Industry: Process / Chemical

Key Takeaways: 

  • At a time of intense supply chain disruption, 57% of organizations say they lack visibility into their supply chains  
  • Robust, resilient supply chains utilize AI, ML and automation 
  • These technologies power the modern supply chain, saving money and time and increasing profitability 
  • Make quicker, more informed decisions, reduce risk and inventory, and offer better customer service 
Accurate Forecasts, Lower Supply Costs, and Faster Cash-to-Cash Cycles 

As the last few years have shown, supply chain disruptions are unpredictable. They are also tough to manage without a proactive approach and the right technology. It’s worth noting that 79% of companies with high-performing supply chains – those that operate in the most efficient and cost-effective way across all key supply chain processes to most effectively match demand to supply – show greater revenue growth than their average industry competitor. These high-performing companies weather supply chain disruptions better, make speedier decisions, and perform more accurate forecasting. 
 
What’s propelling these successes are automation, artificial intelligence (AI), and machine learning (ML). These are terms we are all accustomed to seeing batted around in our space, so it’s important to understand what they bring to supply chain management and what kinds of problems they can help supply chain leaders solve.  

For example, more than half of today’s companies say they have poor visibility into their supply chain, and 63% say they have no technology to monitor their supply chain performance, therefore those businesses that embrace a digital supply chain management platform will leap over their competition. 

In addition to making more money, organizations that have an optimized supply chain have lower supply costs, less than 50% of the inventory, and cash-to-cash cycles that are more than three times faster than those that do not. In this article, we’ll discuss the roles that AI, ML and automation play in the supply chain and how they can help your business thrive in an era of seemingly endless disruptions. 

Transforming the Supply Chain Through Technology 

The pandemic and its associated lockdowns and closures created unprecedented supply chain challenges. Market volatility has reigned ever since, highlighting the need for flexibility and agility. In response, companies have been taking a hard look at their supply chains with an eye toward resilience. To that end, digital supply chain platforms have become the weapon of choice to tackle supply chain disruptions. 

With their integrated end-to-end approach and complete visibility, a digital supply chain platform can deal with the opportunities and constraints of business functions ranging from sourcing and procurement to sales. AI can analyze huge volumes of data, grasp relationships, give visibility into operations, and support better and speedier decision-making. This is a real game changer. But the benefits of AI, ML, and automation don’t stop there. Let’s look at how each can create a money-saving, money-making, resilient supply chain. 

AI ML and automation

AI can help you improve demand forecasting and inform integrated business planning (IBP) 

AI technology mimics human intelligence and is programmed to “think” like a human, rationalize, and take human-like action. With AI, you can improve demand forecasting and inform integrated business planning as well as revolutionize your supply chain in every area: 

  • Planning. AI gives you complete transparency through end-to-end visibility and offers end-to-end margin optimization.   
  • Procurement. With a digital supply chain platform, you benefit from full data integration with suppliers and the ability to optimize recipes for raw materials based on their forecasted pricing.  
      
  • Production. The insights provided by AI allow for agile production planning and scheduling. 
      
  • Distribution. With the real-time information provided by AI, you’ll be able to optimize routing, freight contracting, and vessel sharing to reduce both costs and the environmental impact of your organization. 
      
  • Sales and marketing. AI enables unified, more accurate price and demand forecasts as well as providing improved transparency and granularity, so you know the integrated margin per sale. 

Those companies that were early adopters of AI-enabled digital supply chain management improved logistics costs by 15%, inventory levels by 35%, and service levels by 65% when compared with those without a digital supply chain. Now let’s look at ML. 

ML can help you find new opportunities to optimize your supply chain 

ML is a branch of AI. It’s the part that uses data and algorithms to mimic the way humans learn. It’s an essential component of your supply chain – statistical methods train algorithms to classify things, make predictions, and uncover critical insights that drive decision-making throughout the entire enterprise. 

 ML continuously analyzes your supply chain data to find opportunities for optimization. Using constraint-based modeling, the algorithms identify the factors affecting supply chain accuracy. The improvements can be felt across the entire supply chain: 

  • Improved forecasting. Humans just can’t crunch data like machine intelligence. A digital supply chain platform can quickly analyze large, diverse data sets to improve demand forecasting accuracy. 
     
  • Better collaboration. ML analyzes data across different networks so you can reduce freight costs, enhance performance in supplier delivery, and reduce supplier risk. By identifying the factors that impact efficiency within supply chain tiers, you can better collaborate with suppliers to find the optimum solution. 
  • Know how your supply chain is really performing. ML combines unsupervised learning, supervised learning, and reinforced learning to continually analyze data so you can get real insights into how your supply chain is doing and where you can improve for more efficiency. 
      
  • New product demand forecasting. When you have ML in your supply chain, it considers the causal factors that influence new product demand. The algorithms combine a pragmatic approach with advanced statistical models to enable accurate demand forecasting and data-driven decisions about inventory.  

Supply chain management enhanced with AI improves forecasting accuracy while increasing granularity and optimizing stock replenishment. Forecasting errors can be reduced between 20% and 50%. Sales lost due to product unavailability can be reduced up to 65%, and you can achieve inventory reductions of 20% to 50%. ML can enable R&D cost reductions of 10% to 15% and reduce time-to-market by 10%. 
 
The last piece of your supply chain management technology is automation. It’s all about increasing supply chain efficiency. Let’s explore. 

Automation can help you make your supply chain more efficient, while reducing costs 

Automation in the supply chain uses digital technology to streamline processes by boosting task efficiency. This is how it’s used to give you that boost while reducing costs and helping you scale your business: 

  • Manual task automation. Your staff likely has better, more valuable things to do than process documents and manipulate data. You can save a lot of time and money and make your supply chain run more smoothly, and your employees can spend more time building relationships with customers. 
      
  • Visibility. Visibility means everyone, no matter where they are in your network, can see the same information for a single source of truth. This helps eliminate order and delivery errors. Visibility into shipping information means your customers can follow their orders with real-time information. 
      
  • Better customer service. Customer expectations are constantly increasing. Automation means achieving faster delivery times, more competitive pricing, and the real-time order information your customers demand. 

Automation in the supply chain manifests as increased fill rates, decreased cycle times, increased warehouse throughput time, lower labor and operational costs, reduced errors, and improved inventory management. All three of these technologies – AI, ML, and automation – work together to build a supply chain that can reduce the impact of supply chain disruptions, all while improving general company performance.  
 
The Logility Platform delivers better business outcomes and more resilient supply chains 
 
The Logility® Digital Supply Chain Platform lets you seize new opportunities, sense and respond to changing market dynamics, and more profitably manage complex global supply chains. We use the power of technology to deliver a digital, sustainable supply chain that powers the resilient enterprise.  
 
This means better sourcing decisions, more accurate planning, accelerated cycle times, improved precision, and increased operating performance – everything you need to weather supply chain disruptions and constraints – while meeting your environmental, social and governance (ESG) goals. 

It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss how we can put these technologies to work in ways that matter to your business. 

Make over your supply chain to get visibility into potential future disruptions.

There’s always a lot at stake in supply chain management. Today’s unprecedented supply chain disruption challenges have led to executives looking for new ways of managing their supply chains, not just for today, but to prepare for future unpredictability. Technology leapt to the forefront as visibility into the entire supply chain became essential. 

