how to optimise your end-to-end supply chain and logistics

End-to-end logistics plans, implements and controls the forward and reverse flow and storage of goods and services, as well as the related information, between the points of origin and consumption. All of this is to meet the customer’s requirements.

This is slightly different to end-to-end supply chain management, which we’ll discuss further below.

End-to-end logistics planning and execution is a challenging process because there’s so much to coordinate. Planning end-to-end logistics, however, should look something like this:

1. production planning to balance supply and demand and enable accurate forecasting accuracy;
2. load optimisation and, based on business KPIs, creation of reliable transportation plans;
3. management of fleet, charters, warehouses and depots, using a centralised system;
4. creation of optimal routes through cost-effective single, multimodal, multileg or multi-hub trips;
5. tracking of shipments to avoid traffic, breakdowns, shortages of resources and order changes;
6. capitalisation on every journey, by making round trips whenever possible and fewer empty miles;
7. consolidation of loads to overcome bottlenecks, capacity restrictions and provide complete flexibility;
8. optimisation of the workforce by preventing staffing issues and creating safe, productive working environments;
9. reduction of delivery times to improve customer experience and achieve customer satisfaction and outperform competitors on delivery.

End-to-end (E2E) supply chains differ slightly from traditional ones in so far as they focus more on the needs of the customer. As a result, they tend to offer a complete after-sales service.

Below are the steps of a traditional supply chain process:

1. Collection of the raw materials: This is the first step and involves gathering the materials necessary to manufacture the product. They may be a single product or several products collected from different sources.
2. Collection of the materials from the suppliers: The manufacturers must collect the materials so that they can make the product.
3. Manufacturing: The manufacturer starts all the processes necessary to make the product and then completes them.
4. Distribution: The final product is then transported to the retailers.
5. Consumption: The customer makes a purchase.

Although similar to the traditional supply chain, an end-to-end supply chain expands on this a little more, as the focus is not just on efficiency, but on delivering customer value as well. It’s more holistic, whereas the traditional supply chain is more siloed and treats each element as a separate component. Below are the elements of an end-to-end supply chain:

• product design;
• procurement of raw materials;
• inventory management;
• finance;
• operations;
• quality control;
• logistics;
• sales;
• after-sales service.

the very first step to take when seeking to improve a supply chain should be to review your supplier relationships. Communication is key, and good suppliers are responsive, so you should start here and ask questions such as:

• Do they answer emails in a reasonable amount of time?
• Do you understand each other, or do you have to keep explaining, again and again, the same thing to them?

You don’t want to lose money on unsellable goods, just because your supplier didn’t understand you very well or didn’t get back to you in an appropriate amount of time.

You should also consider reliability. If a supplier gets orders wrong, ships late or regularly don’t follow through on their promises in some way, they’ll create problems in your supply chain. It’s best to cut ties with suppliers who are this unreliable.

Think about speed, too, of course. How quickly do suppliers fulfil your order? If they take a long time, you may have to order more stock to avoid running out while they’re producing your order. If you’re running a lean supply chain that involves ordering only small quantities at a time, you might be better off avoiding operating a global supply chain that has a supplier in a distant part of the world. It could also be problematic if your demand planning is inaccurate.

Analyse your supply chain strategy

You want your supply chain to be lean, low cost and efficient, so you should review your strategy. Ask yourself the following questions:

• Is the strategy suitable for the business type? The supply strategy execution should be appropriate for the business. A drop-shipping model might not be right for an online business, for instance, whereas business-to-business (B2B) companies could improve their supply chains by switching to a wholesale model.
• Is the business making the best of third-party logistics providers? Look at your options and check you’re not missing out on any deals. If a supplier is working with a logistics provider but the provider themselves are expensive, work with your supplier to see if they’re willing to ship their goods with a different logistics provider.
• Is the supply chain strategy resilient? Think about how devastating a disruption to the supply chain can be for the business. You can make your supply chain more resilient by supporting it with backup vendors and logistics companies that can take over supplies or shipping if necessary. If disaster strikes, you’ll still be able to keep things moving.

