Top 10 tips to achieve a lean supply chain
Denise Oakley, international marketing director, GXS
Achieving a lean supply chain is about eliminating co-ordination waste, not just stock, from every possible area within your supply chain operation. While lean is commonly known in the manufacturing sector, a lean supply chain approach brings benefits to any company’s supply chain operation, increasing efficiency and reducing cost, which ultimately results in an all-important competitive edge.
By taking just some of the steps below, you will cut wasteful, non-value-added activities from your extended supply chain and reap the benefits of a more efficient, streamlined operation.
10) Reduce inventory
The larger the inventory, the more time and effort it takes to maintain. Bloated inventories result in disorganised and chaotic working environments. Often excess stock is compensation for an inflexible supply chain or an indication of insufficient supply chain visibility.
Removing unnecessary stock will cut down on storage space, handling time and reduce overall costs.
9) Modernise stock control
Surprisingly large organisations are still relying on old-fashioned pen-and-paper approaches to monitoring and ordering stock, a highly inefficient process prone to human error. Replacing the clipboards with handheld devices or tablets will cut down on mistakes and greatly speed up the process.
8) Consolidate and automate
Even when up-to-date technology is used, key data on stock levels and product information often ends up scattered across numerous spread sheets. This lack of co-ordinated supply chain information wastes time and increases the risk of errors. Data is manually re-entered and there is no single view of critical information. Consolidating stock data into a single location means that information can be updated once and in real time, ensuring greater efficiency and accuracy.
7) Advanced shipping notices (ASNs)
An ASN is sent to the receiver ahead of a delivery and typically contains the same information as the original purchase order, as well as logistics information such as carton IDs, content descriptions, and transportation specifics. So, firstly automate your PO to ASN information. Adopting ASN’s gives distributors and warehouses the data they need for advanced planning and helps improve delivery visibility.
Loading and unloading stock and materials is a time intensive operation that can often be very wasteful. Cross-docking enables the transfer of goods/materials from an incoming truck or railcar directly into an outbound vehicle. As the products spend no time being stored, shipping costs are reduced and inventory costs are minimised.
Another technique to cut down on storage and handling; with drop-shipping the supplier ships finished products directly to the retailer’s customer, cutting out middleman distribution centres. This can produce better lead times for orders, helping retailers cut down on delivery time and costs, while the use of ASNs can keep customers accurately informed about their order progress.
4) Direct store delivery (DSD)
This third advanced transport technique is enabled by ASNs, and in this case the manufacturer or supplier ships directly to the point of consumption or sale, again bypassing distribution centres. This is especially useful for perishable goods like fresh produce where every day diminishes value, and by delivering in bulk, it saves unloading, checking and storing every time.
3) Supply chain visibility
By gaining visibility of its entire supply chain, a company can identify elements that are slowing down its operations or wasting resources. With the increase in globalisation, this means taking all suppliers around the world into consideration, including not just tier one, but also tier two and three suppliers.
Adopting electronic invoicing enables a company to automate their payment process and integrate it with other business systems. In addition to saving upwards of 50 percent over a paper system, e-invoicing also enables the entire supply chain to be much more efficient, and has the added advantage of being environmentally friendly.
1) Achieve B2B integration with a single platform
Even the most advanced techniques are useless if they aren’t properly integrated into the rest of the business. A truly integrated system that incorporates everything from product and stock data, outbound and inbound shipments is the key to achieving a genuinely lean supply chain.
Without integrating into a single platform, businesses are still likely to waste resources by duplicating efforts across operations. A lack of integration means transferring information across systems, which is both time-heavy and vulnerable to error.
A flexible and services-oriented B2B cloud platform like GXS Trading Grid® will help automate global trading communities, shielding complexity from rapidly changing standards. It will also help eliminate duplicative efforts, drive efficiency, and enable a new level of process integration and business intelligence. By integrating into a single platform, businesses can ensure they achieve real results with all of their lean efforts.
Top 10 air freight carriers
10. Cargolux Group
The Luxembourgish freight carrier Cargolux Group (comprised of Cargolux Airlines and Cargolux Italia, established in 2008) remained in the number 10 spot, with a total reported FTK (Freight Tonne Kilometer) equaling 7.45 bn, which represents a 7.7% expansion year-over-year. The carrier group currently operates a fleet of 30 aircraft (26 through Cargolux Airlines and an addition four through Cargolux Italia), primarily variants of the Boeing 747.
9. Korean Air
Headquartered in Seoul, Korean Air provides cargo and passenger services to over 100 destinations in 44 countries. The carrier fell from eighth place in the previous year’s rankings, with a total FTK of 7.66 bn, representing a 7.1% decrease year-over-year. Korean Air reported a net revenue of $10.7bn in 2017, also reporting a return to profitability for the first time in five years, according to Forbes.