Lessons learned since the pandemic are the key to surviving new challenges. Prior to the pandemic, efficiency meant just-in-time manufacturing, but disruptions exposed the flaw in this approach. Production halts, container and transport shortages, and port logjams are just a few of the factors eating away at both efficiency and profits. What’s a supply chain manager to do? Let’s talk about supply chain disruption challenges and what you can do now that will also serve you in the future. 

What are the Big Things Still Disrupting Supply Chains? 

Circumstances seem to change on a daily basis. This port is clogged. Now that one is moving but another port is having difficulties. It never seems to end, and experts say we can expect at least another year of supply chain disruption challenges.  

COVID-19 didn’t start it all, but it certainly exacerbated serious supply chain disruptions that emerged during the trade wars in 2018 and 2019. 

The pandemic shut down ports and factories. This slowed down the movement of goods across the globe. Public health issues meant it was difficult to reopen the economy even partially, and we saw periodic opening and closing of both facilities and ports.  

Then no one anticipated the strong bounce-back in consumer demand. The issue became trying to move gallons of water through a straw. This wasn’t helped by the fact that so many of the goods came from far away, which was just another opportunity for disruption to rear its ugly head.  

supply chain disruption challenges

Then came Russia’s invasion of Ukraine 

The Russian invasion has triggered supply chain disruptions and other obstacles that are hampering vital logistics and trade route implementation. And because of the catastrophic impact on the global food supply, as well as food prices, more than a billion people could be pushed into famine and destitution. Between them, Ukraine and Russia account for approximately one-third of global wheat production. 

Sanctions, blocked Ukrainian ports, and stalled transportation routes have also disrupted the China-to-Europe supply chain. This means supply chain leaders have had to shift from using trains back to using ocean freight and getting goods to market takes longer.  

It’s been an undeniable mess, and while you can’t always predict supply chain disruptions, it doesn’t mean you can’t be better prepared, with disruptions big and small now an accepted inevitability. It’s time to make over your supply chain to meet and overcome obstacles as well as create new flexibility to help you prepare for the future.

The Power to Predict Supply Chain Disruptions 

It’s been a tough few years, and it’s hard to see a light at the end of the tunnel. But it’s time to accept that the world is in a constant state of flux. It’s hard to plan and confidently predict supply chain disruptions, so to sustain growth and create resilience in these uncertain times means developing agility. Agility means having the ability to respond quickly and think outside the box when necessary.  

  • Rethink just-in-time inventory policies: There could be another pandemic or another war. If a large-scale event happens and you don’t have back stock, you’re a threat to your own supply chain. It’s important to note that a lot of today’s worst supply shortages happen in supplier sub-tiers, where manufacturers lack visibility. You need transparency beyond the first tier so you can assess their vulnerability. Mitigating risk may mean finding new suppliers, redesigning supplier networks, revising inventory targets, building safety stock, and diversifying your sourcing strategies. 
     
  • Test what-if scenarios: Build multiple “what-if” scenarios so you can test quickly and observe what parts of the supply chain repeatedly fail. You can’t mitigate risks that you can’t see, and if you can’t see the problems, you can’t find solutions. This multiple-scenario testing may seem daunting, but it’s a great way to get insights into vulnerabilities that would impact your supply chain, as well as determining the impact of various costs and constraints on the supply chain network.  
     
  • Optimize network design: Optimize your complex supply chain network quickly and easily by addressing your most complex supply chain challenges such as determining how many facilities you should have and where they should be in order to meet your desired service levels and optimize costs. 
      
  • Share more data with suppliers: You don’t have to share everything, and you shouldn’t, but you should disclose data when conditions call for it. Working together with your suppliers can expose areas of supply chain disruption you hadn’t considered. If you are hesitant about sharing data, there are third-party firms that can analyze your supply chain, pinpoint weaknesses, and give you recommendations. However, the right supply chain management platform will give you the machine learning, artificial intelligence, and advanced analytics you need to perform your own in-depth analysis and recommendations. 
     
  • Evaluate supplier options beyond China: There was a time – in the 1950s and 1960s – when it seemed like everything was made in Japan. By 1979, China was one of the globe’s fastest-growing economies. In 1980, manufacturing in China began surpassing the world’s industrial powers one at a time, and in 2010, became number one when it overtook the United States. This can be part of your scenario planning, to consider looking beyond China’s sphere of influence to expand your vendor base.  
     
  • Build redundancy where possible in your supply chain. If your organization relies heavily on China or Eastern Europe, consider reshoring. Or you could near-shore to Mexico, Latin America, or other countries in Southeast Asia or the north of Europe. Be cognizant of other vendor issues that can cause supply chain disruptions such as lack of regulatory compliance, poor human rights, and environmental records – you don’t want to be doing business in another XUAR. 

None of us has a crystal ball, which means we’re all preparing for an uncertain future. Only complete visibility into all tiers of your supply chain can give your organization a resilient, agile, and profitable tomorrow. 

Logility Provides Transparency and Agility to Address Supply Chain Disruption Challenges

The Logility® Digital Supply Chain Platform accelerates the sustainable and resilient digital supply chain by leveraging advanced analytics, ML, and AI that empower your business with the visibility you need to create a supply chain that weathers disruptions with agility. 

This means better sourcing decisions, more accurate planning, accelerated cycle times, improved precision, increased operating performance – everything you need to weather supply chain disruptions and constraints – while meeting your ESG goals. 

We help organizations sense and respond to changing market dynamics and more profitably manage their global businesses to become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to learn more. 

Supply chain organizations are like any other part of a business – they’re always moving, changing, and trying to produce and deliver outcomes faster, more efficiently, and to everyone’s satisfaction. But even the most high-performing supply chains have process, infrastructure, and technology gaps that can become problematic if not addressed early.

According to Gartner1, fewer than 10% of companies have mastered a balance between cost management, customer service, risk mitigation, and growth investment. The reason is apparent: keeping pace with every shift requires more than implementing a new application or technology to an already growing patchwork of digital assets.

To get out of this rut, businesses must let go of their traditional assumptions, processes, and decision-making behaviors and start restructuring their operations at the foundation and upward with a digital supply chain platform that provides network optimization.

The Core of Today’s Supply Chain Challenges

After nearly three years of unprecedented supply chain turbulence, businesses and their extended partner networks are still encountering risks posed by an abundance of economic, social and environmental challenges. Labor strikes, geopolitical conflicts, capacity and supply shortages, and an increase in natural disasters – these disruptive events and more are magnifying how woefully unprepared organizations are to handle dramatic shifts.

Common struggles include:

  • Data to build the supply chain network model is distributed over many systems and not normalized for immediate use
  • Some necessary data is unknown, such as freight rates and labor costs
  • Current tools for network design are not agile enough to offer multiple solutions to a challenge and allow decision makers to embed their own knowledge
  • Current methods for network design are not easily repeatable, not fast, and not optimized

Poor modeling and the inability to act on decisions can result in a loss in cost efficiencies whenever the supply chain is updated – whether adding to the original design or unintentionally adopting a new practice. That is a large chunk of money being left on the table by anyone’s standards.

Your business can take ownership of these savings by treating every change as an opportunity to evolve your supply chain design. Even small changes such as identifying an alternative supplier is a great moment to determine how to optimize your entire supply network’s synergy by evaluating the total landed cost and net service impacts to the system and placing the decision in the context of a dynamic plan.

