A Strategic Guide to Visibility & Cost Reduction

A Strategic Guide to Visibility & Cost Reduction

Table of Contents I. Executive Summary... 2 II. Auditing... 3 III. Complexity Reduction... 4 IV. Network Design... 4 V. Outsourcing... 5 VI. Operations Management... 6 VII. Supply Chain Solution Design... 6 VIII. About Triskele Logistics... 7

Executive Summary This guide is meant to give readers an overview of the strategic approach taken when analyzing supply chains. It also reviews specific tools so you can understand how and when to use them. Auditing Operations Management Complexity Reduction Outsourcing Network Design Figure 1Supply Chain Cost Reduction & Visibility Process Improving your supply chain is a continuous process as operational needs constantly change in today s fast paced business environment. In order to gain greater visibility and reduce costs, a wide range of components in your supply chain must be considered. Below are lists of relevant tools used for assessing your supply chain: Before you start, you must ensure that you understand your business goals and how changes to the supply chain will impact your organization as a whole. SUPPLY CHAIN MANAGEMENT TOOLS - A STRATEGIC GUIDE TO VISIBILITY & COST REDUCTION 2

Auditing Approach to Supply Chain Auditing Understanding the current performance of your supply chain is crucial to create a baseline from where to measure your future efforts. An audit of your data, can help you to identify pain points and areas of improvement. Data Validity There are 3 main areas where you want to collect data to assess your supply chain: - Operations Data: inventory, transportation, staff performance. - Business Processes: Flowcharts, protocols and other plans. - Invoiced Costs: Outsourced logistics, surcharges, suppliers/vendors. When using existing data, you must ensure it accurately represents your operations. You should consider: - Are you paying accessorial fees that could be avoided? - Are you paying more than industry standards? - Do you have errors or issues within your supply chain that cost you delays of time or money? Planned vs Actual Costs Supply chains can become very complex with thousands of transactions occurring daily. Auditing these transactions can help you create visibility in the following ways: - Do your rates match your actual invoice costs? If there are differences, why are they occurring? - Understand if your vendors are charging you correctly Figure 2 Supply Chain Audit Process - Review surcharges and value added services There are several tools you can use to analyze your data. The key is to create a model where you can accurately recreate your planned supply chain. You must also ensure that invoiced data is structured in the same way to allow for a fair comparison. Depending on your organization and your suppliers you may decide to have different levels of tolerances. Areas with large discrepancies help you to identify components that you should focus on. In addition, this data can be very useful when engaging with suppliers and service providers to create accountability and to negotiate better rates. SUPPLY CHAIN MANAGEMENT TOOLS - A STRATEGIC GUIDE TO VISIBILITY & COST REDUCTION 3

Complexity Reduction Value Stream Mapping Once you have identified particular areas of your supply chain that need improvement, you must look for ways to streamline your processes. Value stream maps allow you to identify waste in the forms of time and cost. View your supply chain from a customer point of view and identify all the activities and actions that are taken that customers would not pay for, and then eliminate as many of those steps as you can. Figure 3 Example of a value stream map Risk Management By nature, supply chains are exposed to a constantly changing environment. Risk shows up in your supply chain through a lack of structure and process control. Implementing procedures to monitor and manage issues such as Overage, Shortage & Damage, Driver Hours of Service, Cash Collection, Inventory Management, and Maintenance Regulation can significantly improve your operations and reduce your costs. Lean Tools to Identify Waste Identify all of the 7 types of supply chain waste that you have in your organization and create strategies to reduce them. The 7 types of waste are: 1. Overproduction 2. Defects 3. Inappropriate processing 4. Transportation 5. Unnecessary Inventory 6. Unnecessary Motion 7. Wait Time Network Design Location Analysis A key decision for many organizations is choosing a location that effectively serves their supply chain. Companies need to take into account the following factors: - Distance to your customers and suppliers - Land characteristics - Access to the transportation network - Labour availability - Synergies with service providers - Exposure to risk Transportation Assessment Considering your route options is a critical first step when optimizing your transportation network. What mode(s) of transportation will you use? What is the time sensitivity of the shipments? Are there reliable / alternative ways of transporting goods to the customer? Route optimization involves performing shipments at the lowest possible cost by using the least amount of resources possible. Here, SUPPLY CHAIN MANAGEMENT TOOLS - A STRATEGIC GUIDE TO VISIBILITY & COST REDUCTION 4

