Characteristics of Supply Chain Leaders vs. Laggards

What are the specific characteristics propelling some shippers into industry leaders while others continue to lag?  Hint: it involves finding logistics IT providers whose products and services are committed to driving value beyond the confines of their perceived roles.

A majority of shippers use transportation logistics automation tools like TMS, route optimizers, YMS, WMS, fleet management and freight payment & audit solutions.  Yet, there’s a gulf between shippers whose efforts at supply chain management excellence succeed, and those whose efforts fail.  Surprisingly, it isn’t necessarily the technology that makes the difference.  Two shippers using the same logistics IT solutions can produce dramatically different results.

Research firm, Supply Chain Insights, produces the annual “Supply Chains to Admire” study which looks at the factors driving excellence in supply chain management.  The most recent study, published in the second half of 2016, produced a wealth of wisdom about supply chain management.  What caught the eye of Collaborator editors was a chart contained in the report comparing the characteristics of supply chain leaders versus those of supply chain laggards (reproduced below).

Leaders

Laggards

Focus on Horizontal Processes Focus on traditional metrics
Building of Balanced Scorecards Driving Singular Metrics strategies
Consistency of leadership and culture Changing leadership
Strong planning and network design Focus solely on transactional processes
Clarity of supply chain excellence Changing focus and adoption of fads

 

According to the project management experts at UltraShipTMS, best practices for TMS utilization align neatly with the “leading” characteristics identified in the Supply Chains to Admire Study.  For example, the building of balanced scorecards is one area highly emphasized during UtraShipTMS implementations.   The recommended best practice involves designing carrier performance scorecards (as one example) focusing on the aggregate performance of carriers in any given lane.  While it is important to focus on one important metric – say carriers’ overall tender acceptance rates – that figure must also be tempered by examination of other important metrics like, on-time performance, rate level versus benchmark, and frequency of lost or damaged freight.  Only by looking at all these factors can the use of scorecards drive superior results.

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Successfully executing the changes needed within the supply chain – once they’ve been identified – can only be accomplished if there exists a thoughtful and well-conceived plan to achieve specific logistics goals. 

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The proper planning of network design is another area where logistics IT solutions help shippers become leaders.  Often, shippers make the mistake of thinking of TMS and optimization solutions as a way to build automation around their existing processes.  However, a strong TMS partner will do the hard work of pointing out to the shipper that automation of transactional processes alone will do little to achieve the efficiency and control promised by technology solutions.  Rather, the idea should be to allow these powerful computing tools to capture the transactional data as a mere first step.  The real benefit comes from leveraging the patterns and trends emerging from the transactional data to achieve better results.  In dramatic cases, the data may even reveal the need to relocate distribution centers or pool points.  But even in a less drastic case, these tools can help shippers make more effective mode choices, suggest consolidation of numerous LTL shipments into single, multi-stop truckload shipments and even optimize the sequence of shipments to achieve less empty miles and more continuous moves.

From the TMS perspective, the clarity of supply chain excellence ties in to the consistency of leadership and culture.  Deploying and maintaining an effective transportation logistics program requires the ability to make a sober and objective assessment of the strengths and weaknesses of one’s existing supply chain.  It can be challenging to address the root causes of inefficiency and waste; particularly when areas identified for improvement run up against entrenched cultural histories within the organization.  In short, change can often cause friction.

Successfully executing the changes needed within the supply chain – once they’ve been identified – can only be accomplished if there exists a thoughtful and well-conceived plan to achieve specific logistics goals.  More often than not, this plan is the product of a partnership between a competent transportation logistics professional and an experienced solution provider/partner.  With these two stakeholders working in concert, the positive results they often produce for the shipping organization leads to satisfaction at the corporate level.  This on-the-job satisfaction translates to better retention among not only leadership, but employees further down the chain of command.

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