While the health and safety benefits of having optimum visibility and traceability in food and beverage supply chains have been widely acknowledged, much less has been said about how they can boost a business' bottom line.
Supply chain visibility tools are key enablers that allow managers to identify, capture, share, and predict events and transactions more effectively and more timely - providing a playbook from which to manage from. They are the systems in place that allow you to know at all times where your products are and in what quantity; what you have; what has been ordered; who ordered it; and when, where, and how it is being delivered. Once you have this ability, you can manage supply events more precisely and take more educated positions when it comes to leveraging it. You are in some ways replacing inventory in the overall system with information.
By boosting visibility and removing uncertainty in supply and demand - you can adjust your supply chain appropriately and make changes that allow you to achieve great customer service while carrying the lowest inventory possible.
Cost savings also are realized when you increase visibility within your supply chain. Here's how:
- Inventory Cost Savings - Most businesses carry extra inventory to hedge against demand and supply uncertainty. Reducing uncertainty allows you to carry less inventory - and have less capital tied up in inventory investment.
- Warehouse Space Cost Savings - If you carry less inventory, you won't need as much warehouse space to contain it.
- Savings from Less Product Handling - Less inventory means less products are handled and for shorter periods of time. This means less product damage occurs.
To realize the service benefits and cost savings in their supply chains, many companies are partnering with experienced third party logistics providers (3PLs). Through supply chain transformation and the implementation of new processes, companies are fulfilling orders on-time and meeting customer expectations utilizing improved end-to-end visibility.
A trusted and experienced 3PL can implement a system that executes the five vital steps that lead to greater efficiency:
- Capture - Use advanced technology to gain visibility across the supply chain
- Analyze - Evaluate where products originate, where they are stored and where they are delivered - in what quantities and frequency
- Design - Set up routes, material flow, and logistics networks which accommodate optimized requirements
- Sense - Use advanced analytics, processes, and planning technologies to monitor the performance of the network and identify further opportunities for innovation and continuous improvement
- Manage - Develop structured processes and playbooks to effectively ensure network performance is operating within expected parameters, is compliant with regulations and is serving the needs of customers and consumers efficiently.
Implementing these tools means placing your supply chain holistically within a web of transparency. From there, it's easy to see how you can run leaner operations that drive profit to your bottom line.
Darin Cooprider is Vice President and General Manager, Consumer Packaged Goods at Ryder System, Inc. With more than 25 years of experience in food manufacturing, big box retail, strategy consulting and 3PL services, Darin has played an active role in developing and executing strategies to improve service, reduce costs and increase reliability across numerous industry segments.