key variables such as mode (mode mix), time, capacity and cost are analyzed while also taking into account service constraints. Load planning is another important factor and can largely impact your decision when allocating transportation assets. Using forecasts and flexible routing systems you can design routes according to demand. This may involve adapting to seasonal cycles or changes in consumer preferences. Figure 4 Example of route optimization software Inventory Assessment Your inventory strategy can differ greatly depending on your industry and the needs of your customers. There are many software solutions available to track and optimize your inventory, however having the right strategy is key to ensure you are making the right decisions. Consider the following factors: - Type of product: weight, temperature, safety - Cost of inventory: In-house / Outsource - Customer service agreement: responsiveness / safety stock Outsourcing Value Chain Analysis A value chain analysis can help organizations decide on which activities to outsource. It allows companies to focus on value added activities in order to create a competitive advantage. You should consider some of the following factors: - Can the activity be performed cheaper or better by a supplier? - Is the activity a core competence of the organization? - What is the risk associated with doing the activity in-house? RFQ & Rate Benchmarking A Request for Quote (RFQ) is a standard business process that allows suppliers to bid on supplying goods and services. In an RFQ you should request the following types of information: - Rates - Service capabilities - Contract terms - Performance records You can use this information to benchmark against your in-house operations or your current provider. To rate RFQ respondents effectively, you should use metrics that were designed for your specific business needs. Sometimes the cheapest rate will not be the best option. SUPPLY CHAIN MANAGEMENT TOOLS - A STRATEGIC GUIDE TO VISIBILITY & COST REDUCTION 5

Operations Management Real-Time Visibility Having accurate data on supply chain activities allows you to ensure operations are being carried out effectively. In recent years, shipment tracking has become significantly more affordable. Shipment tracking allows you to have higher levels of visibility for all your routes and enables you to create accountability with your driver by comparing planned routes with actual routes. See Oso Consulting to find out how to implement this technology in your organization. Key Performance Indicators & Scorecards Scorecards consisting of Key Performance Indicators (KPI s) highlight not only the operational performance of an organization, but also the value creation that your team is generating for your supplier, vendor and customer. Metrics that generate insight into improvement opportunities such as error frequency, cost benchmarking, and operational efficiency drive significant value to your organization. Understanding what data to capture and how to analyze it is a critical component of any supply chain. Supply Chain Solution Design Our Process We start with a free strategy call to understand the needs of your business. During our free strategy call we will identify opportunities for your organization to reduce your supply chain costs. At the end of the strategy call we will identify next steps and create the outline of a project plan. This will cover key activities to complete, when they will be completed, and who will be completing them. This creates accountability within both organizations and will keep the project on track. Next we'll set up a facilitated business process review. This includes all of the key stakeholders within your organization and will identify all of the steps within your supply chain. We'll use the business process and planning review as a baseline to compare against key data to ensure alignment with your business and team. We will then add to the project plan and create a document to outline the immediate, mid-term and long term opportunities for your organization to significantly save on your supply chain costs. SUPPLY CHAIN MANAGEMENT TOOLS - A STRATEGIC GUIDE TO VISIBILITY & COST REDUCTION 6

About Triskele Logistics Company Overview Triskele Logistics is a supply chain consulting company that enables its customers to achieve cost reduction and efficiency in their supply chain. In addition, we manage projects and complete supply chain research using our industry knowledge, connections and expertise. Founded by Corrie Banks, Triskele applies simple, efficient change methodologies to work with you to achieve your vision and execute your projects. From strategy to project execution to sustainment, Triskele Logistics brings it all together. Our Goal Our goal is to assist our customers in creating the most effective and efficient supply chain possible. We believe that there is always a way to do things differently and drive costs out of your supply chain. Innovation, Analysis, Creativity, Process, and Drive are the cornerstones of our philosophy. Our value is moving you forward one change at a time, from the big picture to the smallest detail we will help you map out your path to success and then drive home the change required to be successful. What We Do CONSULTING Using lean manufacturing and six sigma methods, we evaluate your supply chain to eliminate extra steps, errors, and reduce your cycle time. Our continuous improvement philosophy means that we implement change quickly with the goal of improving the process during a short implementation phase. Network re-design and optimization Costing Audits Cost reduction opportunity identification PROJECT MANAGEMENT At Triskele our project management team will create value for you by creating a positive work environment. Triskele Logistics expert facilitation and cross functional team integration strategies will enable you to capture your requirements at a detailed level to ensure that your project achieves its deliverables. Triskele Logistics creates a roadmap that is easily followed Re-design and implement business processes to support change and accountability Technology integration that supports your business requirements Contact Us Corrie Banks, President Email: cbanks@triskelogi.com Phone: +1 (403) 651-0938 SUPPLY CHAIN MANAGEMENT TOOLS - A STRATEGIC GUIDE TO VISIBILITY & COST REDUCTION 7