This year was an exciting year to be at LogiSYM 2016. Featuring a keynote by Mark Millar of M Power Associates, the event highlighted supply chain trends, their evolution, and the promising future of supply chain disruptive innovation.
Now that LogiSYM 2016 has come and gone, it’s important to look at key topics, takeaways, and what the logistics industry looks like in the near future.
What is LogiSYM?
LogiSYM is the industry event that brings mid- and senior-level shippers together in an interactive forum that helps connect them to solutions, new ideas, and drives innovation. In addition to sponsoring the event, we were excited that our Founder, Stephane Boivin, was featured as a speaker in the Disruptive Technology Segment.
Along with Disruptive Tech, LogiSYM 2016 focused on two additional key areas for shippers: Supply Chain Visibility and Sustainability and Economic Impact on Dynamic Supply Chains. These topics, combined with talks from top experts, academics, and consultants, resulted in an interactive and rich experience, with many new concepts and best practices for attendees to take home and consider implementing in their own supply chains.
Supply Chain Visibility and Sustainability
It’s now abundantly clear to everyone involved in supply chain visibility and sustainability, that the entire supply chain has become a complex operation with dynamic and complicated interdependencies—each one more vulnerable than the next.
LogiSYM’s Keynote Address on Exploring Future Directions for Global Supply Chains highlighted an interesting topic, “right-shoring”. Right-shoring is defined as “The placement of a business’ components and processes in localities and countries that provide the best combination of cost and efficiency.”
Basically right-shoring has you closely examining the different aspects of the manufacturing of your product, and determining where to source based on cost, importance and complexity. Typically, simpler manufacturing that is of less importance is off-shored, while more complex and critical work is kept closer to home.
To develop the appropriate solution for your manufacturing supply chain, you must capture, analyze and act upon supply chain data—in many cases faster than ever before—in an effort to improve quality and reduce cost.
Merger and Acquisition Impact on Dynamic Supply Chains
In recent years, the dynamic landscape of supply chains has changed dramatically. In reality, according to LogiSYM’s website, “Massive industry consolidation has significantly reshaped the LSP sector increasing focus on niche, value-add businesses.” While on the surface, the benefits of mergers and acquisitions in the supply chain space look enticing, there are a number of pitfalls that need to be considered. Supply Chain Quarterly lists 5 common merger mistakes:
- Choosing the wrong metrics. SCQ recommends that, to avoid choosing the wrong metrics, choose ones that can be supported by available data that have common definitions.
- Consolidating systems too soon. SCQ recommends building a common database to help consolidate data and make it consistent, while we believe that leveraging tools that help bridge gaps in quality can help ease the pain of a merger on day-to-day manufacturing.
- Not focusing on planning. SCQ recommends looking at three key areas of the planning processes: Integration, Optimization, and Acceptance.
- Defining the goal, but not the steps to get there. SCQ advocates creating a team to ensure short-term improvements lasting about 3 – 4 months used as a roadmap for long-term productivity improvements.
- Not considering how much disruption will be caused, or its impact. SCQ notes that, while integrations like IT systems are typically easily quantifiable, companies typically can often overlook costs of, and revenue impacts of disruptions.
Disruptive Technology in the Supply Chain
One area that’s always interesting for us to discuss is disruptive technology in the supply chain. We’ve enjoyed speakers in years past, and were honored to be presenting this year’s innovation showcase on improving supplier collaboration by leveraging process digitization.
Currently, manufacturers and suppliers are facing a number of challenges in the supply chain—particularly when contract manufacturing in China. Out dated manual and paper processes, poor quality of product, lack of factory self inspections (or low quality) and on time delivery are constantly creating issues—throughout the entire supply chain process. Frankly, the production phase within any remote or outsourced manufacturing process is a “black box” where partners and customers have little to no insight into causes of these issues.
This is where a disruptive technology with a focus on innovation can come into play for partners, manufacturers and brands. By taking a process that has historically been manual and digitizing the data and putting it in the cloud, supply chain teams can access data, analytics and business intelligence at every tier of the supply chain, without the heavy lifting involved in large ERP installations.
For example, Pivot88’s cloud-based supply chain management suite facilitates the standardization of quality across all manufacturing partners within a single, easy to use platform. This is key because supply chain quality issues impact your vendor and client relationships. But this is only the beginning—poor quality directly impacts customer sales—to the tune of an average of 20% per company.
These are broken down into two key areas: visible costs and hidden/unmeasured costs.
Visible costs include:
- Loss of profit
- Defective products
- Cost of inspection staff
- Cost of sorting and rework
The hidden or unmeasured costs include:
- Missed delivery commitments
- Just-in-case inventory
- Claims management
- Crisis management
- Loss of reputation
- Expedited freight
- Loss of sales
By digitizing supply chain data, manufacturers and partners can get deep insights into supplier sourcing, reducing both visible and hidden/unmeasured costs. Getting accurate and reliable quality control data at the source is crucial, according to a Gartner study on the future of supply chains. For example, Supplier Quality and Supplier On Time Delivery are listed as first and third, respectively, in a list of the top five most important measures for managing quality in the supply chain.
Digitized data promises to disrupt the supply chain by providing powerful and efficient inspections, essentially anywhere—particularly for apparel and toy manufacturers.
If you’re looking to manage your supply chain from within your suppliers and vendor supply chain (rather than after the fact) download our case study, or contact us.