Value of true end-to-end intercontinental transportation planning, by JDA Software
Written by Fabrizio Brasca (pictured, right), Vice President of Global Logistics, JDA
With the unprecedented power of the omni-channel consumer driving behaviour in the global marketplace, companies — regardless of where they sit in the supply chain — must not only find new ways to achieve efficiencies and operational control, but also to accomplish these objectives with the agility necessary to competitively serve today's end consumer.
A better approach: end-to-end planning from initial point of origin to final destination
Today's retailers and manufacturers can infuse value into their transportation and logistics networks by adopting an end-to-end intercontinental planning process. Enhancing both upstream and overall visibility, this process delivers end-to-end transportation lane control extending from true initial global point of origin to ultimate final destination. While outsourcing certain execution segments such as trade compliance or freight forwarding might still make business sense, end-to-end planning ownership provides companies with the critical ability to adjust execution across their networks based on changes in their supply chains. Consolidation and port routing decisions can be made on a network-wide basis instead of a single transaction at a time. And with visibility into ultimate freight destinations, companies can dynamically take into account factors such as the bookings process, port congestion and capacity balancing — and then enact routing changes as needed. Rather than the common practice of setting a predefined itinerary or fixed path each and every time between origin and destination, companies can now re-plan as dynamics change in the network.
Taking control at the point of origin
Companies today tend to conduct more optimisation analysis on the domestic side than on the international origin side, and consequently many of the operational inefficiencies that exist reside on the freight origin front. Both sides currently are independently planning and re-planning, which consumes valuable time and resources. As such, taking control at the point of origin can represent a huge opportunity. In order to drive synergies at the point of origin, however, companies must first be armed with transportation management capabilities that are equipped to handle the challenges of routing in the origin point's global region. For example, a company might be accustomed to applying sophisticated routing techniques domestically in North America, such as creating multi-stops, doing top-offs on the way to a port and looking for consolidation points. But applying these techniques to an origin location in China requires the company's transportation management system to be capable of navigating the challenges of different truck sizes, a very diverse carrier base and limited geographic information inherent to the location.
Today, suppliers often define the terms regarding which party assumes ownership of the various process stages, including whether or not a retailer assumes responsibility for transporting goods to port or whether it takes over after that step. From an inbound retail workflow perspective, one of the first steps in implementing an end-to-end intercontinental planning approach is to conduct analysis across all suppliers and associated purchase orders to determine the best stage for the retailer to assume responsibility in order to truly manage end to end from a cost perspective.
Increasing visibility and creating supply chain resiliency
The connectivity between origin and destination routing created by global end-to-end planning delivers significant visibility to help drive decisions. Ocean carriers are now offering more extended services, such as providing port-to-port rates as well as door-to-door rates in which they handle the trucking on both ends of the spectrum. Looking at the planning perspective from true initial origin point to final destination enables a company to evaluate all of the alternatives between routing freight individually or utilising combinations in which the ocean carrier might assume the trucking legs as well.
This overall need for increased visibility and effective examination of all options and how they relate to one another has never been more important. The past several years have served as a reminder that extraordinary circumstances, like Japan's devastating earthquake and tsunami of 2011, can occur that may challenge existing transportation lanes and disrupt the supply chain.
Gaining end-to-end intercontinental planning control also provides companies with the ability to make in-route modifications based on changes in demand and the network. Consider for instance a container of flat screen televisions traveling across the ocean, slated for a final distribution centre destination in the north eastern U.S. While the merchandise is still in ocean transit, the company discovers through its supply chain processes that there is a surge in demand in the south eastern U.S. The port arrival location may be fixed, but with visibility into the change in demand, the company can dynamically re-plan where that last truck goes and arrange for transport to the high-demand location.
The bottom line
Given the need to drive incremental global transportation and logistics value and continuous improvement through every opportunity, retailers and manufacturers have significant reason to adopt end-to-end planning from true origin to final destination.
Retaining greater control of the end-to-end transportation chain delivers an enhanced level of agility and economies of scale that save resources and also speed time to market. By doing so, companies can achieve true efficiencies while nimbly minimising overall supply chain risk in an increasingly complex environment.