Unlocking the value of supply chain integration.

Today’s supply chains are under extreme pressure. From transportation capacity and labor constraints to changing order profiles and more frequent disruptive events, maintaining predictable and cost-effective material flows has never been more complex or challenging.

Some solutions to these challenges are obvious, such as implementing new technology to enhance performance and productivity. Robotics, autonomous vehicles, wearables and optimization tools are all enabling supply chains to get more from their resources. But other less obvious solutions can be equally, if not more, impactful.

The solution that may have the most potential to improve operations is enhancing integration across both supply chain partners and supply chain processes. The former can be accomplished through a Lead Logistics Partner (LLP) relationship; the latter by selecting an LLP capable of directly managing distribution center (DC) operations.

The Value of an LLP

An LLP typically provides some core supply chain functions, such as transportation management, while also coordinating the activities of other supply chain partners, including suppliers, carriers and other logistics providers.

Coordinating transportation across the network is achieved through strategically located control towers, which serve as the hub for monitoring activities, and integrating and analyzing data from these activities. Through the control tower, the LLP can deliver visibility and real-time analytics to manage transportation performance and control costs. The control tower also plays a vital role in enabling the supply chain to anticipate and respond to disruptive events, such as hurricanes and wildfires, eliminating or minimizing delays.

There is significant value in this coordination and visibility; however, even with this type of relationship, gaps remain between warehousing and transportation. These gaps can increase management overhead and limit the ability to leverage synergies between the two operations. They can be eliminated when the LLP is directly responsible for warehouse operations.

The Benefits of LLP and DC Integration

When the LLP is managing warehouse operations, supply chain teams have a single interface into transportation and warehouse management systems, operating practices are standardized across the supply chain, and resources can be managed more holistically. This delivers the following benefits:

1. True end-to-end visibility

The term “end-to-end visibility” is often used to refer to visibility from the warehouse dock to the end customer. But end-to-end visibility should mean visibility across the entire supply chain, including inbound transportation, receiving, inventory management, shipping and outbound transportation. DHL Supply Chain uses the MySupplyChain platform to deliver this level of visibility.

MySupplyChain provides a single point-of-access for warehouse and transportation data and tools. It delivers near real-time visibility into warehouse inventory and enables order tracking across the network. It can be used to manage inventory remotely, monitor supply chain performance, analyze data to optimize operations and streamline supply chain reporting. The platform also provides public-facing access to enable customers to track their orders. A visibility and analysis platform such as MySupplyChain is essential to realizing the benefits of an LLP relationship.

2. Streamlined Management

With separate partners managing transportation and warehousing, it’s up to the organization to bridge the two operations. That can be time consuming and lead to operational inefficiencies. It also taxes IT resources charged with establishing integrations with multiple trading partners. With the LLP managing warehouses, these burdens are removed as the organization only integrates with and manages one partner. It also facilitates a more holistic approach to continuous improvement as gaps between the two operations can be more easily identified and resolved through regular performance reviews that encompass both operations.

3. Single-Party Accountability

Having a single partner ensures there are no conflicts between partners when issues occur. A single party is accountable for end-to-end, on-time and in-full fulfillment and delivery, as well as order visibility.

4. Improved operations and resource utilization

Having a single partner ensures the same set of master data is being used by both the TMS and WMS, increasing confidence that transportation capacity can be matched with warehouse output. With a holistic view of activities, the LLP can better manage resources to reduce bottlenecks in shipping and receiving during busy periods. There may also be opportunities to shift investments to drive down costs. Changing loading processes in the warehouse, for example, may enable transportation savings by increasing capacity utilization.

5. Improved Agility

Under the management of a single partner, the supply chain functions as a cohesive, unified process, enabling faster response to market or business changes. For organizations considering divesting a business unit, having a single party accountable for that unit’s supply chain greatly simplifies this process.

Capabilities Required

One of the reasons supply chain integration doesn’t get as much attention as other optimization strategies—even though it can often deliver greater value—is that very few logistics providers have the scope of services and scale to execute this strategy effectively. Here’s what to look for when considering a partner to integrate operations across the supply chain:

1. Deep cross-discipline expertise

When acting as a single supply chain partner, it isn’t enough to have well-developed solutions in one area of the supply chain. Logistics partners serving in the role of LLP and warehouse manager must have fully developed and mature offerings across the full range of supply chain solutions, including design, warehousing, packaging and transportation.

2. Advanced technology expertise
You’ll want a partner who is comfortable working with best-in-class warehouse and transportation management systems, extensive experience integrating systems and carriers, and an easy-to-use platform for accessing centralized data. You’ll also want a partner that is actively accelerating digitalization within the warehouse by implementing productivity-enhancing technologies such as autonomous vehicles and robotics.

3. Mature OMS
Some of the benefits of integration will be lost if the chosen partner does not have a well-defined and consistently executed operations management system (OMS) that extends across warehousing and transportation. The OMS creates a framework for the LLP to translate supply chain goals into efficient processes that support predictability and continuous improvement. Through a focus on consistent standards, behavior change and ongoing management, the OMS enables reduced variability and maximum performance.

4. Scale and reach
Ensure your partner has the resources to scale with your needs and the reach to manage partners and carriers globally as required. When managing warehouse operations, particularly in areas such as eCommerce fulfillment, the ability to quickly and efficiently scale labor using established processes is vital to meeting peak demands.

Taking the Next Step

Making the move to an LLP relationship represents a significant evolution in supply chain management and may not be right for every organization. But for those undergoing supplier consolidation initiatives, being overburdened by the challenge of managing multiple partners, considering significant business changes, or seeking to reduce supply chain complexity, it can be a business-changing decision. The first step is a supply chain audit that will help determine whether this type of relationship is right for your organization.

By DHL. 18 October 2022.
Source: Flight Waves. https://www.freightwaves.com/news/unlocking-the-value-of-supply-chain-integration. 31 October 2022.

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