straightforward. You might recall the conversation I had some time ago with Bindi Vakil, who was the CEO of Resolink, and she was talking about risk at that particular time and she said well, do you know what? It isn't always possible to dual source, it isn't always possible to multi-source, and yet that's put forward as this yep, everyone can do this. Well, you might try and look for dual sourcing or multi-sourcing to spread risk in the system, but it won't always be possible. But nevertheless, we can search for opportunity. It's seeking out the opportunity that works for you. It won't work for everybody, but it might work for you. You might look at the way you consider things in terms of where you're going to source from. Are you going to do that globally, regionally or locally, and that might determine where you set up your manufacturing hubs. Are they going to be near shore, far shore, on shore? And again, that's not a simple decision. It depends where your markets are, where you locate those manufacturing hubs. And then, of course, if we are a global company, we have to consider the complexities of tariffs, free trade agreements and any foreign trade zones that might be available.

Tony Hines: 10:05

And again, trade management has moved right up the agenda with the new administration in the United States because President Trump likes tariffs, and that's having an impact not just on the United States but it's having an impact everywhere as people decide whether they're going to put tariffs on the US in retaliation for the tariffs placed on them. And, of course, the role of the WTO, the World Trade Organization, seems to be somewhat diminished presently to resolve tariff disputes. So how are those tariff disputes all going to get resolved? Well, it could escalate into a massive trade war and you need to be prepared in your organization, in your supply chain, to have strategies and levers to deal with those disruptions that could occur from trade tariffs. And I've got a number of episodes out talking about the from trade tariffs. And I've got a number of episodes out, talking about the impact of tariffs, and I explain why tariffs are not really a good thing. They cause friction in supply chains, they can cause disruption and they can actually lower the quantity of trade between various nations.

Tony Hines: 11:17

And then there's the issue of how much buffer stock will you need to overcome the disruptions from tariffs and other natural disasters or man-made or people-made episodes through wars? How can you overcome those sorts of disruptions? You have to have plans in place to think about how you're going to do those things. You hope, of course, in many of the plans that you make, that you don't have to go plans in place to think about how you're going to do those things. You hope, of course, in many of the plans that you make, that you don't have to go to the plan because things go smoothly in any case.

Tony Hines: 11:49

There's also the idea of product portfolios, and we can think back when people talk about risk and resilience portfolios. This idea that you can spread that risk by having a portfolio of products has long been a management wisdom. It's about managing the lifecycle. It's about managing the product range. It's about making sure that you've got things in high demand when others are in low demand so that you balance out the risks that you face as a supply organisation, and, of course, regular risk assessments for that purpose are important. And then there's all the things we can do to underpin the supply chain, what we call the supply chain ecosystem, where we're looking at things like the ability to share data amongst supply chain partners, that we have systems in place that know what's happening as it happens in real time, but also things that can sense demand. So if the demand for one product goes up, the system says that's going up, and if that's going up, there's going to be more demand for these items in your supply chain. It might be components, it might be semi-manufactured products, it might be complementary goods, but it will give a signal that something else is going to be in demand as a result of a demand for a main product item.

Tony Hines: 13:23

And then there's how can you, amongst your network of partnerships that you collaborate with, spread the risk across the chain? So if you are having difficulty getting hold of particular parts or components, having difficulty getting hold of particular parts or components, can somebody else in the chain respond and step up to the plate to provide those goods to you in your moment of need? And that's about having the right types of partnerships in place, and always the aim must be to make sure that you can continue to do business, no matter how volatile and what the disruptions are. You can do business by having good systems, good processes in place and, of course, the appropriate technology that delivers. And that involves investment in the infrastructure that you have. Now, when we talk about investment in this sense, it's not just the investment in plans, equipment, locations and so on. It's investment in your collaborators, in your partnerships, and making sure that those partnerships are the right partnerships for your organisation at this time Now.

