Supply chain distribution has flourished in recent years, because the business savvy professional has utilized supply chain software and supply chain technology to streamline the process of ordering, manufacturing and distribution to its customers. Some examples of businesses that utilize supply chain distribution include technology companies, major retail companies, and health and vitamin companies.

Technology companies often utilize third party logistics to distribute their product. With third party logistics, the sale, modifications to the product, and the distribution can all be handled through one distribution facility at a low cost to the distributor and of great benefit to the original manufacturer. A key component to third party logistics and supply chain distribution is the health of the entire system. The processes of product coming in, the manufacturing or productions of the product, and the distribution of the product can all be streamlined if the flow through the warehouse is smooth. This is where inventory control, lean thinking, and operations management play the most important roles.

Inventory control is most important as the product passes through the entire warehouse. Loss of inventory or failure to track an item results in a loss for the company and the customer as well as investors in the long run. For example, in third party logistics, the product is received into the distribution facility through a shipment that ideally arrives in a specific area of the facility and that product is tracked through inventory control throughout its entire lifespan in the facility and sometimes even up to actual delivery to the customer. This can be done through innovative technology such as logistics software or radio frequency identification tags (RFID). Once the product is inventoried and ordered from a customer, any modifications or manufacturing that is required would ideally be handled within a separate part of the facility and after modifications, the product would be shipped from another area of the facility. Lean thinking comes into play here because instead of having one worker inventory, manufacture and ship the product; operations management would create supply chain jobs that are specific to the process that is being completed so that they are able to do more with less. Muddying up any of the processes of receiving, inventorying, manufacturing and shipping with another process can impeded the worker and task that person with too much to do. Supply chain jobs usually specialize and a worker is classified as a receiver, manufacturer, or shipper whose sole job is to ensure their portion of the process is completed in a timely, efficient and cost effective manner.

In order to be cost effective, timely and efficient when distributing large or unique products, companies that look to supply chain distribution and even third party logistics often hold a competitive advantage to their competitors. This competitive edge results from being able to keep prices low through specializations and by doing more with less which is the result of a healthy supply chain distribution process.

Simply put, companies that outsource their logistics are attempting to improve the performance and reliability of their supply chain, thus gaining an advantage over competitors. Outsourcing can result in improved customer service, shorter shipment times and help reduce the delivery cost for customers. While there is an understandable reluctance to give too much internal information about operations to outside companies, this reluctance can block both creativity and innovative new ideas.

By outsourcing logistics a company can gain essential local expertise in new markets instantly. It’s not that an internal supply chain manager doesn’t know what they need to accomplish. It is the knowledge gained by working with a specialists in logistics that can help expose new logistics management tactics, present the latest order fulfillment, employ a new warehouse management system, or in general present supply chain solutions that your organization has not considered.  This keeps the company focused on its current business, rather than spending time and money learning about new requirements and building new business relations.

By having logistics outsourced each company in a supply chain can benefit quickly by gaining access to a wider variety of new technology and cutting edge services that would otherwise be impossible or unknown if they set out to do this on their own. Supply chain technology is always changing and improving to create more effective services for customers. The companies that have access to the latest technology are the ones that can do business better, faster and more efficiently.

On a global scale especially, dealing in commerce, it can be extremely challenging to stay abreast with constantly changing requirements. Making mistakes in global logistics can have major cost, time and money implications and will result in poorer service to clients. Such missteps can even leave a bad impression and make it harder for a company to find new clients. Companies that have recently expanded or hope to expand into an increasingly competitive global market place can reap huge benefits by partnering with companies that have already been there and learned from their mistakes.

Logistics outsourcing allows for access to a scaled logistics operation that is both extremely flexible and capable of responding far more quickly to changes in market demands. This could be due to normal seasonal fluctuations or rapid business growth but having a flexible logistics operation can spell the difference between success and failure. By having logistics outsourced it is also possible to gain significant cost savings from shipping discounts due to larger volume. Access to increased expertise can also result in risk reductions. Inventory costs may even be reduced drastically due to better management of the supply chain.

Whilst most companies know that their success depends on being in constant contact with all their partners in a supply chain, often this fails to happen. This failure can lead to missed delivery dates and lost opportunities. Recent surveys have shown that while more than half of the companies surveyed are attempting collaboration at some level, fewer than 5% are working on it end to end. One of the largest complaints was the dissatisfaction at being unable to co-ordinate internal systems and needs with suppliers or service providers.

Connectivity with all supply chain partners in the fast-paced global markets is what helps to breed innovation and create new strategies to service and engage customers. The bottom line is that processes are always evolving. Logistics outsourcing allows companies to unlearn old ideas and take on new ones that will allow them to build a better future in the global market as we now know it.

The Set Up
We are going to create a fictitious store called Cool Snowboards.  Cool Snowboards is a snowboard manufacturer located in New Hampshire. They have a line of 10 different snowboards and a line of winter clothing (hats, gloves, face masks, under garment thermals, snowboard pants, snowboard jackets) which they sell nationally.  They have direct relationships with about 60 different retailers.  Most of these retailers are small, independent retail shops, but 4 of them are medium to large shops.  The medium shops (3 of the 4) have 3-10 retailers in one state.  The large retailer has 60 stores serving the Midwest.  The sales relationship with the large retailer is serviced through a distribution company called Snowboard Distribution Company.

