Today’s supply chains are under extreme pressure. From hauling capacity and labor constraints to changing order profiles and more frequent disruptive events, maintaining predictable and profitable material flows has never been more complex or challenging.
Some solutions to these challenges are obvious, such as implementing new technologies to improve performance and productivity. Robotics, autonomous vehicles, wearable devices and optimization tools are all enabling supply chains to make the most of their resources. But other less obvious solutions can have just as much, if not more, impact.
The solution most likely to improve operations is to increase integration between supply chain partners and supply chain processes. The former can be accomplished through a Principal Logistics Partner (LLP) relationship; the latter by selecting an LLP capable of directly managing the operations of the distribution center (DC).
The value of an LLP
An LLP typically provides certain critical supply chain functions, such as transportation management, while coordinating the activities of other supply chain partners, including suppliers, carriers, and other logistics providers.
The coordination of transport on the network is ensured by strategically located control towers, which serve as a hub for the monitoring of activities and the integration and analysis of data from these activities. Through the control tower, the LLP can provide real-time visibility and 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, by 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 manages warehouse operations, supply chain teams have a single interface with transportation and warehouse management systems, operating practices are standardized across the chain procurement and resources can be managed more holistically. This offers the following advantages:
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 provide this level of visibility.
MySupplyChain provides a single access point for warehouse and transportation data and tools. It provides 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 access to allow customers to track their orders. A visibility and analytics platform such as MySupplyChain is essential to realizing the benefits of an LLP relationship.
With separate partners handling transportation and warehousing, it’s up to the organization to bridge the two operations. This can take time and lead to operational inefficiencies. It also requires IT resources to establish integrations with multiple trading partners. With LLP warehouse management, these burdens are removed because the organization only integrates and manages a single 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.
Single party responsibility
Having only one partner ensures that there are no conflicts between the partners when problems arise. A single party is responsible for end-to-end, on-time, and complete fulfillment and delivery, and order visibility.
Improved operations and resource utilization
Having a single partner ensures that the same base data set is used by both TMS and WMS, increasing confidence that transport capacity can be matched to the output of the system. ‘warehouse. With a holistic view of activities, the LLP can better manage resources to reduce bottlenecks in shipping and receiving during peak periods. There may also be opportunities to redirect investments to reduce costs. Changing loading processes in the warehouse, for example, can save transportation costs by increasing capacity utilization.
Under the leadership of a single partner, the supply chain operates as a cohesive and unified process, enabling faster response to market or business changes. For organizations considering divesting a business unit, having a single party responsible for that unit’s supply chain greatly simplifies this process.
One of the reasons that supply chain integration does not receive as much attention as other optimization strategies, even though it can often deliver greater value, is that very few logistics providers have the breadth of services and scale to execute this strategy effectively. Here’s what to look for when considering a partner to integrate operations across the entire supply chain:
In-depth transversal expertise
When acting as a single supply chain partner, it is not enough to have well-developed solutions in one area of the supply chain. Logistics partners playing 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 .
Advanced technological expertise
You’ll need a partner who’s comfortable with leading warehouse and transportation management systems, extensive system and carrier integration experience, and an easy-to-use platform to access data centralized. You’ll also want a partner that’s actively accelerating digitalization within the warehouse by implementing productivity-enhancing technologies like autonomous vehicles and robotics.
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 to warehousing and transportation. The WHO creates a framework for the LLP to translate supply chain objectives into effective processes that support predictability and continuous improvement. By emphasizing consistent standards, behavior change, and ongoing management, OMS enables reduced variability and maximum performance.
Scale and scope
Ensure your partner has the resources to scale with your needs and the reach to manage partners and operators globally as needed. When managing warehouse operations, especially in areas such as e-commerce fulfillment, the ability to quickly and efficiently scale the workforce using established processes is essential to meet the peak demands.
Take the next step
Moving to an LLP relationship represents a significant shift in supply chain management and may not be suitable for all organizations. But for those undertaking supplier consolidation initiatives, overburdened by the challenge of managing multiple partners, considering significant business changes, or looking to reduce supply chain complexity, this can be a business-changing decision. . The first step is a supply chain audit that will help determine if this type of relationship is right for your organization.
To find out how DHL Supply Chain can unlock the value of supply chain integration as an LLP, visit www.dhl.com/supplychain/transportation