Tony Hines: 14:33

When it comes to complexity, of course we've said that technology plays a really important part, and when we started off the episode, we said that logistics and fulfilment was at the heart of getting goods to the right place at the right time, the right price in not so many words. In not so many words. But the other part of complexity, too, is having sustainability in our sites when we organise our supply chains, and optimising technology can help us reduce idling time on vehicles, lower fuel consumption, ensure that we can employ dynamic routing so that trucks can take the most efficient way to a destination, based on real-time traffic, weather, roadworks, etc. And minimize those environmental impacts. We can also shift deliveries to intermodal combining truck, rail, ocean freight, barge and even drones to get that efficient delivery to the customer. If we take rail, for instance, rail can reduce greenhouse gas emissions by 75%. That's per tonne per mile.

Tony Hines: 15:53

And businesses have to be exploring these opportunities that now exist that weren't available just a few years back. We didn't have all the satellite technology 20 years ago or the software in place, in other words, the ecosystem, the infrastructure, that technology has developed over that period of time and it's far more efficient today. We can look at alternative fuels. We can reduce those empty mile trips Backhauling was a great invention where we don't run trucks empty on the back route and we have to do that with shipping and every other form of transport. Make sure that the two-way journey is fully occupied to improve efficiency and reduce the environmental impact. And we also have to improve that last mile delivery. Making sure that we can move things between hubs is incredibly easy compared to the last mile. The last mile, the final part of any journey, is often more complex than many other parts of the journey and it often generates more emissions per mile in the process. So we have to find ways to be efficient over that last distance, and we have to have effective monitoring of those carbon emissions and all the other nasty stuff that comes out of transportation. We need to make grand efforts to reduce and be effective in our processes, and we have to encourage those that we work with in partnership be they shippers, truckers, whoever they are that we encourage those partners to be focused on sustainable delivery too.

Tony Hines: 17:45

Another part of the supply chain that's increasingly complex is reverse logistics, and when we talk about reverse logistics, this is about dealing with things like returns to the business. That's becoming more and more expensive. When we set up our supply chains, we were probably thinking of one-way traffic from our organization to the customer, but over the years, and particularly with the development of online retailing and those kinds of deliveries, we're now experiencing higher and higher returns. Sounds like a Jackie Wilson song, doesn't it? Higher and higher, there we go. So we've got these higher costs and unpredictable expenses which could come into the system, and we can sometimes be paying anywhere between 20% and 30% of annual revenue just to deal with returns. It depends on what kind of business you're in, but certainly at the retail end they could be that high, and it depends on the product lines too, of course, which products you're dealing with. So we need effective systems, good technology, to deal with returns, and some of the best retailers handle returns extremely well. If you look at companies like Amazon, you will see that Amazon handle returns particularly well from customers. From the customer's point of view, it's very easy to return goods. You can drop them off at a returns point or you can get them back yourself if it's a single item, but it's very, very easy to do.

Tony Hines: 19:29

So what type of skills are people going to need for the new supply chain? Well, artificial intelligence is going to be a growing part of what we do in supply chains. It's going to be the underpinning technology that will change the nature of supply chains and ensure efficiency in the process, and you need people who understand how that artificial intelligence works. You need people to understand how data-driven decisions are being taken. They need to understand the concepts of resilience and what it means in practice for the business. And, most of all, you need people who are technologically savvy, and those are all skills that can be learned are technologically savvy, and those are all skills that can be learned. So and, of course, not just by some, but actually by anyone. It's easier than ever to learn those particular skills and you shouldn't be afraid, whatever your role, whatever your job, in getting your hands and your mind into those new skill sets. Look for opportunities where you can develop them.

Tony Hines: 20:45

Well, that's it for today's episode, talking about supply chain efficiency, complexity and what you can do, how you can create opportunities by examining the various aspects of your supply chain to build that technology infrastructure, partner with collaborators who can help you achieve the resilience, reduce the risk, lower cost and help you become more efficient in the supply chain. Hope it's given you some insights into thinking about how you can do that in your particular context. If you like the podcast, then you can subscribe and you'll be first to know when new episodes of the Chain Reaction Podcast are out. I'll be back next time with the Chain Reaction Podcast and I hope you'll join me. I'm Tony Hines. I'm signing off. Take care, see you next time. Bye, for now you've been listening to the chain reaction podcast, written, presented and produced by tony hines.