The Company
Cool Snowboards has 25 manufacturer reps that are not exclusive to their product line. They are located across 18 different states and generally work out of their home.  They sell Cool Snowboard products via a catalog that is online (sometimes) or is printed.  The printed catalog are shared with the retail shops and/or buyers.  As part of the catalog there are several order forms that can be copied or torn out of the back of the catalog.  Retail partners are generally encouraged to order product using the order forms or in communication with the rep, which is then typically transferred to the order form.  Once this order has been placed, retailers will receive their product after the order has been processed by Cool Snowboards, packaged and shipped out via UPS ground.

Looking at Cool Snowboards
For those manufacturers and retailers in the outdoor industry or those retail chains that still possess these types of symptoms, this process may sound about right. Though more suppliers (like Cool Snowboards) are going online, it is not in the most typical or accessible sense.  In most cases companies such as Cool Snowboards will have a website highlighting the products via a cool, flashy web site. Customers interested in the product will have to look for retailers in their local area to buy their products.  So the customer is forced to either be lucky to be close enough to a local retail location or find someone selling Cool Snowboard products online.

Things To Analyze:
•    The manufacturing process
•    The sales process of the manufacturer rep
•    The ordering process
•    The distribution process
•    The retail process
•    The reconciliation periods
•    Historical data analysis

Then we will take a global/summary look at:
•    Lean Supply Chain Opportunities
•    Supply Chain Technology and Logistics Software
•    Supply Chain Risk Management
•    Warehousing Management
•    Supply Chain Distribution

As mentioned in the beginning, this is meant to be an analysis in the retail supply chain.  Our hopes is that we can expose some chinks in the armor or reveal some ideas that may help you in your journey of understanding the resources available, tactics you can use, or general improvements to your operation.

If you have questions or areas that you would like us to discuss in this journey, please post them here.  It will be far more useful if this was more of an organic process with you than not.

Unfortunately for some businesses, they have not embraced an ordering solution that fits the times.  Mainly, they are employing methods such as the old school paper and fax.  This is not where you should be today.  At a minimum you should be using Excel.  Many companies embrace Excel and utilize its flexibility and features enabling them to create the right order form.  With the right solution in place these same companies can link Excel to their inventory management system or point of sale software they are currently employing for their business.

Shoestring Commerce has put together a webinar series which happens to start with the order form.  Check it out, sign up if you are so inclined, but if you want to learn how to create an Excel order form that will impress your business partners, it is worth your time.

Take Advantage Of Technology

Supply chain software is a must-have for businesses of all kinds. If you’re not currently using one, then it’s about time you started to. This software streamlines the entire supply chain process and makes staying on top of your inventory that much easier. Simply expecting everything to fall into place magically on its own is foolhardy; your business can falter mightily when you don’t have a real-time view of what your inventory is like. Running a successful business means constantly building up your customer base – not watching it shrink.

From Point A To Point B: The Retail Supply Chain Matters

If you’re like most companies, then you probably order your stock from a handful of key suppliers. However, those suppliers most likely get their goods from other suppliers, and so on. All the way down the line, it is critical to know where your goods come from – and what kinds of things can get in the way of having what you need on hand when you need it. Being prepared for all sorts of scenarios, and having a backup plan, is of key importance.

Why Reverse Logistics Are Important

Getting your products to your customers in a timely and efficient manner is important, but knowing where they come from in the first place is, too. Reverse logistics – tracing the origination point for each one of your products – is something that you should emphasis in order to run a tight ship. Businesses who lose sight of where their goods come from, and who fail to communicate regularly with their suppliers, are the ones who get caught unaware and end up making major mistakes and alienating their customers.

Mistakes Happen – But They Shouldn’t Happen Often

It’s true that everybody makes mistakes; every company does, too. That doesn’t mean that it should become a habit, or that those mistakes shouldn’t be examined. Learning from mistakes in the supply chain is critical; any time a snafu occurs, it is up to you to track it down and figure out why it happened. That way, you can strive toward never allowing it to happen again. This might sound time consuming, but in the end it will save you a lot more time – and a lot of lost customers and business, too.

Keep Track Of Your Supply Chain Distribution

In order to run a highly successful operation, you need to have a good grasp of the big picture. That means that you should not only be aware of lead times and shipping estimates, but you should know how long it will take to get an item on your shelf. Breaking promises to your customers is something that should never happen, which is why paying close attention to your supply chain is so important. Emphasizing these critical points will make your company more successful and profitable in the long run, and you will reap the rewards.

The Complexities Of Logistics

Every single time that an order arrives late to a customer, the reputation of your organization gets tarnished. Each and every time an item arrives damaged at a client’s location, it reflects poorly on your business and you run the risk of losing a valued customer. Companies that fail to place a priority on their order fulfillment fall behind those that do; simply getting an item out the door just isn’t good enough. Beyond working with reputable trucking companies, a business has to take care of what it can within its own walls.

