Many businesses share common management concerns including potential supply chain disruptions. These common supply chain threats include extreme weather like hurricanes or tornadoes, or natural disasters like earthquakes and floods. Other kinds of disruptions like supplier breaks, labor issues and pricing risks, are perhaps less dramatic, but hold the same potential for damage. For every business, the type and ultimate impact of supply chain disruptions will vary. There are several threats to a business”s supply chain, especially if they rely on transportation.
Any manager waiting for a truckload of raw materials originating in a hurricane zone along the Gulf knows that unforeseen disruptions are costly and can potentially put their business at risk. Supplier breaks can arise for a variety of reasons.
Climate change and environmental damage continue to cause supplier breaks because they can lead to swings in the cost of commodities and other materials prices, which can affect your bottom line. For example, changes in climate led to a reduction in grain crops in Eastern Europe, leaving many food manufacturers forced to increase prices to cover the drop in supply and subsequent increase in price. Unanticipated events like explosions in warehouses, business failures, or new regulations can end in supplier breaks too. Continue reading
Choosing supply chain technology is the most important decision a logistics manager makes in his or her career. Why? Simply because the right software solution can propel a company forward, regardless of how bad the economy is, while the wrong one may bury the business for good. Unfortunately, selecting the best supply chain management (SCM) system can be difficult.
Selecting a SCM System
Never has so much technology been developed to help organizations improve supply chain performance. Yet, the performance of most supply chains has never been worse. Due to poor coordination and planning, dysfunctional industry practices, and high costs resulting from adversarial relations among partners, most supply chain organizations generate low profit margins, surviving, not thriving. To help you choose the right SCM system for your company, the rest of this post delineates the steps you should follow in the selection process. Continue reading
For businesses that transport their products within North America and carriers, protecting their bottom line from volatile fuel prices is an ongoing concern. One way to garner some protection from a fluctuating fuel price is the fuel surcharge.
What is Fuel Surcharge?
The fuel surcharge is the total cost for fuel usage. It is a contract between the shipper and another party that sets a standard rate for the fuel and how much will be paid above the base rate, and what fuel price triggers the surcharge, or no surcharge at all. Continue reading
The supply chain is threatened with insecurity from all directions. Theft, terrorism, and cyber crime are just a few examples of threats faced by goods on transit. Fortunately, there are several simple yet effective ways through which the security of the supply chain can be improved.
Here are six practices that you should consider if you’re resolute about enhancing your supply chain security.
1. Applying a structured approach
The first step in averting any risk is usually to stay safe: do not expose yourself to the problem. Start by forming a diverse team tasked primarily with managing supply chain risks at the organization. Then you can have all departments within the organization assessing and outlining their specific concerns which are then planned for by this management team. Every department has its own special needs and giving them the opportunity to express their concerns is the best way of identifying and tackling all risks within the entire organization. Continue reading
Although there are many industries that can benefit from transportation management, one industry where it is critical is the food and dairy industry. Whether a farm, packager, or seller the process of bringing food and milk to market is a complex endeavor with numerous factors to take into consideration on a daily basis. With so many moving parts, attempting movement and transportation without sound logistics planning in place can be a disaster waiting to happen.
There are few industries that are as time-sensitive as food and dairy production and distribution. You can have thousands of tons of perishable material moving nationwide at any given moment. Some runs can be hundreds or even thousands of miles between producer and consumer. Professional transportation management is the only way to keep the entire enterprise cost effective and therefore profitable.
One solution to the transportation management dilemma is engaging the services of a third party logistics company to provide comprehensive transportation management services. There are four big ways that transportation management services can help your food or dairy business be more efficient: Continue reading
Running any business with a supply chain requires analyzing each component to make sure the company is running as efficiently as possible. Whether your business is in home improvement, hi-tech, retail or any other industry that involves costs, you need to reduce waste and maximize productivity. Supply chain analysis is the study of vendors, manufacturing materials, value, functions, costs, processes and forecasts to make sure your company is as profitable as possible. Continue reading
The ratio of world trade to the GDP of the globe as a whole, an index also used to measure openness of economies, increased by 20 percent to just over US$20 trillion by the end of 2011. The sharp rise in global trade over the past two decades is partly due to innovations in logistics as well as changes in policies in trading countries, which has led to a reduction in the cost of delivering goods and services across borders.
A report launched by WEF indicates that removing supply chain bottlenecks could significantly enhance global trade. For example, if counties were to improve border management and necessary infrastructure, especially transport systems, to just half the level of Singapore, the global GDP would shoot by 4.7 percent which is about six times what we would get by scrapping all import tariffs. Continue reading
The third party logistics (3PL) industry is expanding as more organizations realize the benefits of outsourcing logistics to specialized companies. To attract more customers, 3PL organizations offer a wide range of services, ranging from transportation to customs clearance. A very important aspect is that certain warehousing and distribution solutions ensure critical operational improvements, resulting in faster return on investment and greater profitability.
As a shipper, it’s very important to understand your needs in order to best assess what type of 3PL solutions are appropriate to your current circumstances and future development plans. Most 3PL service providers have combined a variety of warehousing and transportation services that can be further customized according to customers’ needs. Here’s a practical guide to the warehousing and distribution operations 3PL companies are able to complete nowadays. Continue reading
Poor materials logistics costs the construction industry more than $2 billion dollars every year. Too often, logistics in the construction industry revolve around on-site handling which is usually too little to impact on the total cost of completing projects.
According to Liker, a famous philosopher, waste is defined as the opposite of value where value is any process that a customer is willing to pay for. Waste is also used in reference to resources that add negligible or no value to the final product. Waste is therefore loss of resources including time, materials, equipment, labor and capital, when these resources are produced by activities that contribute to the final cost but do not add value to the final product.
In the construction industry, after the design is agreed upon, most of the value adding usually occurs at the site. Activities that add value are assembly, packaging and finishing. Other activities such as moving, counting, storing, scheduling and sorting can therefore be said to be wasteful.
Unfortunately, research blames the supply chain for most of the wastes in the construction industry. One report went as far as saying that wastes in the construction industry are mainly caused by “obsolete, myopic control” of the supply chain. Continue reading
The success of your business depends so much on the quality of your retail logistics. Everything, right from sourcing for raw materials to transportation, delivery and installation will influence the success of the business. Where there is a smooth flow of operations, usually as a result of solid retail logistics, it becomes easier to satisfy your customers at relatively lower costs leading to higher returns on investment.
Of course, retail logistics is such a critical component of your business so it may be hard to even contemplate outsourcing it. But if you take a moment to think about it, you’ll realize that working with a third party logistics provider may be just what you need to offset your profits.
The advantages of using third party logistics mainly result from economies of scale and economies of scope, both of which encourage retailers to increase net profits by reducing costs. Competent 3PL providers boast superior coordination ability which enables them to search for and find reliable sub-contractors and business partners. Normally they also possess the ability to better manage inter-firm flow of goods. Logistics is very technical and time consuming. So by outsourcing, you will save a lot of time which you can invest in other areas of the business. Continue reading