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Network distribution can be much more efficient... with smart execution management

Wed | 19 Oct 2022 | News

Network distribution can be much more efficient... with smart execution management

In the last mile, smart execution management (SEM) is already widely used by retailers and carriers. With SEM they can work together and keep grip on their transport operations towards shops and consumers. Within network distribution - the transport between producers and retailers - SEM is less established, even though that is precisely where major benefits can be achieved. How do you give shippers insight into truck arrival times when your network partners all use their own TMS? How do you monitor the progress of transport orders if they are placed with different charters? How do you respond quickly to urgent requests if you have no idea where in your network capacity is still available? These are just a few of the challenges for which an SEM platform can be of great value.

In recent years, there’s a lot of focus on the last mile in transport management. As an e-commerce company, how can you offer your customers an optimal home delivery service? How can retailers stock their shops even better, more efficiently and more sustainably? Over the years, Simacan has developed a number of excellent tools for this, which many retailers and transport companies are already using to their logistical advantage. With our smart execution management (SEM) platform, they can cooperate efficiently and the progress of trips is transparent to all stakeholders. Consumers, DCs and shops can see exactly when a shipment will arrive and transporters can anticipate traffic conditions in real time. Just to name a few of those benefits.

What about network logistics?

There is less focus on the distribution part before the last mile, i.e. transport from the supplier to the retailer, but interesting developments can be spotted here. This part is also known as network logistics. Network logistics is about all parties involved finding a form of cooperation that optimally meets the objectives of each in that network. In network logistics, carriers do not carry out standard trips between DCs and locations or delivery addresses (as in retail delivery), but drive for multiple customers, trying to combine different loading and unloading orders as smartly as possible within one trip. For example, a driver would first pick up two pallets from producer A in the morning, then 4 pallets from wholesaler B, then deliver 2 pallets to retailer C, pick up some more from producer D, deliver 3 pallets to retailer E. The rest of the pallets would be stored in his own DC and transported to a customer at a later time. In short, a very different process from the classic 'milk run' where the same route is taken every day.

Transparency is lacking

With shop replenishment operations, retailers know exactly when a carrier will arrive at a loading or unloading address using SEM. With network logistics, there is often no such transparency. Manufacturers and producers simply forward their sales orders to a logistics provider and then leave it up to them to make sure the goods arrive at the customer's premises on time. If the goods are picked up at the factory, and maybe inefficiently combined with other orders, the shipper does not get involved - that is the service provider's business. Smart cooperation is out of the question. Not sustainable, but it only becomes problematic when a carrier fails to meet the agreed time window with the receiving party. Then the supplier suddenly has to engage with his carrier, for instance by calling them and asking what is going on, and inform his customer. All in all, a lot of hassle and meanwhile the staff of the retail DC are completely in the dark about when the goods will arrive.

Tangle of subcontractors

What makes network distribution so complex is that it involves several carriers, who together form a network. They do this to accommodate peaks and troughs in demand and, by exchanging orders, make the best possible use of their valuable drivers and transport resources. Regional transport companies often cooperate with colleagues in other regions to offer customers a comprehensive distribution network. Large logistics service providers often have a list of subcontractors or self-employed workers to whom they can assign orders. Smaller carriers also regularly exchange orders among themselves. All this has major implications for their operations. It means that transport companies are increasingly taking on a kind of 4PL role alongside their core business. They have to manage a jumble of their own orders, trucks and drivers plus those of external parties.

Communication with chain partners

Clearly, such a form of business, focused on cooperation within a network of chain partners requires a high degree of planning and coordination. Transport orders have to be assigned to a mix of internal and external means of transport and drivers in such a way that shippers' loading and delivery time requirements are met, as well as driving as efficiently as possible. If a truck is unexpectedly delayed somewhere in the network, customers should be informed in time and a new Earliest Time of Arrival (ETA) provided. The consequences for the rest of the planning schedule should become clear right away, in order to make adjustments.

Three things are therefore important for network distribution: full transparency of the entire network, real-time communication with all stakeholders and the ability to intervene quickly. Unfortunately, these requirements are currently very difficult to achieve, because not all carriers work with the same TMS and therefore do not have a view of each other's orders. Nobody has an overall view of how goods are distributed among the various transport companies. Trucks are insufficiently connected - charters or self-employed workers often do not even have an on-board computer - so there is no overview of the real-time status and progress of all those orders. If something goes wrong, it is the recipient of the goods who is the first to find out, and this is exactly who you don't want to burden with this. This is where Smart Execution Management comes in.

Consignment views give overall picture

Increasingly, we see that an SEM platform like Simacan, which has already brought many benefits in retail operations, can also be very suitable for network distribution. This platform includes the Shipment Status, an overview at a shipment level, which allows carriers to monitor and adjust the transport orders (consignments) of different customers in one overview in real time. What makes this feature extra powerful is that carriers can also share these views with their customers. With such a view, a manufacturer can see exactly when an order will be loaded at a factory. And staff at a retail DC know exactly when goods are unloaded at their premises. And they can not only see it, they can act! They can adjust the time slot, within certain limits, and chat directly with the carrier or shipper. So SEM goes a step beyond just visibility!

Shipper receives better customer experience

Smart execution management can offer great benefits for all stakeholders within a distribution network. First of all for the shipper, who can guarantee a better delivery performance towards his customers and no longer gets angry phone calls about where a shipment is. Even better: because the receiving party can also be very easily connected to the SEM platform and see for themselves when a truck is coming to unload, they can make sure an unloading dock is available on time and DC personnel are available to unload. As a result, lead times can be reduced and all parties face fewer surprises.

Carrier becomes more efficient

For logistics service providers, a SEM platform is a tool to offer added value towards shippers improving their competitiveness. But it also benefits the efficiency and reduces the CO2 footprint of the network. With an asset overview, such as Simacan's Transport Asset Status, planners can see at a glance which vehicles - their own or those of charters - are delayed or which may still have an opening to accommodate a last-minute order. This reduces empty miles. An SEM platform makes transport companies agile and enables them to make adjustments so that both customer agreements and their own efficiency requirements are continuously met.

Acquisitions and mergers

Another advantage… smart execution management increases integration capabilities in acquisitions and mergers. The latter are commonplace in the transport industry and cost companies a lot of time and money. This is mainly due to the fact that companies work with different, often outdated TMSs, which are difficult to integrate. With an SEM platform such as Simacan, this is not the case and the transport operations of two companies can be merged within just a few days.

Conclusion

In this blog article, we talked about how the principles of smart execution management can also be of value within ditsribution networks. One of the questions remaining is who should take the initiative for this. In the 'last mile', i.e. in parcel delivery and shop replenishment, we see retailers taking the lead and persuading their carriers to connect to Simacan's SEM platform. Within network logistics, however, we see carriers are more likely to take the initiative. After all, it allows them to improve their proposition and thus their partnerships with their shippers. By taking control of their highly fragmented transport network, they also get a grip on performance and costs. At Simacan, we are already talking to several large transport companies about this and concrete steps have been taken.

If you would like to know more about this subject or want to explore with us how we can take your distribution network to the next level, please feel free to contact us.


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