The Solution: Continuous, Repeatable Supply Chain Network Design and Optimization

The solution is not to tear down the supply chain and rebuild it whenever you want to transform. It’s just too complex and time consuming to do a project on a monthly, quarterly, or semi-annual basis that is usually undertaken every 3.7 years, on average. Instead, supply chain leaders need to view supply chain redesign as a continuous initiative with no beginning or end date.

This is where a supply chain network design and optimization solution is tremendously relevant. The technology allows you to automatically analyze and measure failures and inefficiencies to drive actions that modify or improve the network’s design. The integration of machine learning, predictive analytics, data visualization, and interactive dashboards also empowers you to rethink your operations on a more granular level.

You can reach decisions that drive continuous network design and optimization – not short-term gains at the expense of the future – for example:

  • Scenario evaluation and simulation to adjust the network-wide master schedules and distribution plans in response to curtailment of production in regions heavily impacted by labor and capacity shortages
  • Smooth transition to new ways of working remotely, enabled by shared visibility, messaging, and remote collaboration within a single version of the operating schedule
  • Scheduling of operations in labor-intensive factories that accommodate new government regulations and industry requirements

By supporting a comprehensive approach to continuous, repeatable network design and optimization, a network optimization solution as part of a digital supply chain platform helps realign organizational goals by reframing decision-making as an opportunity to fulfill demand more profitably. This dramatic shift in decision-making helps avoid the traps and limitations of functional approaches to cost reduction and efficiency gains. Now, supply chain leaders like you can develop network operating diagnostics for awareness and systemic analysis of major sources of monetary, resource, and inventory waste and risk.

From Everyday Decisions to Long-Term Optimization

For every supply chain leader, recent disruptions have reinforced the reality that no decision is too small. Yet, organizations that adopted supply chain network optimization have realized rapid payback from their choices as they continuously optimize their network’s balance between supply and demand for the long term.

Learn more about repeatable network design and optimization, and how Logility’s digital supply chain platform can help, by following this link.

1 Gartner Research, “Network Diagnostics and Planning Excellence Are at the Heart of Supply Chain Cost Optimization’; June 2020

Respond quickly, maximize benefits, and identify supply chain opportunities and threats. 

Key Takeaways: 

  • Supply chains need technology, but putting that technology to best use is the province of humans 
  • AI and ML are tools, not solutions 
  • It’s human judgment and ingenuity that will save the day, but the right data is vital 
  • Technology provides transparency and visibility across the entire supply chain, something humans cannot get on their own 
  • Balance between humans and technology is essential to anticipate and solve the supply chain disruptions that are all too common today, and who knows what’s coming next? 

Supply chain disruptions. They grab daily headlines, and the question always on the table is how to get the visibility and agility needed to respond in time. Things can’t go on as they did pre-pandemic. No matter how good it all looked on paper, the pandemic made weak links obvious: supplier shortages and backed-up transportation networks, among other things. It also exposed worker exploitation in lower-tier vendors that shed light on serious ESG miscalculations.  

Smart organizations have embraced supply chain management platforms that provide complete transparency. The best solutions that address supply chain opportunities and threats leverage artificial intelligence (AI) and machine learning (ML) to provide the data and analytics necessary to manage the modern supply chain. 

But technology alone is not the answer. The real path forward combines AI with human intelligence to maximize benefits as well as identify opportunities and threats. AI can provide the essential data component; it’s useless when it comes to collaboration, negotiation, and forming relationships with suppliers. While AI mimics human thought, it’s no replacement for the human judgment that’s vital to successfully implementing your digital supply chain platform. In this article, we’ll explore how to leverage humans and technology to best advantage. 

The Human Component of Digital Supply Chains 

Technology is flashy and captures attention in the boardroom. A vision of a completely automated and seamlessly integrated supply chain may be presented, where machines use AI and ML to adapt, solve problems, and respond to supply and demand changes. There’s usually no mention of humans in these discussions unless it’s about how they won’t (someday) be needed any longer.  

Will this sort of supply chain ever become a reality? Maybe. But algorithms won’t solve every problem, and a sophisticated demand forecasting system isn’t much use if humans ignore its outputs. The value of a digital supply chain platform depends on the ability and willingness of the people in an organization to take action in response to the data. 

supply chain opportunities and threats

It’s the symbiosis between digitization and humans that creates the real chance to identify supply chain threats and opportunities. Designed to repair complex and fractured processes, algorithms can only provide information – it takes a human with logistics expertise to handle any exceptions and provide a quick response to changing circumstances.  

In short, AI can increase speed and accuracy in number crunching, data handling, and supplier vetting. It can help optimize transportation routes, warehousing, and stock management and handle other specialized but mundane tasks. It can also increase customer satisfaction by improving ease of use, reducing work steps, and offering new solutions for customers to improve their own supply chain visibility.  

Your supply chain platform and its associated technology is a tool. To be fully effective, the unique cognitive skills of supply chain management professionals are essential. So, how do you achieve the right balance? 

How to Leverage People with Technology  

There’s no doubt modern technological solutions are revolutionizing and improving supply chain performance. AI and ML are vital to gather data, crunch it, and learn from it. Automation is great, but it only takes you so far. It’s humans who use this data to make the rapid decisions today’s supply chain disruptions demand.  

A recent study asked supply chain industry professionals what they thought was the right balance between humans and technology. Their opinion in 2019 was that 60% technology and 40% human expertise provided the optimum balance. That didn’t, however, discount the role of humans – it’s that their tasks are changing as technology takes on manual processes. Humans still are the best solution when strategic thinking and decision-making are needed. 

In 2021, the new ideal balance was 57% technology and 43% humans. This isn’t a huge shift, but it marks an awareness that technology cannot solve all problems, no matter how advanced. Human ingenuity is a major factor in handling supply chain disruptions successfully.  

The pandemic was a major factor increasing the need for technology to support humans. AI was a valuable tool in decision-making, providing usable data, helping optimize carrier networks, and identifying ways to increase operational efficiency. But it was humans who had to decide which recommendations would best serve their organization. 

Technology, People, and ESG 

Through the use of AI and ML that search and track patterns, organizations can keep a closer eye on and better meet their commitments to environmental, social, and corporate governance. While many companies tout their sustainability initiatives, without the data to back it up, it’s nothing more than a greenwashing exercise.  

It’s about visibility and the transparency that it provides. Opaque procurement methods and multi-tier supplier networks mean it is impossible for a human to do the data analysis needed, much less make sense of it. This is where a digital supply chain platform proves invaluable. 

Successfully Merging People and Technology in the Supply Chain 

Here’s the bottom line: Every organization needs a robust digital supply chain platform. Every organization also needs human expertise. They both provide value, and one cannot be successful without the other.  

Even without supply chain disruptions, the frailties that emerged with the pandemic need solving. The data insights provided via AI and ML are invaluable to accelerate decision-making, reduce costs, increase agility, and gain deeper insight across the supply chain. This results in improved forecast accuracy, planning confidence, and a way to continuously monitor supply chain performance. 

A supply chain management platform also provides a way to visualize, evaluate, and optimize planning, sense demand, and plan out life cycles. On the supply side, you gain the ability to plan and optimize manufacturing, manage vendors, control quality, and meet compliance and ESG commitments. 

With all of the data and the tools to use it effectively, humans can make faster, better decisions based on a completely transparent supply chain. At their very core, supply chains are about human connections – partnerships, collaborations, and even competition. These are all vital to a successful supply chain.  

