Lessons Learned From Supply Chain Visibility Initiatives: Part 2 Supply Chain Logistics and Transportation, 2016
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1 Lessons Learned From Supply Chain Visibility Initiatives: Part 2 Supply Chain Logistics and Transportation, 2016 Published: 7 July 2016 G Analyst(s): Christian Titze, Bart De Muynck Deploying supply chain visibility capabilities is an initiative high on every CSCO's agenda. This research sets out the key findings and best practices gathered from multiple organizations that have used technology to enhance their logistics and transportation visibility. Key Challenges Data integrity and quality, complexity of integration, and inefficient, disjointed processes are still the top obstacles for companies to overcome when executing supply chain visibility initiatives. Convincing suppliers and service providers even small carriers and forwarders that the benefits of joining a visibility and collaboration platform are also achievable for them and not only the brand owners remains a challenge. 3PLs continue to be pushed to provide better supply chain visibility along a variety of milestones and events by their customers as well as by expectations set through new and advanced technologies and visibility platforms. Recommendations Use the client case examples in this research to identify the different types of visibility initiatives that your own organization could adopt, and the level of commitment and investment required. Work with suppliers and service providers with a special emphasis on partner onboarding and initial data mapping. This collaborative style will allow joint value creation. Closely monitor vendors' product roadmaps when evaluating solutions for initial deployment, and also for upgrading and enhancing with new capabilities empowered by emerging technologies. Table of Contents
2 Introduction... 2 Analysis...4 Collaborate Toward Seamless Supply Chain Information Integration... 4 Key Take-Aways... 5 Move From Electronic to Digital Supply Chain Logistics... 6 Key Take-Aways... 7 Increase Last-Mile Visibility With Track-and-Trace Collaboration...7 Key Take-Aways... 8 Mobilize Critical Business Processes Through Mobility and Data Capture Solutions...9 Key Take-Aways Conclusion Gartner Recommended Reading List of Tables Table 1. Supply Chain Priorities...3 Table 2. Project Parameters...4 Table 3. Project Parameters...6 Table 4. Project Parameters...8 Table 5. Project Parameters...9 Introduction Increasing supply chain visibility (SCV) adoption is no longer a "nice to have" for any organization, no matter the size, geography or industry. SCV use now goes across a multitude of industry verticals and use-case segments. In discussions with CSCOs at Gartner events over the past two years, it became clear that SCV is a top priority. This demonstrates that supply chain leaders not only have this on their agenda, but also execute on it with a variety of initiatives (see Table 1). Page 2 of 12 Gartner, Inc. G
3 Table 1. Supply Chain Priorities Topic Rank Study June /- Rank Study December 2015 Leveraging supply chain analytics Improving supply chain visibility 1-2 Building talent training programs 3 = 3 Designing a supply chain strategy for cost to serve 4 = 4 Building a resilient supply chain Source: Gartner (July 2016) From March through May 2016, Gartner conducted research on SCV solutions covering executional use cases. 1 Based on that research, inquiries with clients, briefings from solution providers and presentations at our supply chain events, Gartner detected that, overall, there are common drivers for visibility initiatives as well as common challenges that supply chain leaders face when executing projects. But, deploying technology alone does not guarantee success. A combination of people, process and technology are necessary for that transformation (see "Supply Chain Visibility: Laying the Foundation for a Company's Journey to Value Creation"). Gartner's research series on lessons learned from SCV initiatives consists of three notes: Part 1 on supply chain planning and cross-domain summarizes case examples and their key insights in the SCV segments of planning and cross-domain. Part 2 (this note) on supply chain logistics and transportation summarizes case examples and their key insights in the SCV segment of execution, with special emphasis on logistics and transportation. Part 3 on supply chain execution summarizes case examples and their key insights in the SCV segment of execution, focusing on supply and demand processes. The examples in this research include organizations that execute on visibility initiatives. They are of different industry segments, geographies and company sizes, with different use cases and solutions deployed. The most important imperatives to consider for your SCV initiative when looking to enhance logistics and transportation insights include the following: Collaborate toward seamless supply chain information integration: Establish a collaborative transportation management platform to automate, improve and optimize processes in a global supply network. Then, leverage the foundation for strategic and tactical decisions in the more long-term horizon. Gartner, Inc. G Page 3 of 12