Use demand planning

Implementing demand planning could improve your efficiency if you’re not already using historical data to forecast customer demand for your products. If you know a certain product is popular in June, July and October, you might work with your suppliers to make sure there are enough supplies available in the chain for these times.

As part of your planning, you should also consider how to work around your suppliers and other factors, such as their location. If, for instance, you’re working with a supplier in China, you must account for their holidays and may wish to order materials or products well in advance so that you have them when you need them (and also cut costs because they’re not sitting somewhere in storage for a long time while the supplier is closed).

Remove data silos

A data silo involves one group having access to information required across several groups or users. This is bad news for the business because if a supply chain manager, procurement agent and demand planner don’t have access to the same information, it can lead to major mistakes in the supply chain, such as double ordering.

Using a supply chain management platform (or even an inventory one) can bolster the visibility of the supply chain across the business. The extra visibility will smooth out the kinks in the supply chain across the business, helping you to make massive savings and keep errors to a minimum.

Monitor the system

Something that works well today won’t necessarily work tomorrow, and a good supply chain manager will know this. Review the performance of your supply chain regularly. Have any patterns developed? Have there been any spikes in late shipments, unfulfilled orders, products or inconsistent quality?

Try to identify the source of the problem. It could be a supplier. It could be a logistics provider. It could be incorrect warehouse handling. Once you’ve detected the source, make a change so that you can improve your supply chain. A change in the vendor or in shipping methods, or some training for warehouse employees, are all potential solutions, depending on the issue.

In the past, supply chain information was siloed a lot. As you’ve seen above, this can create problems and lead to costly mistakes. Data silos are an old-school way of thinking and don’t match the demands of today. Businesses can’t treat each stage of the supply chain as singular holders of information only relevant to their function in the chain and oblivious to what’s going on in the other stages.

Times have changed, and supply chains have moved towards a more modern approach. Now, supply chain visibility is the thing. Supply chain visibility, basically, refers to the business’s ability to track each component of the product or service as it moves away from the supplier’s hands to the business’s own.

One way to enhance visibility is to make it possible for suppliers to check your inventory in real-time so that they can understand your present situation better and plan ahead to fulfil future demand. Improving your supply chain visibility will also help crucial members within your team strategise better and lower risk.

Here are a few ways to improve the end-to-end visibility of your supply chain:

Set out your key performance indicators (KPIs)

This is the starting point. You need to know what success looks like. If you don’t, you’re operating in the dark and wandering around without any real compass. Your KPIs serve as clear, measurable indicators against which you can check whether your business is on track to meet its goals.

Increase transparency across the supply chain

Transparency in every link of the supply chain is essential for better end-to-end visibility. You must adopt a holistic mentality for this.

Some businesses only meet their suppliers in a limited way and miss some of the issues a supplier may face. Bottlenecking, lack of raw materials, sourcing issues and stalled inventory are all problems that can affect not only the suppliers but also other parts of the chain. If a business can recognise its relationship with the supplier as a long-term partnership, this will lead to more proactive solutions and can also reduce issues such as data silos.

Implement uniform technology and other solutions

If your warehouse is using dated technology incompatible with that of other members of the supply chain or that requires manual input, this can create gaps in information that make it harder to detect potential risks and exceptions in the warehouse. Using similar technology and solutions across the supply chain will simplify the way the different parts of the chain pass the information along, speeding up the flow of information as well.

Encourage greater collaboration between departments

This goes hand in hand with greater visibility. When each department is aware of what the other is planning or working on, this places everyone on the same level. Employees can assist with any issues that emerge, and they can even suggest potential ways to counter problems that might come up. Greater cooperation between departments increases the synergy within the supply chain and encourages everyone to treat the chain as a whole, leading to higher levels of productivity.

Plan for customer demand

Big data is a big help in the world of supply chain management. Understanding what customers want, in what quantities and when they want it can help you to make better procurement decisions, choose the right supplier, shorten lead times and lower costs. You can track customer order history, seasonal trends and more so that you can plan more accurately for demand.

Plan human asset capital

Without this planning, some employees may end up staying late, whereas others may leave early unaware of their colleagues’ workloads. This can lead to burnout and high employee turnover.