Understanding Order Fulfillment

Fulfilling an order successfully involves more than simply getting it out the door. Having a good system in place so that things don’t slip between the cracks can help ensure that your products arrive where they need to be, by the time they need to be there. The moment that an order is placed, a careful process must be adhered to from beginning to end. Warehouse personnel must follow certain procedures so that the correct items are pulled. Further, they must understand how many units per box, how(if) the order is to be palletized, and the correct labeling and shipping instructions are properly displayed.  After that, many other critical things happen.

Out The Door, Out Of Mind? Not Quite

Employing the use of a quality logistics software solution is a key part of the supply chain foundation, and if done correctly can help a company run a lean supply chain with little waste or inflated costs due to inefficiencies.  This means that the start of your logistics software begins at the personnel level.  Warehouse personnel must be fully trained to use an organization’s logistics software to the best of their abilities. If necessary, training classes must be given in order to guarantee that every person who will be using that software can do so with maximum efficiency. When an employee is unskilled at using shipping software, or unnecessarily rushed, errors are much likelier to occur. Sloppy errors like mistyped street addresses and incorrect weights can cost a business hundreds – and sometimes even thousands – of dollars.

Get Your Products From Point A To Point B

In order to provide the most exceptional customer service possible, you must be willing to invest in high quality shipping software. High quality software does not mean expensive, investing in logistics in general is ensuring that your organization understands each step of the supply chain distribution.  On top of that, you need to have a clear and effective quality control system in place, along with tested and proven procedures regarding logistics and order fulfillment.  Finally choosing the right trucking companies, if you don’t have this as part of your organization, as your transportation partners is a critical element for success.  Whether you use freight forwarding or another special service, you must ensure that it will allow you to provide the best service possible.  All of this may mean you may need to look into logistics consulting where a third party analyzes your current solution to ensure you are operating to the best of your ability.

Earn Repeat Business With Ease

The simple answer to the question of why you need a good logistics software solution is that it completes the relationship you have established with the customer you are shipping to.  Every customer that receives their order on time – or, better yet, early – can become a loyal and repeat customer. This is customer service 101 and could be a major misstep that will cost you a ton of money. Investing in appropriate logistics software will make it easier for you to thrill your customers and earn their loyalty. Over the long haul, that loyal base of customers will help turn your organization into a highly successful enterprise. Skimping on important details – like quality distribution software – can cost you dearly over the long haul, so keep that in mind.

Lean supply chain management requires an organization that is willing to embrace lean thinking.  It requires a company to look at each process and each touch point in that process to evaluate its efficiencies and deficiencies.  The streamlining of this waste can have extreme effects on a company; faster deployment of product to market, improved profit margins, improved logistic data and operations, and happier employees.

Some simple ways to look at your supply chain is to consider the staples of any process.

Time. How long does it take for your entire supply chain to reach fruition?  Breakdown each step to get a clear understanding of your streamlined steps and those taking too much time.

Resources/Inventory. Do you have enough warehousing? Enough shipping resources?  How many people are involved along the path of your supply chain? Are you carrying too much stock?

Technology. Still faxing everything?  What is your ability to track shipments?  Orders? Fulfillment?

Information. How many information feeds do you get through your chain?  When the product or service reaches the end of your supply chain can you tell someone the story of how it got there? All steps?

One can go far deeper than this, but this is a good start.  If you come away with more questions than answers while asking any of these questions, that’s a good indicator that you are dealing with a potential waste/improvement.

The greatest challenge in value stream mapping an organization is most companies need help through a third party.  On top of that, this type of sea change requires upper management support and a solution to maintain suggested improvements.  However, companies can also go lean by providing a quality environment that strategically demands and rewards improvements to their organization.  In most cases, successful deployment of a lean supply chain results in a business of savings.  This makes it difficult for some companies to achieve an immediate return, but the smart ones keep at it.

To be clear, streamlining a corporation’s supply chain does not necessarily result in an expense.  In fact there are many solutions today that serve both the large organization and the small to medium sized company. Sometimes an organization simply needs to embrace change through supply chain technology, warehousing management, logistics software or employing periodic logistics consulting from outside parties.  In the past you would hear scary words like EDI, which can have significant upfront costs and changes to the overall operation of a company.  Today there are web based solutions that allow you to organize your sales force, track inventory, point of sale systems, distribution, and operations.

Without a doubt, there will be many businesses that have extremely complicated operations with larger companies in particular possessing more complexities than their more nimble, smaller competitors.  However with a lean supply chain it is possible for any company to experience tremendous competitive and financial improvements.  What’s more, today’s businesses (big and small) are relying more and more on using the latest supply chain technology, running lean production, better inventory control and order fulfillment to get that competitive edge.

The road to better margins and creating a competitive edge can come from a lean supply chain and improved internal processes.  I knew of a company where it took six months to deploy a new product to a client (after a long sales cycle).  Just by deploying a smarter management program and streamlining their tools they were able to deliver that same product in 4 weeks.  Cost of deployment went down significantly, more sales were completed each year, customer satisfaction went up, and more time was allocated to R&D for future products.  Sounds like a win to me.