8. Air France-KLM
The Air France-KLM freight carrier group was founded in 1947. The group is comprised of Air France, KLM, and Martinair, and is based in Paris, France. Falling from seventh place in the Freight 50 rankings, the carrier reported a total FTK of 8.13 bn, which represents a 9.2% decrease in traffic year-over-year. The group reported a net revenue of $29.08bn at the end of 2017 and is ranked #28 on Forbes Magazine’s list of Best Employers.
7. Qatar Airways
Qatar Airways, the nationally owned airline of the Kingdom of Qatar is based in Doha, and ascended two places in the Freight 50 rankings, with a total FTK of 9.22 bn, representing a 19.6% increase in comparison to the previous financial year. The carrier’s Cargo division recently launched facilities at its hub in Doha to provide a “Seamless Cool Chain”, comprised of a “2,470 square metres Climate Control Centre situated at the airside… equipped with segregated temperature-controlled sections for storing pharmaceuticals and perishables.” This end-to-end supply chain control is expected to further improve Qatar’s standing as a leader of Middle Eastern air freight.
6. Lufthansa Group
Based in Cologne, Germany, the Lufthansa Group (comprised of Lufthansa, Swiss, Austrian, and Brussels Airlines) fell from the fourth position in the Freight 50, with a combined FTK of 9.46 bn. While this represents a 1.6% increase in traffic, year-over-year, the carrier was forced down the list by drastic growth from other German freight company, DHL. According to Forbes, Lufthansa’s revenue and net profits ($41.5 bn and $2.78 bn, respectively) in 2017 are both the highest reported by the company over a ten-year period.
5. Cathay Group
The Cathay Group (composed of Cathay Pacific Airlines and Dragonair) is headquartered in Hong Kong and its Cargo division accounts for 21% of the airline’s total revenue. The company’s first dedicated cargo flight between Hong Kong, Frankfurt, and London, was established in 1981, according to the official site. Now, Cathay Pacific’s Cargo Division services over 47 destinations worldwide. The carrier fell from the fourth position on the Freight 50 ranking, as its total FTK fell by 3.6%, to 10.21 bn. According to Forbes, Cathay Pacific experienced a second year of unprofitability, although the airline’s asset portfolio reached a record high in 2017, with a net value of $24.1bn.
4. DHL Express Group
Operating as the largest European carrier group, DHL Express Group (composed of DHL Air, DHL International, Air Hong Kong, Polar Air Cargo, ABX Air, Southern Air, Aerologic, and EAT Leipzig) rose two positions in the Freight 50 rankings. The carrier reported a total FTK of 10.56 bn, which represents an increase of 15.1% year-over-year. In 2018, at the Farnborough Air Show, DHL Express announced the purchase of 14 Boeing 777s, part of a new strategy to modernise its fleet.
3. UPS Airlines
Headquartered in Atlanta, Georgia, UPS Airlines is part of United Parcel Service, Inc. Founded in 1908, UPS is the oldest company in the Top Ten, and retained third place in the Freight 50 rankings, with a total FTK of 11.26 bn. This represents a 3.9% increase year-over-year. The Company as a whole reported a net revenue of $67.7 bn, according to Forbes, representing a continuation of a ten-year trend of continuous growth. Forbes also ranks UPS among the world’s top 100 most-innovative companies, and the world’s top 50 most-valuable brands.
2. Emirates Skycargo
The state-owned air freight carrier for the UAE, Emirates Skycargo remains in second place on the Freight 50, with a total FTK of 12.27 bn, representing a 0.4% decrease year-over-year. The carrier’s central hub in Dubai allows its 259-strong fleet to reach over 1.5 bn consumers in under eight hours. Current purchasing plans are underway for Emirates Skycargo to almost double its fleet size. According to Albawaba, “In response to increasing demand from its customers, Emirates SkyCargo introduced a range of air transport solutions specific to industry verticals including Emirates Pharma, Emirates Wheels and Emirates Fresh.” Emirates Wheels has transported close to 150 cars per month since the program’s inception.
1. FedEx Express
Founded in 1998, FedEx Express is both the youngest and largest air freight carrier worldwide, with a total FTK of 15.71 bn. Haulage decreased by 0.9% year-over-year, while revenue increased to $60.5 bn in 2016, and again to $63.8 bn in 2017, continuing an eight-year growth trend. FedEx employs 395,000 members of staff, with FedEx Express operating across twelve transport hubs globally. The carrier purchased an additional 24 Boeing 777 variants in 2018, maintaining their company’s position as the largest airline in terms of cargo haulage.