The Consumer Packaged Goods Industry Needs Supply Chain Digitization

December 6, 2017

eCommerce shopping and changing consumer demands are causing an acceleration in supply chain complexity. The strain this puts on manufacturing companies is especially intense. Two major issues have presented themselves as a result—capacity issues driven by increased volume, and supply chain disruptions impacting just-in-time shipping. In order to combat these issues, organizations must look toward digitization.

Digitization Alleviates Supply Chain Complexity

The supply chain has experienced more change in the last year than in the previous five decades, but has quickly grown to require a level of connectivity, speed, and precision that traditional approaches can’t deliver. The industry’s legacy technology doesn’t have the capability to transfer data in a way that meets the needs of the modern supply chain and ondemand consumer. Customers expect fast deliveries, and shipping companies are experiencing higher volumes. In order to meet customer demands, the entire process must become more efficient. That’s where digitization comes into play.

Digitization opens up a wealth of capabilities for your supply chain. Visibility, for example, is a necessary tool for combating supply chain disruptions, and true visibility can only be achieved via digitization. The ability to track shipments in real-time and leverage that data for exception management capabilities allows for shippers to plan accordingly when there’s going to be a delay. For example, if an organization knows their trucks and shipments are moving behind schedule, they can keep their customers informed and satisfied, and they can take the necessary measures to satiate the most problematic issues that arise as a result of the delay. Digitization also provides the foundation for significant interoperability across carriers, transportation modes and systems, opening the door for a multi-modal solution to exist in one place (Truckload, Rail, Dray, LTL, etc). This way you can integrate your entire supply chain rather than having each mode or carrier fragmented.

It’s all about accessing and leveraging real-time, accurate information. Digitizing your supply chain provides you with high-fidelity data so you can create actionable insights and leverage powerful tools for identifying and responding to exceptions. The further ahead you are able to see, the easier it is to avoid stockouts, and order the right quantities at the right times.

Just-In-Time and On-Time-In-Full Delivery

Most shippers don’t want to sacrifice space simply to keep a wealth of product on hand. This has created a need for Just-in-Time (JiT) shipping. Essentially, companies are ordering their inventory as needed to avoid holding too much stock at any one given time. They forecast that they’ll be in need of a certain number of items at a certain time, and they place an order accordingly. It’s great because it means they don’t have excess stock on hand, but if there’s a disruption in the supply chain, the entire shipment can be held up.

This is becoming especially problematic because retailers are tightening their delivery windows, as well as their penalties for missing those windows. For example, Walmart added an On-Time, In-Full program, which requires deliveries to be made on-time and in-full 95% of the time. Any missing, late, or early items over a period of one-month incur a fine of 3% of their total value. Fines like these are becoming more common across the board, and combined with increased volume and capacity shortage, manufacturers are losing money. Leveraging automation solutions can enable manufacturers to meet these stricter deadlines, even with a higher volume of shipments.

Automating Dispatch

The Amazon effect is being felt all over, and manufacturers and packaging companies have experienced an intense rise in volume. What’s already a $635 billion industry is expected to grow to $721 billion by 2020. More business is a good thing, but it comes with a set of challenges.

When LTL carriers make daily stops with a two-hour pickup window, they need accurate, up-to-date dispatch information. With so much of the industry still relying on EDI 204, which needs to be batched, carriers and and their customers are working with unreliable information. This frequently results both missed pickups and delays with drivers having to sit in the yard and manually key in each shipment. This clogs up the yard, and causes delays across the entire network.

Utilizing project44’s API-based Dispatch services, information is updated in real-time, and information symmetry is achieved. That means the shipper, the carrier, and the end-customer all receive the same information at the same time. Carriers see exactly what they’re picking up before they arrive, so they can plan accordingly. Linehaul is planned as soon as the dispatch call is sent via API, and manual key entry is not necessary.

Digitizing the supply chain allows manufacturers to keep up with the increasing demands of their customers, and contribute to the visible supply chain. The more digitization, automation, and visibility solutions an organization can leverage, the more likely they are to become and remain a preferred vendor.

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