In short, technology should empower people. It’s the balance between human expertise and the information and automation provided by technology that will mark the agile, resilient, and successful supply chain. 

The Technology You Need to Support Your Human Capital 

Logility’s digital supply chain platform allows you to trace your supply chain end to end. That gives your supply chain experts the visibility and data they need to optimize every part of the supply chain, preserve and increase revenue, and deepen customer and supplier relationships. Our digital supply chain platform utilizes AI, machine learning, and automation to help you easily track and analyze your supply chain, so you always have optimal performance and key insights.  

Make better decisions and deliver better outcomes. Contact us today. 

Why do we build logistics models?

This is obviously a rhetorical question. But I ask it because modeling often takes a detour into the land of debilitating detail. And by debilitating, I mean an enormous analytical time sink — think months. I am often asking clients whether they wish to: 

A) Model the precise general ledger costs for logistics? 

or 

B) Make a well-researched decision? 
 
If you chose “A” you can stop reading because the rest of this blog post is about why that will lead you down the wrong path. 

At the surface “A” and “B” seem to follow one another. If I am making a good model, am I not accurately modeling my future logistics spend? Yes, with a big BUT… the precision required to make a perfect model of your financial spend can often lead you to a create a model that is erratic. Let us look at this a little deeper and see where the “precise” and the “good” deviate in a classic logistics model. 

What is a Good Logistics Model? 

A good logistics model is designed to predict the future. Yet a modeler will always start with a calibrated baseline. And the “calibrated” part of this refers to accounting costs — those costs found in an organization’s financial database. The theory goes that if a model shows the same costs as the current state, then we can trust that it will show appropriate differences when changes are modeled. 

A logistics model can be as complex or simple as a modeler wishes, however it always needs to be believable and grounded in the actual costs of a system. This blog post should make one thing clear to the modeler: the search for “accounting” level accuracy can stand in opposition to your actual goal — making a supply chain decision. It will not only cost you time to build this “perfect” supply chain model, but it will also imbed imperfections into the very mechanism of the model. 

What Makes Fiscal Accounting Accuracy Popular? 

People gravitate to their accounting numbers because of comfort — pure and simple comfort. General ledgers do not need to be explained. They reflect actual expenditures — they are immovable facts of history. They are also safe. Executives and managers alike believe their general ledgers. No one gets sent out of a conference room for repeating known accounting numbers to a group. But the actual spend last year has lots of little aberrations. 

How Can Accounting Costs Lead You Astray? 

Accounting costs can look very detailed and accurate; take an entry for an individual shipment of your product, for example. You can see the units, weights, and most importantly, the costs. These costs go directly into the accounting system. These show exactly what was paid net of discounts, accessorial, and anything else that might be tacked on. 

This means that for every origin and destination that has shipment activity, we should have a highly accurate cost for the organization’s shipment down that lane… right? 

Let me share experience from hundreds of modeling exercises. If we treat a shipment table as the definitive cost for each lane, we run into three problems with our model: 

1. Lack of statistical significance 

2. Heterogeneous data 

3. GAAP accounting methods 

Let’s delve into each one of these.

1. Statistical Significance — If I have a number, how can it be wrong? 

Let’s say you have data on hundreds, or even thousands, of trucks you paid for last year. How could this vast amount of real data go wrong? When you break them down by lane, season, and method of purchase, thousands of data points might turn into five to ten data points for a given lane — or sometimes only one shipment. As a reminder from that long-forgotten statistics class, statistical significance for a single variable starts at seven data points — just to be roughly correct. 

Now go further and ask yourself: 

– Does your shipment data have a mix of spot and contract shipments? 

– Are there data points for every season? Note: trucking in some regions has significant seasonality. 

– Is there selection bias? Your buyers or your 3PL might be taking advantage of opportunistic contracts— trucks that were cheap for a single event, but do not reflect the market price next year. 

You may have a wealth of data in aggregate but not at the level you need. Here is a way to test its value to a model — take a sample set of data for a given region and given season. Find the average and standard deviation by individual origin and destination. The variation will probably be large — I base this on my experience. The danger is that this variation is dropped from analysis once the average is found. Do some statistical sniff tests, you will probably be very disappointed in the value of this data in predicting your future spend on a lane-by-lane basis. 

Figure 1 below visually displays what historic data looks like in an actual model. The total cost of the network exactly matched the accounting cost of $6.97MM. You can see three warehouses and almost every warehouse shipped to each destination city. We should have lots of real historical date, no need to fill in the blanks. 

Here is where it goes wrong, Figure 2 is the same data set but optimized for the lowest cost supplier. Great, see how I saved $948K? Now look closely, find all the crisscrossed lines. Find the case where a customer node is right near the Alabama warehouse but is shipped from the Nevada warehouse. 

actual historic shipments logistics model
Figure 1 – Actual Historic Shipments
lowest cost logistics model
Figure 2 – Optimized to lowest cost lanes based on historical data

If it was not obvious before, you should now realize that optimization software acts like a passive aggressive child. If it can follow your instructions exactly and return nonsense, it will. In this case the analyst could go to each lane that did not make sense and exactly match it to actual average truck costs. Our wealth of data falls apart because lack of statistical significance throws off our model — we cannot rely on hundreds of records that present a solid average and we have not even started to add lanes that do not have any historical data. 

2. Heterogeneous Data — how do you fill in the blanks? 

The purpose of a logistical model is to answer “what-if” questions. This means something is going to change — a new port, new warehouse location, new route to the customer. Inevitably, key transportation lanes will not be found in the historical data. Modelers generally use three methods: quotes from carriers, regression analysis, and benchmark (market) data. Each of these methods will create three very different sets of data. 

Carriers can provide quotes on contract and spot rates for a defined set of lanes. These will not match your historical costs because the carrier is predicting the future costs at the same time they are trying to secure your business. Many things might not match your past discount rates and accessorial charges. But with effort and enough quotes, you can get these to be “OK.” It will take time and you will have to do it every time you make a change in the model. 

Regression analysis will turn a pile of data into a statistically significant formula. But it will also have inherent errors. Truckload rates are not uniform across any geography. An extreme example would be a port city like Los Angeles; more loaded trucks go out of Los Angeles than in. You will find that the cost from Phoenix to downtown LA is 42.5% the cost of a truck from LA to Phoenix. This is an extreme example, but you get the idea – regression formulas average out a lot of market subtleties.  

Figure 3 is an example of regression data input into the model. It makes the pretty picture you want to see — every customer is served out of its nearest warehouse. You can see the purple line showing the smooth lines of demarcation between service areas. This is easy to explain but is not correct. 

The third data set is benchmark or market data which is really another measure of historic data, but it has the advantage of being historic data across hundreds of companies and millions of shipments. It will not match a company’s historic data precisely. But if everyone is buying from the same market you can assume that everyone’s rates will regress to the same market average. 

In Figure 4, you will see the customer-to-warehouse assignments are not as clean as the regression. But this is the real world and reflects the optimum use of the freight market. For example, trucks from Illinois going south are cheaper per mile than Alabama going north and east. This may be harder to explain to someone with this picture, but it has the advantage of being the most right. 

Benchmark data also has the advantage of being the same set of data for known and unknown lanes You do not have to create a Frankenstein-like data model of mixed sources to fill in all the data you need. 

regression-based costs logistics model
Figure 3 – Optimized to regression-based costs
market-based costs logistics model
Figure 4 – Optimized to market-based costs

See the table below to describe the usefulness of different data sources.

