Transportation logistics at Welch’s

MM: In the case of Welch’s, you talked about what again?

MB: That one was transportation logistics. Trucking, basically. They have to ship their goods on trucks from their plants to their customers’ warehouses. It’s a somewhat complex world out there in trucking. You have some customers that handle customer pick-up and drive their own truck to your factory. Other times, you have to schedule and hire trucks from a variety of carriers that deliver your products to the market.

Optimizing shipments for consumer packaged goods companies, like Welch’s, can save a lot of money… A meaningful fraction of their revenue is spent on transportation costs. Companies can optimize that by assuring your trailers’ utilization is high, or by comparing accessorial charges which are the extra charges like fuel surcharges, costs for unloading of goods by the driver at customer locations, trailer storage, and so forth.

They can optimize these across carriers to see if any carrier’s charges are out of line by analyzing shipment patterns to see where load-leveling may be out of balance. By having carriers report actual time of delivery to your customers through a Web-based tool, you can analyze on-time delivery performance, and company to have the capabilities of larger competitors at a fraction of the cost through these SaaS Web-based solutions.

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Weakest links of a supply chain

MM: Isn’t the other idea of a supply chain the notion of constraints or constraint theory? That is, the supply chain is as efficient as its weakest link.

MB: Well, certainly if you use the kind of lean inventory-management strategies where you’re trying to minimize the inventory that you’re carrying—then, yes. You have to have a lot of trust that the inventory is going to be replenished rapidly by the party on the other side, and these Web-based SaaS solutions provide visibility that dramatically increases this trust because each player can see what is happening and also dramatically reduces the risk of failure.

MM: Isn’t that in fact reality of today’s economy? Virtually, if you’re not lean, you’re carrying a whole bunch of inventory or raw materials on your income statement. So inherently you’re seeing all of that as, “Gee—not on my financials.”

MB: In fact, that is one of the things our solutions target. We have specific dashboards and alerts that identify for each of your many, many thousand of items, which ones are at risk of being out of stock or of having excess stock. They are solutions that allow you to run lean without getting into trouble.

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Core concepts

MM: Let’s shift now into the conversation and hopefully extended discussion of digital supply chains and how they parallel to a high degree physical supply chains. Would you just give us a quick reprise of the core concepts or the core ideas of a supply chain? Then start to correlate that to digital and physical versions?

First, supply chains start with the idea that there are multiple business entities or operations that are part of an end-to-end process of transforming raw materials or IP into some sort of tangible good or service at the end, that a consumer ends up buying.

MB: Part of the complexity of managing a supply chain is that the number of these parties is not small.

If you are a company that buys things from two other companies, you do not have a big and complex supply-chain problem.

But many companies buy many thousand items from a large number of suppliers and in turn sell to hundreds or thousands of customers—these companies have very complex planning and execution issues and can benefit from new analytic tools.

Beyond analytics, collaboration with your supply chain partners, sharing of information and allowing views by your suppliers into the inventory levels of their products in your facilities, or views by your customers into the status of your shipments to them, can dramatically reduce your joint costs, improve product availability and increase customer service.

Web-based access to these analytics and collaboration applications by supply chain partners is a big advantage of SaaS solutions.

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