PART 1: First Steps
We love datasets – sometimes they almost sing to us pouring out so much information our excel sheets (literally!) overflow and we can get lost in labyrinthian, through-the-looking-glass adventures as we dive deeper and deeper in. Sadly, there are other times when the data is stubbornly uncommunicative, and it takes ingenuity and skill to coax out the secrets held within. Regardless of how co-operative the dataset however, the narrative we are always looking to provide for our Supply Chain Consultants [SCCs], is one that tells an unambiguous tale of the very core of the business they are trying to understand and optimise for their clients.
The SCC’s need to know what product comes into a business, how long it stays and where it is kept; where it goes after, when it goes there, how it gets there, and why.
Next; does it ever come back? If so why, and how often? Does it always travel in groups? How old is it? What is its life expectancy – possibly in the market and on the shelf? Two very different concepts, We hope you’ll agree, and not always applicable. How will it be managed out the business when it is no longer viable? Much of this is bread and butter to a good analyst and with or without the cooperation of the dataset, it will be accomplished. It might just take longer and require more assumptions or derived answers, but it can be done. But then we must get to the psychology of the business – how does it all behave, and of greater interest, why?
This is where the true magic lies, and it requires teamwork between the Supply Chain Consultant and the analyst. The SCC is the one who spends the most time with the client; walking the floors; seeing the operation, feeling the activity levels and environment. They talk to the Chief Finance officer and Managing Director and/or CEO to learn the desired strategy and planned growth or profit margins of the business; they see the operatives in action and sometimes experience a whole 24 hours of shifts to understand patterns and processes of picking and loading, transport scheduling; lead time from order to dispatch and so on.
The SCC might be told what the business perceives is its peak times per year or day or week; they might be told what the main selling item is; they will certainly learn what the business specific jargon is (from field names in the data outputs through to how the Client refers to their key distribution centres) and, if they are good at what they do, they will be absorbing throwaway remarks like a sponge and applying their own practised eye to what they see, ready to report all this back to the analyst. For you see, using an analogy; if the data is the coded message, and the analyst is the codebreaker/interpreter, then the Supply Chain Consultant absolutely provides the Key to the ciphers.
PART 2: Knowledge is Power
In part 1 we mentioned the psychology of the business, and you may have wondered what I meant by that. To us as Supply Chain Consultants, it can be anything from the psychology of the end consumer at whom the product(s) is aimed, to commercial or religious or cultural events that might influence the consumer’s decisions, through to global events which destabilise the supply of critical raw materials and how all this is managed. But additionally – in no particular order and by no means an exclusive list; It is about the brand. Is the company producing a product for sale that is a luxury item? A staple grocery? Is it a service rather than an object? Is it the first thing to go in an economy hard-pressed by inflation, high interest rates and the cost of living? Or will it continue to be purchased no matter how high the price rises?
It is about the company purchasing and production policies: do they have to batch order in or make production runs of a certain length? Do they only sell at minimum order quantities? Or per unit? Any clean downs between production runs? Penalties for failure? All these could affect the efficiency of the business and/or any decision-making process.
It is about the product: Is it seasonal? Weather dependent? Clothes? Barbeque fuels/food? How is it made? What goes into it? Is there a key limiting raw material which is business critical? If so, how many alternative sources for this item are there?
It is about the systems – yes, the IT software and hardware, but also the actual operational and administrative systems/processes adopted. Do any of these Systems create false weekly profiles? Or fail regularly? Perhaps there’s a 24-hour shut down and back up of the IT system every Sunday leading to an apparent spike in orders on a Monday because Sunday’s are carried over?
Or perhaps a more manual based system has apparent orders influenced by the days that the administrator actually works? If the amount of orders, and therefore order processing, only justifies a part time worker (say three days per week) but production/despatch have sight of orders coming in (not yet on the financial system) and work seven days a week – the literal mismatch in numbers could lead the analyst to a misdiagnosis that could be dangerous, operationally speaking.
Returning to the previous analogy, all the above and so much more is where the insight – the cipher – of the Supply Chain Consultant becomes critical in helping the analyst create an accurate narrative that does not include any red herrings which could otherwise inform a very different and non-optimal set of recommendations which leads to unhappy Customers or unnecessary reworking of analysis with the corrected parameters included.
Finally, there are occasions when the data simply doesn’t make sense without the insight from the SCC – we’ve lost count of the number of times over the years that there’s been a sudden dawning of comprehension on my part once a particular conversation with the Consultant has been had about the data. But similarly, it goes the other way: the SCC is intrigued by an apparent anomaly in the analytical output that has been identified and validated so it actually isn’t anomalous at all; they take it back to the client knowing that our teamwork has unmistakably added value – the newly gleaned insight might not necessarily be good news, but it will always makes the Client better informed about their own business and they can take suitable steps to make the most of this newfound knowledge.
PART 3: Data Underpins Solution Design
We mentioned in part 1 above, that the end game for this analyst is to produce a narrative that gives our Supply Chain Consultants an unambiguous understanding of the Client’s business. But what does this look like?
The analysis will present the quantities of what product(s) were in all parts of the business at different times, and where they went when they left. It will be able to show where, when and how they came INTO the business, and we will have modelled what it all physically looks like from volumetrics data, so we can see how the business requirements on space and transport fluctuate from its peaks to its troughs, but also what the requirements of the core business is. We can then translate the company strategy for ambitious growth in sales volume, into physical impact on the business via forecast models. We can suggest potential threats and how to mitigate these.
We might show that the consumers are heavily skewed towards one geographic area – leading to the recommendation of opening a new distribution centre there or moving the existing one, to minimise the stem mileage (and associated drivers’ hours, fuel etc.) and thus reduce operating costs.
We might show that for most of the year the existing DCs are underutilised and therefore the client is not optimising their return on the rental/overheads costs because they simply aren’t using enough of the space. The Supply Chain Consultant might therefore recommend partitioning the storage and leasing a portion to a 3rd party. Or the opposite might be true – the existing storage locations are geographically perfect but have inadequate capacity, so an internal redesign might be recommended: for a one-off capital investment the density of the storage could be increased dramatically, thus saving on “overflow” storage costs all year round.
Or maybe the existing DCs are perfect for the core business ten months of the year but the remaining two months requires additional storage, but hitherto on a reactive basis – the Supply Chain Consultant might recommend a planned strategy for short term leasing annually, on better terms and better situated.
Further, by changing the location of the distribution points – and perhaps introducing additional nodes to the network using different transport strategies (breakbulk, crossdocking etc.) – the efficiency of each driven mile can be increased. Perhaps the fleet contains the wrong profile of vehicles; or too many or too few units. Perhaps it is own-fleet managed and would be better outsourced or conversely, better bringing it back in-house. Is the yard laid out poorly? Does it get gridlocked either for inbound or outbound vehicles? How can this be alleviated?
Inventory management recommendations could be made; consolidating certain lines in specific locations or not to stock them at all, instead using suppliers who are willing to send product direct to customer on the Client’s behalf. Processes might be streamlined, recommendations made for better ERP systems. Operational “bottlenecks” might be identified, leading to the recommendation to change working patterns. Maybe there are too many operatives or not enough.
Whilst all this might seem like over-promising on our part; we can carry all of this out using customer data. Existing operating costs, human resources information, transport records, inventory and sales data, outbound delivery locations and inbound supplier information; business strategic goals – short, mid and long term; all of this can help us to optimise the way you run your company, by creating an optimal logistics strategy tailor made for the nuances of your business.