4 Move from electronic to digital supply chain logistics: Enhance a transportation management platform (TMS) with mobile capabilities to integrate and optimize supply chain partners and processes. Move from electronic to mobile order management, providing real-time information for the whole value network supplier, shipper, carrier, driver and customer. Increase last-mile visibility with track-and-trace collaboration: Overcome the hurdles of emerging markets by utilizing mobile capabilities combined with commonly used apps. Interface easy and free messaging and calling apps into the TMS for collaboration and last-mile visibility information, to the benefit of the whole community. Mobilize critical business processes through mobility and data capture solutions: Replace older and aging technology with leading-edge mobile devices in support of pickup and delivery processes. Then, utilize prebuilt mobile apps for core transportation functions and real-time analytics to help this end-to-end transformation. Analysis Collaborate Toward Seamless Supply Chain Information Integration Using advanced transportation management capabilities and collaborating with all value chain stakeholders in real-time allow an improved overview of the streams in supply networks. As a result, tactical decisions and operational activities can be made more easily and optimized (see Table 2). Table 2. Project Parameters Description Visibility Use Case Key Drivers Supply chain execution/logistics Elevated and inaccurate inventory levels (resulting in poor on-time delivery) Too many manual processes and data entries (leading to high administrative cost and error rates in production planning) Additional manual efforts and process inefficiencies (due to relabeling) Inefficient transports Core ERP system not providing transport/logistic relevant information Vendor SupplyOn Source: Gartner (July 2016) A global technology company serving the automotive and industrial industry helps shape mobility for tomorrow. Its initiative was to optimize the interactions among the company and its business partners suppliers and service providers for better transparency in a global supply chain Page 4 of 12 Gartner, Inc. G
5 network. The company recognized that perhaps no other supply chain application area might offer this high potential to save money and drive value. Looking for global collaborative supply chain network capabilities, the scope of possible solutions was to gain visibility and allow reacting to market changes quicker through flexibility and scalability, thus avoiding service disruptions and allowing for smarter logistic decisions. The project was initiated not only to build a global integrated transportation platform but also to act as a driver for the comprehensive improvement and integration of information exchange among the firm and its business partners. More long-term goals included enhancing the overview of end-toend transportation network flows, making tactical decisions for consolidation points and optimizing the operative allocations based on predefined tariff options. Key Take-Aways Lessons learned: Put a strong focus on change management, as process changes are a big challenge for the organization. Clearly communicate progress and outcomes to all parties involved in the initiative. Leverage multiple possibilities to integrate with even smaller business partners (electronic data interchange [EDI] and web EDI). Benefits achieved: The seamless extension of internal business processes beyond company borders, allowing true cross-company processes and visibility Improvements in warehouse efficiency, cash flow, process automation Inventory reduction and optimization (by 10%) New delivery capabilities Better on-time delivery and utilized capacity of transports, leading to improved supplier performance (increased from 94% to 98%) More exact data in standardized form, less errors in supplier collaboration After a deployment of four months, key business partners of the pilot serving two plants/countries are live. Top goals in speed, transparency, responsiveness and optimal inventories at the lowest possible costs have been achieved. As next steps, a companywide rollout is underway with the project serving as a template for all other plants across multiple countries. The company is also looking into event management to further drive the aspect of real-time updates from its service providers as well as leveraging captured data for optimization/simulation of its global supply network. Gartner, Inc. G Page 5 of 12
6 Move From Electronic to Digital Supply Chain Logistics Implementing a TMS can help reduce freight cost, get more price transparency, optimize labor efforts, and also reduce waiting times and increase loading capacities. This is well established and mature in the market. What then needs to be done is implementing mobile capabilities for carriers and their drivers to further digitalize the end-to-end supply chain (see Table 3). Table 3. Project Parameters Description Visibility Use Case Supply chain execution/logistics Key Drivers Phase 2: Erratic number of trucks with high waiting and dead times Loading capacity needs and labor cost-to-serve that capacity No visibility of process steps Need for improved customer satisfaction (on-time delivery) Vendor Transporeon Source: Gartner (July 2016) A multinational steel production company faced several burning issues, like orders being handled mainly by phone, customers requiring just-in-time