Combining two or more sets of heterogeneous data across thousands of lanes requires a miracle of analysis to get them coordinated to the point that they do not mislead your analysis.

3. Cost Accounting — How can my numbers be wrong when they match my P&L? 

Accounting is for accountants. Their objective is to balance all account totals at the end of each period. There are a lot of ways that transportation invoices are reconciled to their actual costs inside this time frame. These include corrections that might be taken at different times than the actual shipment or include discounts either ascribed to a shipment or again taken at a different point in the period. 

Manipulating all the costs, corrections, and discounts to match each shipment can be an enormous task. If you total all the truckload, LTL, and Parcel shipments into a subtotal by mode, you can believe that summed number. However, if you want each of thousands of individual shipments to be properly costed, you have a lot of work to do and might need to get your accounting department to spend some quality time on your project. 

What Should I Be Doing Instead? 

The way to build a good supply chain model is to rely on long-term market figures and averages. You can buy them from any number of rate boards or Logility provides its own proprietary data set with its SaaS subscriptions. All you need do is calibrate these numbers to your business by “benchmarking” them against what you do know. Scale the market rates up or down and proceed to answering your question. 

The true value of a logistics model will be that it trades off high-cost modes like LTL against low-cost modes like FTL. Or that inventory will be traded off against transportation. As long as your ratios are calibrated, you will get the right answer.  And a good supply chain leader will value the right and defensible answer over detailed accounting precision — and they will appreciate that you answer the question sooner rather than later. 

Additional reading:

Answering the One-Day Service Challenge
“True Greenfield” – Answering the Distribution Service Time Challenge
Three Ways Center-of-Gravity Analysis Studies Lead You Astray

Reach corporate social responsibility goals while improving your economic sustainability.

Key Takeaways: 

  • You make important decisions daily that affect both your own corporate responsibility goals and external ESG demands from consumers and investors 
  • Vendors can make or break your broad supply chain goals, which makes real-time, AI-analyzed data essential for supply chain decision-making 
  • Self-reporting and a cumbersome audit process present dangerous challenges that can be overcome with an integrated platform 
  • To supply the detailed reporting required by all stakeholders, complete transparency into your entire supply chain is needed 
  • One bad vendor decision can damage your brand beyond repair, so constant vigilance and swift action are necessary 

Supply chain executives make vital decisions daily. Disruptions – from wars to COVID-19 lockdowns to a lack of containers – just add to what is already a complex undertaking. A holistic approach using reliable, properly analyzed data is required to achieve both your business and corporate responsibility goals.  

Data is useless if it’s not actionable. True corporate social responsibility (CSR) requires vigilance and compliance throughout the entire supply chain, and this takes properly analyzed data. This is especially important in vendor management. Your vendors can be your greatest strength or a source of serious liability. When it comes to supply chain decision-making, you need a digital corporate responsibility solution. 

Ethics and sustainability affect brand value, and corporate responsibility in the supply chain is a huge part of this. Supply chain leaders who understand public concerns about the environment, health, and safety know that nothing affects this equation as much as their vendors. 

Do your vendors present environmental, regulatory, or other risks to your company values? Can you trust their self-reporting? What about a vendor’s location or other factors that might affect their performance? With so many unknowns plaguing your supply chain decisions, this is one area where the right data and AI-supported analysis means you can move forward with confidence. 

Socially Responsible and Economically Sound 

A sustainable supply chain is no longer an option, as both consumers and investors clamor ever louder for brands to up their game when it comes to environmental, social, and corporate governance (ESG). They want to know where everything comes from, its environmental impact, and that it was produced by people who are treated fairly and humanely. 

You want all of this, too, but you might not be sure how to get there, especially in an era of such profound uncertainty. You must be sure that the decisions you make don’t just work for today but will continue to work in the future to meet your economic goals. The economic sustainability of your company is at stake as much as anything else.  

Uncertainty aside, even in times of relatively smooth supply chain operation, you never know what’s coming up next. But you can probably guess that new compliance standards and regulations are likely. Consumer demand is sure to rise. Trade embargoes will follow political turmoil. Not only do those factors put your reputation on the line, but they can also damage the viability of your enterprise.  

Fortunately, there are powerful digital solutions that can give you the actionable information you need to both accelerate and improve your supply chain decision-making. 

Enhance Financial Performance, Boost Reputation, Strengthen your Supply Network 

Data confidence is everything as ESG demands become an integral and inescapable part of supply chain decision-making. It is imperative that companies build stronger and more sustainable supply chain networks. This can only be done via better management of governance assessments and audits, which then fuel better, sustained collaboration with your entire vendor network.  

Audits are vital but time-consuming, incredibly inefficient, and error-prone – often facilitated by an exchange of emails. Self-reporting has its own unique set of issues. What’s required is a digital solution that offers easy integration, storage, and the analytics you need to achieve transparency, sustainability, and better supply chain decision-making. 

Your corporate responsibility solution should: 

  • Surface variants between audit findings and self-reported scores and analyze the results 
  • Issue corrective action plans and adjust your sourcing plans in real time with consideration of a supplier’s progress toward sustainability objectives 
  • Offer reports that allow you to publicize practices and findings to all stakeholders with full transparency and confidence. 

The right platform will give you a single source of supplier data you can use to assess vendor compliance. Because form numbers and identifiers vary, seamless mapping of data is required to ensure you’re viewing the same information without having to cross-reference multiple systems.  
 
You’ll want to be able to collect factory certifications as well as manage all ESG-related assessments. As CSR has become subject to more mandatory regulations, self-regulation is no longer possible, which makes data-driven supply chain decision-making mandatory. 
 
It is incumbent on organizations today to make sure they have the information they need to plan, schedule, and perform multiple assessments. Further, you want to be able to capture and evaluate the results so you can generate improvement plans. This allows you to remediate issues, assist supplier-users with training, and craft an exit plan to shift non-compliant suppliers out.  
 
All of this results in stronger supply chain partners who will appreciate a fair and efficient system that motivates them to adopt best practices, knowing that compliance is the key to retaining your business. 

It’s a Matter of Long-Term Value 

A digital solution to corporate responsibility has a positive impact on the world, but it also supports your long-term business growth. Compliance standards must be met, consumer demands fulfilled, and investors satisfied. Greenwashing is unacceptable. Transparent, verifiable reporting is essential.  

A non-sustainable supply chain exposes your company to avoidable business risks, including damage to your brand reputation and foreseeable supply chain disruptions. The data gleaned from a transparent supply chain will optimize your business planning as well as streamline product movement and balance supply and demand for inventory.  

Ultimately, sound supply chain decision-making that supports all the requirements of the ESG enterprise requires data and AI analysis supplied by the right digital supply chain platform. 

Sound, Sustainable, and Profitable Supply Chain Decisions Start with Logility 

Logility provides the supply chain platform that allows you to trace sustainability through all tiers of your sourcing. Our platform utilizes AI, machine learning, and automation to help easily track and analyze your supply chain, so you always have optimal performance and key insights. Make better decisions and make more profits. Contact us today. 

Use a two-pronged approach that couples new recruitment approaches with technology to provide transparent operational insight. 

