Opportunities for Multi-Company Logistics
Supply Chain Management is a term which has become widely used of late, but many have come to question how much traction has actually been achieved in real world supply chains. This is especially true when one examines implementation of multi-company supply chain management. Much discussion, analysis and even implementation of multi-company supply chain initiatives have happened in other industries during the last several years resulting in a variety of outcomes.
Most, if not all have resulted in failure or simply faded into obscurity due to a number of reasons. The first of these is the business bias of the firm leading the initiative, such as a third party logistics or transportation provider who may be more interested in filling their warehouses or trucks than generating overall supply chain efficiencies for the participants. Another is the inability of co-operative groups of manufacturers/importers to agree and jointly resolve, manage and complete the myriad of issues and tasks which surround such initiatives.
Strong leadership, mediation and facilitation is required to ensure such a group successfully meets both individual company and overall consortium goals. It has become clear from past examples that the part time efforts of groups of already overworked line management from the firms involved cannot succeed on their own in completing the difficult but not insurmountable tasks required to create and operate a vibrant multi-company supply chain.
The first step in the process is to complete a detailed analysis of the supply chain opportunity based on data collection from the participants under strict confidentiality. The potential amalgamated supply chain is then modeled with previous analyses of this type identifying 15 to 20 % logistics cost reductions. Based on the significant percent to sales these costs represent, there are often millions of dollars in potential savings available. And as these are straight operating costs, all savings generated fall directly to the bottom line. Now that we have discussed the opportunity, past pitfalls and potential benefits, how can such an initiative be successfully implemented in the Toy Industry ?
Probably the most critical of factors is to have an experienced facilitator for the project with strong leadership and logistics skill with a direct focus on the initiative. Once an appropriate facilitator has been selected, the initiative can then be advanced on a phased basis to limit costs, with the progression to later phases going forward based on the successful completion of each previous step. The first step as mentioned earlier is to work from a data checklist to collect the information required to analyze the scope and nature of the potential logistics cost savings opportunities available through the formation of a multi-company supply chain.
Following completion of this analysis, it is then presented to the group including the types and magnitudes of potential savings opportunities along with suggestions and a draft plan for implementation. After group review and feedback, should enough of the group members wish to pursue some or all of the potential logistics opportunities, the next phase can then be launched to complete a detailed implementation plan and formally create the group in the format agreed by the interested members.
A number of supply chain components can offer beneficial results when carried out on a multi-company basis including inbound and outbound transportation, warehousing, advanced systems as well as e-commerce and e-fulfillment services. It is important when rolling out such initiatives to first select the easiest and most direct of the potential savings opportunities to ensure success before proceeding on to the other more complex integration opportunities.
Usually these first integration opportunities lie on the transportation side of the business and after initial success, the confidence and resolve of the group to work further together grows rapidly. Beyond just the group of like minded manufacturers, it is very important to engage the other participants in this process. Major and minor retail customers on the outbound side and significant plant sources or suppliers on the inbound side all need to be engaged along with other support, systems, transportation and equipment providers to develop the best possible complete solution. This jointly developed plan based on the foundation of supply chain data analysis and open dialogue incorporates, uncovers and resolves any issues or additional opportunities which exist in the extended supply chain.
Equally important to the engagement of all supply chain participants is to ensure the project begins with a focused pilot rather than attempting a "big bang" implementation. Through such a focused approach, multi-company activities can be successfully carried out integrating a number of exciting and diverse technologies which would prove more difficult in a widespread pilot or other large scale proof of concept project.
We would be pleased to hear further ideas and feedback or even to meet with interested groups of Toy manufacturers or individual firms to further expand upon the opportunities for multi-company logistics in the Toy Industry.The supply chain in the Toy Industry was one of the first to function on a truly global scale with products moving from overseas sources to local markets all around the world. On both the global and local operating levels there still remain significant logistics and supply chain management improvement opportunities for those companies with the foresight and interest to examine multi-company logistics opportunities.