By planning your human asset capital, you can do much more than make sure the business has plenty of staff, however. This entails ensuring they have proper training, identifying skills and weaknesses, providing motivation and listening to their concerns. Team-building exercises, continuous training, employee reviews and regular meetings (weekly or daily) are all ways to do this.

Efficiency is essential in a supply chain, of course. Planning for human capital and customer demand are two practices already discussed. Here are some of the best practices to implement in an end-to-end supply chain:

Setting up and implementing a good inventory management process

It’s important to keep track of your inventory at all stages of the process, and there’s plenty of technology out there that can help. This technology can assist you with tasks such as avoiding inventory stockouts, optimising inventory control, setting automatic reorder points and demand forecasting.

Using a warehouse management system

When you use a warehouse management system, you can decide which areas call for improvement, how to cut costs and become generally more efficient. The system allows you to manage inventory storage, track the inventory in real-time and become more productive to complete orders.

Creating a returns management system

Unfortunately, some orders will come back, so you need a smooth returns management system for two main reasons: 1) to track damaged inventory that will need to be returned to the supplier; and 2) to keep customers happy by making sure damaged products or wrong products are returned as quickly, easily and at as little cost as possible.

Using real-time data for continuous improvement

The use of data is paramount for good supply chain planning. When you use the right reporting tool, you can make much better-informed decisions for your supply chain planning. Important metrics to track include:

• inventory turnover rate;
• order accuracy;
• time to ship;
• warehouse capacity used;
• average cost per unit for storage, order fulfilment and shipment.

Implementing benchmarking processes

Establishing solid benchmarking processes will help you to measure the efficiency of the supply chain and the processes within it at different stages and intervals. You’ll be in a better position to identify and address issues within inventory management, storage planning, quality control and more. You can implement qualitative and quantitative benchmarking, the former working better for measuring best practices, whereas the latter will suit better working with historical data, gathering information from it and defining KPIs.

Root cause analysis

A root cause analysis can help you to get to the very heart of problems in your supply chain. This analysis provides a data-driven picture of the weaknesses in the supply chain and the challenges it’s facing. Then you can work on finding efficient and effective supply chain solutions.

Developing good relationships with suppliers

Communication between the business and the suppliers is vital. Doing so can allow you to avoid shortages, delays and other issues, or plan for them, early on. It’s important to identify reliable suppliers and, to minimise potential disruptions or other issues in your supply chain, weed out unreliable ones. When you discover which suppliers are reliable, it’s important to foster open communication and conflict resolution with them.

Cultivate professionals

Your supply chain is only as strong as the people in it, so create a training plan for employees. Warehouse managers and logistics managers should all receive training on how to implement standard procedures so they can make consistent, accurate and efficient decisions.

Establishing green practices where possible across the supply chain

Consumers (and customers) are becoming more and more eco-conscious, and are becoming more and more aware of the steps businesses are taking (or not taking) to lower their carbon footprint. One way to make a supply chain and the logistics in it more eco-friendly is to use eco-friendly packaging made from biodegradable materials and, to minimise waste, which cuts back on filler materials.

We’ve discussed optimising supply chain visibility. Here are a few tips for optimising the chain itself:

Understand your Tier 2 suppliers

The chain doesn’t begin with your suppliers; it begins with your Tier 2 suppliers, the suppliers who provide your suppliers with raw materials, components and possibly also services. You need to know who these suppliers are, their products, their costs and their lead times. You can leverage this knowledge to negotiate volume pricing.

Manage the supplier costs of goods sold

You may have negotiated a deal with suppliers, but you still can renegotiate once they’ve optimised their own internal processes. When negotiating with suppliers, you should be able to negotiate the year-over-year costs (to an order of 3 to 5%) that are built into the supplier agreement.

Your supplier should be optimising their own costs so that they don’t end up losing money through the agreement. Meanwhile, you should also be looking at lowering your other costs.

Share demand information with your suppliers

Your suppliers will do their best to provide you with what they need, but they do so by spending as little money as possible. If you and your suppliers aren’t sharing demand information, you run the risk that they might not have enough supplies for you.