Key Takeaways: 

  • Supply chain disruptions and labor shortages provide separate yet connected challenges 
  • Labor shortages are a global problem – contraction has already happened in Germany, Poland, Russia, and Japan and is expected to quicken 
  • From the top floor to the shop floor, workers are quitting their jobs at a rapid rate 
  • Supply chain executives must look at new sources for workers and provide the technology that allows the supply chain visibility they need to recruit and retain top talent 
  • It’s a time of crisis, but out of ashes often comes opportunity; get ready! 

Today’s supply chain is challenged by the impact of what would appear to be two disparate challenges: constant supply chain disruptions, and what’s been dubbed “The Great Resignation.” Organizations must use every means at their disposal to keep goods moving while at the same time preventing their most important resource – their talent – from jumping ship at an alarming pace. 

Roughly 25% of workers plan to change jobs in 2022. In February alone, 22,000 people in the U.S. resigned from their jobs in durable goods manufacturing. Food supply chains already heavily damaged by the effects of COVID-19 have received yet another blow from labor shortages. The trucking industry was down 80,000 drivers in 2021, and that shortage is anticipated to balloon to 160,000 by 2030. 

ease labor shortages and increase supply chain resiliency

It’s a global problem. The labor supply is shrinking in Germany, Poland, Russia, and Japan, and contraction is expected to quicken. China, which had a worker surplus of 55.2 million to 75.3 million in 2020, could have a worker shortage of up to 24.5 million by 2030. The overall outlook for supply chains is bleak, leaving executives racking their brains for the key to supply chain resiliency.  

It’s time for decisive action. Let’s look at how labor and talent shortages wreak havoc on a supply chain, and the steps leaders can take to solve problems now and protect their organizations in the future. 

How Labor and Talent Shortages Affect Supply Chains 

There are labor shortages affecting all aspects of the supply chain, from raw materials to final product delivery. The Bureau of Labor Statistics says that, while the manufacturing sector as a whole is projected to have some pandemic recovery employment growth, it also contains 11 of the 20 industries that are predicted to have the most rapid employment declines. These include transportation and material moving, warehouse and fulfillment center workers, truck drivers, call center agents, delivery services, and manufacturing workers. 

It’s not just skilled, semi-skilled, and manual labor that’s lacking. Supply chain managers are also leaving, with more mulling over their part in the great resignation. This is all happening while the proliferation of eCommerce has driven up demand for supply chain labor. Then, there’s the Infrastructure Investment and Jobs Act – the construction industry is expected to pull workers from the supply chain since both logistics and construction attract similar worker pools.  

Of course, all of this has obvious effects on the supply chain, including:  

  • A lack of longshoremen and dock workers to unload ships 
  • Not enough drayage drivers, which means shipping containers sit in ports instead of moving down the chain 
  • A shortage of long-haul truckers – so shippers can’t move inventory quickly from ports to distribution centers 
  • Warehouses are understaffed and distribution centers can’t work at full capacity. This results in delays that cause material or inventory shortages that affect both manufacturers and retailers 
  • Fulfillment centers that are short of workers can’t keep pace with order fulfillment volumes fueled by eCommerce. 

And so it goes on, and on, and on. Labor shortages in any of these instances cause issues up and down the supply chain, but combined they have a crippling effect. You’re likely aware of these issues, so let’s move on to what you can do to minimize the effects of labor shortages on supply chain resiliency. 

Supply Chain Resiliency in the Face of Labor Shortages: A Two-Pronged Approach 

Supply chain executives have two problems here. You have the seemingly uncontrollable supply chain disruptions along with a labor and talent shortage. The remedy is far from simple, but you can greatly reduce the impact of these challenges with advanced technology coupled with talent management strategies.  

To ensure you have the workers you need now and in the future, approach your talent pipeline the same way you approach your supply chain: 

  • Make sure you have complete visibility into your supplier base. Implement a supply chain management platform that easily allows you to find suppliers with large labor forces who can ensure operational viability and find and connect with alternative vendors that can lower first- and second-tier risk. 
     
  • Look beyond wages. Competitive wages and attractive benefit packages go far, but take time to examine why workers are leaving your organization and implement fixes. Automate what you can to reduce repetitive work. 
     
  • Identify stresses in your supply chain and adjust labor flows. Shift the flow in your supplier network away from those who are labor-stressed. Reroute orders to other warehouses and manufacturing locations. If necessary, change product design or formulations to reduce the need for components and ingredients from labor-strained areas. 
      
  • Take a look at your product and services portfolios so you have a deep understanding of each offering and its trade-offs, both operationally and commercially. The goal is to reduce complexity in a way that has a limited impact on sales.  

Solving the labor crunch also means exploring new sources of supply. Transition programs for prisoners and veterans’ programs can be good sources of labor. Also, look for workers in industries where employment is declining and reskill them. Connect with local community colleges and technical schools. 
 
Returning to the issue of visibility – because how can you fix something you can’t see? – demand planners play a big role here. A digital supply chain platform can give planners the insight they need to account for different scenarios and facilitate collaboration across the organization to solve current problems and plan for the future.  

And for supply chain resiliency even during labor shortages, you need a platform that offers a user-friendly interface along with deep analytics that can attract and retain top planning talent. stichd, a Netherlands-based product licensing company and division of PUMA, recently selected the Logility® Digital Supply Chain Platform to support its ambitious growth strategy and demonstrate investment in its workforce. “Growth is our top priority. To continue achieving our goals, it was critical to find a planning platform with more sophisticated forecasting and clear visibility capabilities, but that is also easy for our employees to use,” said Rogier Wijnhoven, COO at stichd. 
 
Today’s challenges require informed decision-making. You need transparency: real-time data along with artificial intelligence, machine learning, and automation that continually senses, analyzes, and updates activity throughout your entire supply chain. You need granular detail to reach peak operational performance and to prepare for unexpected supply chain events – labor shortages and otherwise. 
 
As John F. Kennedy said, “When written in Chinese, the word ‘crisis’ is composed of two characters – one represents danger and the other represents opportunity.” Be sure you have all the tools you need, both human and digital, to overcome today’s dangers and be poised for tomorrow’s opportunities. 

Get the Solutions You Need for True Resiliency with Logility 

Logility helps companies accelerate their digital, sustainable supply chain by providing solutions that don’t just present and model data – they drive actionable insights that deliver real and measurable value, so companies can respond to changing market dynamics and more profitably manage their complex global business. 

The Logility® Digital Supply Chain Platform leverages an innovative blend of artificial intelligence (AI) and advanced analytics to automate planning, accelerate cycle times, increase precision, improve operating performance, break down business silos, and deliver greater visibility. We help you make smarter decisions faster – reach out to our team to discuss our supply chain solutions. 

Look deeper than ever before. Reduce risk. Increase profits. Make your customers happier. 

Key Takeaways: 

  • Supply chain visibility offers the means to manage your supply chain efficiently as well as help you meet ESG and corporate responsibility goals 
  • The transparency gained through complete supply chain visibility increases supply chain efficiency, increases profit margins, and strengthens customer and supplier relationships 
  • End-to-end supply chain visibility allows you to massage and control every piece of your supply chain for optimized results for both you and your customers 
  • Modern supply chains need modern technology — you can’t get visibility with emails, phone calls, and spreadsheets 
  • A digital supply chain management platform gives you the data you need along with the analysis required for informed decision-making and complete visibility 

Today’s supply chains are messy, tangled beasts. Even in the best of times, they can be unwieldy, and keeping track of your suppliers, your suppliers’ suppliers, and… You know the drill. Insights can be hard to come by as investors, consumers, and boards of directors are upping their environmental, social and governance (ESG) criteria and demanding greater corporate responsibility. A transparent view of the supply chain is required.  

