Global Logistics and Supply Chain Strategies - September 2008 - (Page 36)

work together, Bharadwaj says. The retail industry is a particular source of siloed behavior. With all of the category managers and buyers that make up a retail supply chain, it’s not unusual for different departments to make separate purchases from vendors within the same region—or even the same vendors. Often that oversight results in the excessive use of less-than-truckload transportation, which is slower and pricier than full truckload carriers. Consolidating purchases from a given area can greatly reduce logistics costs, Bharadwaj says. Working for one client, Infosys uncovered multiple LTL shipments coming from vendors as close to one another as five miles, shipped on the same day to the same retailer’s distribution center. But companies can do better than merely consolidating those kinds of loads, Bharadwaj says. Internal cooperation can uncover shipments scheduled from the same region over a period of several days—a redundancy that standard transportation management system software typically won’t spot. If the consignee is willing to reschedule some delivery dates by a day or two, the supplier can realize even greater opportunities for consolidation. Using this technique, says Bharadwaj, Infosys projected savings of between 3 percent and 12 percent on one client’s inbound transportation costs. Following a threeweek review of some 21,000 purchase orders, Infosys was able to demonstrate, on an annualized basis, savings of around $1m on a base expenditure of $35m. Such a strategy becomes even more valuable as fuel prices soar, Bharadwaj says. Ritu Jain, product marketing manager with Cary, N.C.-based SAS Institute Inc., sees an inherent lack of trust between internal functions that must be overcome. The customary result is a lack of operational transparency. “It makes it difficult [for employees] to come together and share data,” Jain says. “There’s almost a fear of sharing the knowledge.” The solution begins with a commitment by top management to restructure the company and alter key business strategies. But the view of individuals further down the organizational ladder must also be sought. Often they have a better sense of how to make the new strategy work. Jain says all employees must drive toward a common goal, whether that’s customer satisfaction, a higher profit mar- gin or improved market share. More transparency between jobs allows employees to see how their actions reverberate throughout the company. Jain cites one example of a large retailer that had separate and independent groups dedicated to warranty management and field services operations. When a warranty claim came in, the first group wouldn’t share with the second exactly what needed to be fixed. The disconnect was solved when the company created an umbrella organization with one department head overseeing both groups. The common goal was customer satisfaction, leading to a realignment of metrics on the service side. That level of cohesion must also take place at the planning end of the chain. In this area, information technology can be of help. SAS recently launched an application that “The goal is to get employees to take on ownership and responsibility. ” — Mark Payne of Linksys allows companies to develop consensus forecasts at any level of product. It creates a baseline which can be shared by multiple departments, who can then run “what-if” scenarios of actual demand to determine whether the forecast needs to be adjusted. Collaboration in A&D Few industries face as many collaboration challenges with outside suppliers than aerospace and defense. But companies in that sector also grapple with everyday issues of internal cohesion. Exostar, the Herndon, Va.based creator of a collaboration platform for A&D suppliers and manufacturers, also addresses that side of the equation. Exostar works to narrow the chasm between engineering, sourcing and general supply chain activities, says chief executive officer Kevin Lowdermilk. The application known as ForumPass allows for the sharing of key documents pertaining to product design and other activities. Still, the tool depends on a change in human behavior, which can defeat the most cutting-edge technology. “I don’t know that Exostar is going to be able to break down [the silos],” says Lowdermilk, “but we can start bridging the gap.” To make it work, companies must clearly communicate which business processes they are tackling and who is involved in the effort. Employee training on the back end is equally important, Lowdermilk says. Rolls-Royce is deploying Exostar’s collaboration tools to ensure the transmission of data in a timely fashion. It uses ForumPass to conduct cross-organizational meetings in real time around the world. “Within one to two hours,” says Lowdermilk, “several thousand users are getting the same version of the truth. They use that regularly for internal meetings and for shareholder meetings.” Other companies rely on Exostar’s technology to harmonize procurement, parts pricing and vendor relations. Simply putting everyone on a single communications platform isn’t enough, however. The many individuals who make up an internal supply chain tend to be measured differently, according to their geographic region, day-to-day activities and professional level, notes Ann Grackin, managing director of the Supply Chain Intelligence Service of Marsh Inc., in Boston. “Sometimes it’s embedded in what the person’s job is,” she says. “There’s an inherent conflict in what these people are bringing to the table.” Grackin often sees a disconnect between procurement and logistics. The first is out to secure the cheapest parts regardless of location, while the second must deal with the realities of transportation, such as port congestion. Often the savings derived from buying the lowestprice part will be more than offset by higher transportation costs. A similar level of tension might exist between individuals in forecasting, with backgrounds in materials management, and dispatching, where employees tend to have gotten their start driving delivery trucks. The solution, says Grackin, lies in coming up with a total cost of sourcing that encompasses all of the elements involved, from purchase to delivery. This single metric, incorporating such often-ignored factors as insurance and risk management, can help the entire company see where saving money in 36 SEPTEMBER 2008

Table of Contents Feed for the Digital Edition of Global Logistics and Supply Chain Strategies - September 2008

Global Logistics and Supply Chain Strategies - August 2008 Contents Editorial GL&SCS Exclusive Fast Forward Up Front Cover Story: Free The Enterprise: Busting Silos in the Supply Chain Business Process Management Merits New Look fromCorporate Strategists Ships and Ports Explore Many Ways to Go Green The Right Information Should Help Avoid Any Kind of Risk Industry Voices

Global Logistics and Supply Chain Strategies - September 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.