Much the opposite could also be true: they may be holding too much inventory. If that’s the case, it means they’ve spent too much money trying to meet your demand. As a result, and although you might not realise it, they’ll pass the cost on to you.

You should understand the financial implications of both situations, which means knowing what to revise and cancel down. You should also understand your suppliers’ lead times so that you know whether they’ll be able to react to any changes in your order. For instance, if the lead time on raw material is 90 days, you must be aware of this and know they might not be able to react if you increase your order within a 90 day period.

Sharpen up your customer demand planning

Although customers may seem like they know what they want and when do they? You might have a better understanding of their needs than they do if you implement the right customer demand planning. Their customer forecasts might be a good starting point, but you can understand their needs and plan for them so much better with market analysis, a look at their history, seasonality, the competitive landscape and more. This robust type of planning can also help lower the costs in your supply chain, too.

Make sure your inventory is accurate

Warehouse management systems are a good way to keep an accurate record of inventory, but support this with physical checks. Regular, systematic cycle counts and physical inventories are the only way to ensure you have a completely accurate record of inventory. If you don’t have accurate inventory records, you might ship products to customers late or be buying in stock you already have or don’t need.

Manage risk

Planning is absolutely crucial. Anything can go wrong in a supply chain, and you need to manage for risk. You should have a standard plan, a backup plan and, as comical as it might sound, a backup plan for your backup plan. Being as prepared as possible by planning for any event will help you to keep things moving and stop you from losing money when things don’t go according to plan. In the case of extreme weather, for example, you could plan alternative routes or identify alternative carriers.

A business must continue to generate revenue and keep its costs as low as reasonably possible but at the same time, still be able to service its customers adequately. Focusing on the supply chain can help the business to accomplish its aims, but sometimes when they concentrate on one part of it they get things wrong in the other. Here are a few trade-offs a business must make:

Inventory v service

Salespeople will prefer high inventories so that the business can serve its customers well, whereas finance professionals in the business will prefer lower ones to reduce the level of working capital. The company management will have to make a decision between building up their inventories so they don’t let their customers down and reducing them to keep their costs low.

Lower inventories might be the more preferable option for perishable products or products that have an expiry date. Higher ones may be better in the fast-moving consumer goods world, however, in which businesses one to maintain their market share.

Large batches v small runs

Single runs are more convenient and more efficient. Managers at manufacturing plants prefer making one product at a time in large batches. Multiple runs with fewer quantities, however, lower inventory and synchronise more closely with demand. The more frequent runs also save on storage capacity but at the expense of using less production capacity.

Large orders vs small ones

Some vendors like to attract customers by offering discounts on large orders, but this can be problematic for the supply chain. Large orders can incur a high risk of the products becoming obsolete, higher inventories and higher storage costs, whereas smaller orders can solve all these issues. Not only this, but they can improve the end service to users because vendor lead times are shorter and there’s less risk of running out of inventory.

Sourcing local v sourcing global

Sourcing internationally creates opportunities to acquire materials at a lower price. The large geographic distance, however, means lead times are longer and the supplier isn’t able to respond as quickly to changing demand as the business might need them to.

Meanwhile, local sourcing incurs the reverse. The suppliers can respond more quickly to changes in demand. Unfortunately, the buyer may have to pay higher prices. Suppliers further afield may also not be able to match the quality of local vendors. Nor may they be able to deliver on time.

Full loads versus less than truckloads (LTLs)

One of the other big dilemmas company management faces is whether to wait until orders fill up a truck or deliver LTL. The former reduces freight costs whereas the latter focuses on delivering good customer service. A lot of small and medium enterprises (SMEs) choose the LTL option, using smaller trucks or even motorcycle couriers to deliver goods to customers.

Our automated solutions can improve your supply chain by making the loading and unloading of trucks and trailers more efficient, and by reducing driver waiting times. Not only that, but they can reduce some of the operational costs that the loading and unloading entail, such as the number of people necessary to perform the tasks and the use of forklift trucks.

We have three main automated systems: the moving floor, the slipchain and the trailer skate.