It’s not just about meeting ESG goals. Supply chain visibility offers the means to manage your supply chain efficiently by offering previously unseen opportunities. In days of yore, you didn’t need such in-depth visibility, but today, as supply chains grow more complex and stretch further across the globe, you need a 360-degree view, from raw material sourcing to final product delivery. 

As procurement and supply leaders examine their supply chains, they often turn to things like spreadsheets or try to hack their current software to create a DIY solution. What they end up with is an unresponsive, inflexible system and no visibility at all into the supplier data they need. Supply chain visibility has become critical, so we’ll look at what good supply chain visibility really means, why it’s important, and why you need a unified digital supply chain platform. 

What Is End-to-End Supply Chain Visibility? 

End-to-end supply chain visibility is the ability to track individual components – beginning with raw materials, sub-assemblies, and finished products – as they travel from supplier to manufacturer to the final destination. It’s enabled through technology that provides real-time data about all aspects of your supply chain, gathering usable data that gives your company the agility to work around inventory shortages, sidestep bottlenecks, and meet any compliance requirements. 

It’s visibility inside and out – into your internal business operations and all external partners. The transparency gained through complete supply chain visibility increases supply chain efficiency, increases profit margins, and strengthens customer and supplier relationships. 

Why Is Supply Chain Visibility Important? 

Supply chain visibility is essentially about control. As time has marched on, companies have outsourced more and more pieces of their supply chains, making them difficult to control, and this is where supply chain visibility comes in. The transparency gained can alter your organization’s operations as interactions and relationships with both suppliers and customers improve.  

A digital supply chain management platform means you can pull data not only internally but directly from suppliers, providing detailed insight into each component you use or sell. Risk is reduced as visibility into upstream partners means you’re notified immediately of any disruptions, so problems can either be solved or circumvented.  

At this level of visibility, you can track movement throughout the supply chain. There would be documentation for the use of raw materials, components used in the production process, and, upon completion, you can see the exact location of finished goods. Once goods leave the plant, they can be tracked on ships, trucks, or planes as they travel through customs and other checkpoints.  

Your digital supply chain platform should also include a corporate responsibility solution to track social compliance and environmental status that allows you to initiate, review, monitor, and submit corrective action plans. You also need a view into the environmental status of all suppliers to ensure compliance with your corporate responsibility practices. 

Supply chain visibility also offers the benefits of: 

  1. Simplifying complexities: By providing insights across your diverse supplier network, you not only anticipate and solve logistical issues that can hurt customer relationships and decrease profits but also add a level of trust and transparency. 
  1. Increasing customer satisfaction: By making sure the right products are at the right locations at the correct time, you offer the ability for customers to track their orders from the factory to their loading dock. 
  1. Easier compliance: Your international supply chains have intense regulatory requirements, and these are changing all the time. Decrease the risk to your reputation, too, by ensuring that the behavior of all your supply chain partners is ethical.  
  1. Boosted competitiveness: Your supply chain is costly, and likely is one of your largest budget line items. 
Visibility Takes a Digital Supply Chain Platform 

Visibility doesn’t just happen, and it will never happen using phone calls, emails, and spreadsheets. It doesn’t matter if you’re monitoring supplies and products at a batch or individual item level. Monitoring safety, legal, and material certifications; order and vendor information; status and location of suppliers; and manufacturing dates – all are integral parts of the highly visible supply chain.  

Supply chain visibility first and foremost relies on data. Relevant, real-time data across the supply chain. Then, this data must be analyzed and acted upon. To achieve this requires a robust digital supply chain platform that utilizes advanced, intelligent technologies with a focus on process improvements that drive efficiency and monitor corporate responsibility. 

A modern digital supply chain platform also enables resilience with end-to-end visibility and capabilities for supplier management combined with contingency planning, crisis management plans, and incident response strategies. It’s important to note that end-to-end today doesn’t mean a linear progression. The circular supply chain concept is gaining traction, as manufacturers seek to meet sustainability goals by recycling and reusing stock. You want to be able to capitalize on reverse logistics, as well, to be sure you’re capturing the value of or properly disposing of excess goods, whether from returns or because they were unsold.  

You want artificial intelligence (AI) and machine learning (ML) to inform and improve decision-making, forecasting, and planning, as well as to perform the advanced calculations that turn visibility into actionable information. 

Supply chain visibility is essential to business success. You need insights into every nook and cranny of your supply chain to achieve efficiencies that deliver the profits necessary to flourish. In addition, you need the means to both validate and transparently report on progress toward your ESG goals, not to mention keeping on top of the ever-changing regulatory environment. 

Get Vital Supply Chain Visibility with Logility 

The Logility® Digital Supply Chain Platform supports you to drive a visible, sustainable digital supply chain. It leverages data-driven tools such as advanced analytics and AI that empower your business to meet today’s supply chain complexities head on. You get the supplier data and other analytics you need to meet your transparency goals as well as your revenue goals.  

We help organizations sense and respond to changing market dynamics and more profitably manage their global businesses and become resilient, sustainable enterprises. It’s time for a digital, sustainable supply chain. Reach out to our specialists today to discuss our supply chain solutions. 

While the supply chain talent wars continue, it’s incumbent upon today’s business owners to consider whether the technology they use day to day has any ‘wow’ factor. Demand parameter optimization has that ‘wow’ factor.

In this post we look beyond the more conspicuous and well-documented benefits of advanced supply chain technologies, such as increased speed to market, more efficient operations, improved customer satisfaction and the ability to thrive during ecosystem shocks large and small. This post considers the human element, the brains that use the technology to derive insights and take action. 

As you’ve no doubt heard and perhaps experienced, the recruitment and retention of tech talent is a matter of great urgency. Many business leaders around the world are happy the pandemic is waning, but wondering where all the people have gone. More than 19 million U.S. workers have quit their jobs since April 2021, disrupting businesses everywhere. 

The brain drain would rightly be viewed as critical even if the goal were to simply replace lost headcount. But it’s more dire than that; many companies have embarked on aggressive plans for incremental hiring in the coming years. Consider these statistics from McKinsey: 

  • Facebook plans to hire 10,000 people in Europe to build out its “metaverse” 
  • Amazon announced plans to add more than 55,000 people in the U.S. for corporate and technology jobs 
  • In Germany, 780,000 additional technology specialists are needed by 2026 to meet the estimated demand 
  • Globally, more than three million cybersecurity positions were open as of 2020. 

Business leaders are feeling pressure. According to a McKinsey survey of more than 1,500 senior executives globally, 87% say their companies “are not adequately prepared to address the skill gap.” 

Now let’s circle back and pose the question hinted at above: can commitment to and adoption of modern supply chain technology help recruit and retain top talent? The short answer is that talented knowledge-workers want to use the latest and greatest tools. McKinsey quotes a stack overflow survey that shows  “the… technologies I’d be working with” is much more important than, for example, “the industry that I’d be working in” when making a job choice. 

Beyond Excel

Of course, winning the supply chain talent war requires much more than committing to “an Excel-free work environment,” but continual access to modern solutions and capabilities is an aspect that businesses shouldn’t ignore. One such capability among many in the Logility® Digital Supply Chain Platform portfolio is demand parameter optimization (DPO), a machine learning application that automatically fine-tunes a subset of forecast parameters in order to improve forecast accuracy. DPO can process thousands of items simultaneously, selected by filter (such as inventory classification) or by alert (such as forecast error threshold). The result: a significant reduction in the amount of time spent manually tuning plus better quality forecasts. 