deliveries, trucks being inefficiently used (waiting and/or blocking yard space) and the whole logistics process being nontransparent. After a successful initial deployment in the last decade, it enhanced the existing electronic logistics transportation platform with mobile capabilities. This allowed it to further optimize existing modules and better integrate supply chain partners, not only carriers and shippers with a special challenge not owning fleet and trucks but working with about 70 different carriers but also drivers and customers (see Note 1). The aim was to achieve full and real-time visibility and transparency in the company's supply chain, handling more than 80% of all transports via this mobile order management solution. This integrated TMS includes capabilities of carrier selection (method, "best carrier") and assignment (method, "no-touch order"), electronic dock scheduling inbound and outbound, and mobile order management. The latter allowed it to geoposition carriers from source to destination (from shipper to carrier to driver to customer) along consistent, electronic and transparent processes (including electronic documentation of load securing, integrated calculation of estimated time of arrival [ETA], electronic delivery note and automatic status information for customers). Page 6 of 12 Gartner, Inc. G
7 Key Take-Aways Lessons learned: Early involvement of all parties is necessary. Clearly communicate goal and timelines. Outline to carriers that benefits are achievable for all business partners (more transparency, efficiency, easy handling). Put special focus on innovative IT partners and project management, which helps for implementation success. Benefits achieved: Freight cost reduction Carrier/truck optimization (yard scheduling, waiting time) Better predictability of carriers Enhancements in loading process (time reduction 15%, capacity increase 15%, staff cost reduction) Integrated and automated workflow/trigger capabilities More accurate reporting for customers Having laid this foundation, the company achieved the anticipated benefits. In the upcoming rollout phase, the number of carriers being connected and using mobile order management will surpass 80%, allowing real-time communication between trucks and loading point, generating benefits for the whole community. Another project will be to integrate shipment information to the customer platform, allowing end-to-end visibility and communication for customers (from order to arrival). Increase Last-Mile Visibility With Track-and-Trace Collaboration Companies commonly face challenges in last-mile tracking due to disjointed processes from carriers and shippers, aging technology equipment, complicated mobile apps (often facing less qualified human resources), systems not being integrated (e.g., TMS with GPS), or ongoing changes in routing assignments. This leads to more manual and administrative efforts and the unavailability of real-time information. Integrating mobile devices with widely spread and simply used apps (e.g., WeChat and WhatsApp free messaging and calling apps) can help overcome these hurdles (see Table 4). Gartner, Inc. G Page 7 of 12
8 Table 4. Project Parameters Description Visibility Use Case Key Drivers Supply chain execution/logistics Simple deployment of logistics capabilities in emerging country No dedicated equipment and open system; avoiding system barrier Reaching own and external (often very small) carriers Vendor inet logistics Source: Gartner (July 2016) A logistics service provider was entering the Chinese market, and looking to structure its logistics and transportation capabilities. To be successful, it recognized the importance of enabling simple and flexible technology. An initial pilot was drafted for one megacity, with a dedicated fleet utilizing the WeChat solution integrated with core TMS capabilities. Integrating TMS with mobile devices handheld and apps capabilities enhanced last-mile process steps, allowing drivers to execute, communicate and collaborate on defined workflow activities together, with the device sending real-time information. It allowed real-time tracking, automatic exchange of tracking information with the TMS, reliable and efficient communication with truck drivers, and customer/consumer/end-user collaboration on up-to-date information. Key Take-Aways Lessons learned: Drivers need to cooperate; training is necessary. Utilizing common technical equipment and apps helps overcome skepticism. WeChat technology is widespread (in contrast to developed countries). Online connection is given in megacities, but limited in remote areas. Benefits realization can be achieved in less than a week (WeChat integration). Benefits achieved: Increased customer experience, better transport transparency, faster and more accurate tracking status, cost and time savings Ease of use, real-time driver communication, automatic geopositioning Enhanced logistics service provider (LSP) services, automated updates, paperless work, better end-to-end visibility Page 8 of 12 Gartner, Inc. G
