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From ugly duck to beautiful swan!

18 January 2018, Retail, Wholesale, Manufacturing, 4 min leestijd

Transport is often the last in line when it comes to the supply-chain family. When strategy and innovation are being discussed, it's often other subjects that come first. But as rapid and flexible delivery has become essential for the service experience, it's high time to move transport up the pecking order. So, in this blog, I’ll discuss what an ideal situation would look like.

In the previous blog Johan Looijmans discussed the transformation from a supply-driven value chain to one that is demand-driven. In a demand-driven value chain, the entire logistic chain shares the same goal: meeting the customer's demands. And those demands increasingly concern delivery: (online) orders need to be delivered as quickly as possible, at the desired time and location, and for the lowest possible costs. 

So organisations that want to really put their client central must first give transport a bigger and more central role. Because the last link in the chain is exactly the point at which the service experience is made or broken. How would an organisation look if transport was no longer a neglected subject, but taken seriously? One that's made to shine as much as possible? What kind of consequences would this have for - for example - finance and operations? Well, here I'll show you the difference between a supply chain both with and without a larger role for transport.

Operations

Without. “It is out of our hands now.”  From the moment goods leave the warehouse  and are on their way to the customer, supply chain visibility decreases.  Operations don't always have a clear picture of where the goods are located within the distribution network. This can create some unwanted situations, for example when customers call to say that their products haven't been delivered and operations not being aware of that.

With. If the whole flow of goods is registered centrally and the status of deliveries is continuously updated in the system, operations has a tool with which they can maintain a clear overview. This will also make it possible to actively steer the distribution network and personally inform customers about possible delays, something which adds a great deal of transparency to the situation. 

Finance

Without. In the world of transportation, things are always fluctuating. This often leads to unforeseen costs, for example, waiting times, closed doors, or transport companies that measure a different weight than you did, putting the delivery in a different price category. All things that make it difficult for finance to get a grip on transport costs.

With. If transport is given a more prominent role, the ties with finance can be rekindled. This will lead to a complete and real-time overview of the flow of goods, for all the links within the supply chain. Everything will be registered: what is transported, where the cargo is, how much it weighs. Finance can see exactly which deliveries haven't been completed and why not. And after proof of delivery, the invoices will be compared line-by-line and every surcharge compared with the pre-calculated costs. Any deviations will be automatically processed, so finance won't be presented with any unpleasant surprises.

Purchasing

Without. Contracts and price agreements within the world of transport mainly exist on 'paper'. And the recording of the necessary key figures is often done by the transport parties themselves. This makes it difficult for procurement to manage the transport parties well. The result: the focus is mainly on managing the current contract agreements instead of purchasing actually responding to what customers want. Purchasing aims to support operations by having several transport parties so that they can then choose an appropriate carrier for each specific order. But the seemingly higher workload that that entails (turning tenders, closing and maintaining multiple contracts) often keeps the department from turning that into a reality.

With. In order to further professionalize transport, it is important that all shipments are registered centrally. And that ensures more efficiency for purchasing. All the necessary (historical) data is then available to standardize the purchasing process, to easily compare carriers and to create good tenders. It will then even be possible to automatically select the most suitable carrier for each consignment enhancing its efficiency.
 

Want to know more?

Transport has long been overlooked as an ugly duckling. But it’s time to change all that. Because if organisations truly connect transport with the other links in their supply chain, this will lead to more coherence and transparency. As a result, a lot of progress can be made concerning customer-centricity, as well as efficiency.

You also want to change to a demand-driven supply chain? You want to get insight in what advantages it offers to which departments?
watch the webinar: 'Transport in de demand-driven value chain’