And with improved forecast accuracy comes reductions in inventories, lost sales, expediting costs and obsolescence costs. Moreover, demand parameter optimization enables autonomous planning, reducing the hours spent by planners manually manipulating parameters. This in turn increases the time available for other planning tasks, such as exception analysis triggered by workflow alerts. 

As one Logility customer put it: “Not one of my planners goes home at night and brags that they got to use a spreadsheet at work. But when they’re using modern planning tools like DPO to evaluate scenarios and reduce planning error, and they’re really in the zone, I see the joy of learning on their faces, and the joy that comes with knowing they are making a difference. They benefit, and so does the business.”  

More Tech Doesn’t Equal More Value to the Customer

Logility’s Kevin McInturff, EVP of R&D, says: “At Logility, we offer the perfect blend of foundational strength and the desire to innovate. Our product visionaries never lose their footing. Companies that are overly enamored with their own technology often focus their efforts on the pursuit of the next shiny toy. The reality is more technology just for the sake of it does not always equal value for the client. While others give in to the temptation to be led by their technology, we will always allow the voice of the customer to guide us toward solving real supply chain problems.” 

Read about how stichd – a division of PUMA – chose the Logility platform for its “sophisticated forecasting and clear visibility capabilities” in this recent press release.

A transparent digital supply chain will give you the insights you need for faster fulfillment. 

Key Takeaways: 

  • Same-day delivery is preferred by most consumers today, and supply chains must speed up to match that fulfillment speed. 
  • Fulfillment can be delayed anywhere in the supply chain, but if you can’t see where it’s happening, you can’t do anything to fix it. 
  • Promises made must be promises kept, or your customer satisfaction will take a dive – automation is the answer. 
  • Increasing numbers of consumers will abandon their shopping cart if they can’t get things when they want them, and this goes across verticals that include apparel, food, and beverages. 
  • Logility’s digital supply chain platform can help you capture your part of the predicted $9.2 billion growth by 2025 for same-day delivery. 

It’s no secret that order fulfillment is complex with many moving parts. It’s also true that, in today’s competitive ecosystem with consumer demand for almost instant delivery, speed and efficiency are of the essence. Achieving this requires deep insight into the entire multi-stage supply chain, from order receipt to final delivery. 

The economic sustainability of your business depends on fulfilling orders, of course. Preserving that sustainability and increasing profits depends on meeting market demand, which in turn demands increasing fulfillment rates to satisfy your customers. Achieving this goal requires optimizing your strategy with an aim toward perfect order fulfillment. 

There are many places fulfillment can be delayed – from an antiquated order acceptance process to lack of inventory to logistical complexities. Without complete visibility into your entire supply chain, you won’t be able to see where it’s failing. If you can’t find the problem, you can’t solve it. It’s an information gap that can cripple your entire business. Equip your company for growth, improve fulfillment rates, reach new levels of efficiency, and increase customer satisfaction with a truly transparent supply chain. 

A supply chain is only as strong as its weakest link 

Your customers want what they want, and they want it instantly. Same-day delivery has taken hold. Many shoppers – 49% – say that same-day delivery means they will more likely shop online. Of those aged 18 to 34 who already shop online, 56% expect same-day delivery. Another 61% say they are willing to pay more. In addition:  

  • 51% of retailers already offer same-day delivery 
  • Of the remaining 49%, 65% plan to offer it within two years 

To maintain a competitive edge, your supply chain must be able to deliver. Even among those who don’t expect same-day delivery, 80% expect same-day shipping. Many shoppers would abandon an order if they couldn’t get same-day delivery, and this applies to a number of verticals including: 

  • 22% of those who shop for apparel 
  • 24% of electronics shoppers 
  • 23% who buy food and beverages 
  • 28% who buy toys and video games 

The compound annual growth rate for same-day delivery from 2020 to 2025 is predicted to be 20.31%, or $9.82 billion. This growth rate depends on increasing customer satisfaction through speedy and efficient fulfillment rates. So just how do you get there? 

The path to customer satisfaction is transparent 

Opacity is the enemy of supply chain management. You know; you’ve been through that tense, nail-biting meeting with a customer who wants to know where their product is. You know it left the manufacturer. It’s on a ship somewhere, you guess. Or maybe it’s tied up because someone didn’t fill out some paperwork along the way.  

You check your ERP, but that’s to run your internal business, not your supply chain. You can likely see the order, and that’s it. It gives you no real-time insight into inventory, you have no real-time information at all about where your goods are in the supply chain, and you can’t tell your customer anything enlightening. You might have order management applications, some warehouse management software, and a variety of order-taking channels, but they still don’t give you what you need. 

You need a cohesive, integrated solution that offers transparency to speed up your fulfillment rates and give your customers what they want. The Logility® Digital Supply Chain Platform delivers what you need to meet and exceed your strategic goals. Check out the following solutions on offer.

Automated fulfillment 

Automated order promising allows you to evaluate Available-to-Promise (ATP), Capable-to-Promise (CTP), and Profitable-to-Promise (PTP) inventory to improve customer service and model supply chain opportunities. This leverages an active digital twin of your supply chain to quickly determine the ability to fulfill a customer order. You can:

  • Achieve complete visibility into customer order status 
  • Get instant notification of incoming orders with the information you need to analyze every detail to flag and mitigate problems before they happen
  • Know inventory levels in real time so you know you whether can fulfill the order 
  • See fulfillment status in real time so, if necessary, you can adjust resourcing. 

You also gain the ability to review the final profitability of the order. By leveraging in-memory processing and robust analytics, you can make faster decisions around how to respond to an unexpected opportunity, generate incremental revenue, and provide more proactive customer service.

Inventory planning and optimization

Optimized inventory gives you a competitive advantage when it comes to increasing fulfillment rates. You can create, evaluate, and optimize your inventory strategies and tactics throughout your entire supply chain network.  

With increased visibility, you can see and consider all the interdependencies in production and distribution to avoid excesses that increase cost while making sure you have what you need to speedily fulfill orders.

Supply planning and optimization 

It’s all about a strategy that synchronizes supply and demand – even in complex distribution networks and global supply chains – ensuring the most effective allocation of resources throughout your supply chain. With the real-time information offered by the Logility platform, your planning takes place in the real world, with current supplier, transport, and other constraints. By leveraging automation, you can consider a wide variety of replenishment scenarios to meet customer demands. 

Today’s customer is increasingly demanding, with speed of delivery being a primary competitive differentiator. You can either cash in on this expanding market with a modern digital supply chain platform or sit by and ignore technological innovation at your peril. Remember Blackberry? 

Logility delivers the solutions to meet today’s demands for fast fulfillment        

Reinvent your supply chain to deliver what your customers need. Logility offers complete supply chain transparency to meet current demands and adroitly respond to changing market dynamics. By accelerating the digital sustainable supply chain, we help companies seize opportunities and more profitably manage their complex businesses. 

The Logility® Digital Supply Chain Platform leverages an innovative blend of artificial intelligence (AI) and advanced analytics to automate planning, accelerate cycle times, increase precision, improve operating performance, break down business silos, and deliver greater visibility. We help you make smarter decisions faster – reach out to our team to discuss our supply chain solutions.