9 The new solution provided benefits to the company as well as its drivers and customers. Now it is looking to co-develop with the vendor additional capabilities along ETA calculations, electronic signature, map navigation, KPI reporting, spot sourcing and vehicle search. It will be expanding the concept globally, rolling out the solution to other cities and integrating further subcarriers. It is also looking into offerings for customers, allowing them the potential of real-time delivery tracking. Mobilize Critical Business Processes Through Mobility and Data Capture Solutions Enterprises can benefit from hardware-agnostic mobility and data capture solutions in two fundamental ways: replacing older, aging scanners with smart devices and innovating by leveraging mobile apps alongside smart devices. Such emerging capabilities will enable the transformation of critical business processes across the entire supply chain (see Table 5). Table 5. Project Parameters Description Visibility Use Case Key Drivers Supply chain execution/logistics Inflexible, outdated and costly hardware Reliance on dedicated devices Vendor Scandit Source: Gartner (July 2016) A European-based transportation company historically relied on industrial scanners and automatic identification and data capture (AIDC) solutions for supply chain operations, which lately got more and more inflexible and costly. Basically, it was dealing with an outdated hardware and software environment. In an approach to transform critical business processes, the company looked into hardwareagnostic mobility and data capture solutions to replace the existing solution, and drive innovation through mobile device and apps integration. Some of these capabilities were developed by thirdparty logistics providers (3PLs) for and on behalf of their customers. Management looked into pickup and delivery solutions with track-and-trace capabilities to increase productivity, get real-time business insights, lower IT costs, and enable easier integration with existing systems. In a rapid deployment of less than three months, internal logistics processes (scan/sort/deliver) are now supported by this new platform where employees use hardware-agnostic mobile devices and prebuilt apps for scanning, transport/work-task management and analytics. Gartner, Inc. G Page 9 of 12
10 Key Take-Aways Lessons learned: Special attention on user buy-in (different skills levels) and training are necessary. User-group deployment has its challenges (mobile device management). Automated upgrades/updates save time, cost and nerves. Benefits achieved: Simplification of processes (easier and more stable use) Increased user satisfaction Hardware autonomy Cost savings (as existing smart devices are leveraged) In a next phase, additional processes will utilize mobile devices. The scope of processes will be extended from in-house to external customers (home pickup and delivery), and this solution will be integrated with a new core business system. Conclusion CSCOs continue to identify SCV as a top priority. However, they face challenges to improve visibility in their organization and business partner network mostly data integrity, partner onboarding and communication. The real-world examples in this research detailing challenges and successes companies had in the logistics and transportation domain will help CSCOs better prepare and execute SCV along a detailed roadmap. Gartner Recommended Reading Some documents may not be available as part of your current Gartner subscription. "Common Themes From 19 Supply Chain Visibility Initiatives: An Overview" "Lessons Learned From 19 Supply Chain Visibility Initiatives: Part 1 Getting Started" "Lessons Learned From 19 Supply Chain Visibility Initiatives: Part 2 Implementing" "Lessons Learned From 19 Supply Chain Visibility Initiatives: Part 3 Realizing Value" "Supply Chain Visibility: Laying the Foundation for a Company's Journey to Value Creation" "An Industry Perspective on Supply Chain Visibility" Page 10 of 12 Gartner, Inc. G
11 Evidence 1 From March through May 2016, Gartner surveyed multiple end-user organizations to understand their initiatives, approaches and key take-aways for supply chain visibility deployments. We interacted with and/or received responses from organizations of different industries, geographies and sizes. These findings informed our current understanding of the market's offerings and actual adoption by users. Note 1 Mobile Order Management One key for success was the collaborative approach involving business partners upfront and demonstrating joint benefits. The solution vendor assisted in onboarding activities, providing training for the mobile apps on handhelds for the drivers. Not only does the brand owner pay for this visibility and collaboration platform, but carriers also pay fees based on transactional volume (as they also get benefits as outlined in the note). Gartner, Inc. G Page 11 of 12
12 GARTNER HEADQUARTERS Corporate Headquarters 56 Top Gallant Road Stamford, CT USA Regional Headquarters AUSTRALIA BRAZIL JAPAN UNITED KINGDOM For a complete list of worldwide locations, visit Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner s prior written permission. If you are authorized to access this publication, your use of it is subject to the Usage Guidelines for Gartner Services posted on gartner.com. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner s research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner s Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see Guiding Principles on Independence and Objectivity. Page 12 of 12 Gartner, Inc. G
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