A direct freight train linking Wuhan in central China and Lyon in France began operation in April this year. It now takes 16 days to complete the 11,300-kilometer journey, compared to the 50-60 days to transport from Wuhan to France by sea.
If you’re a supply chain expert managing the China-Europe route, the new rail line potentially opens up cost reduction opportunities. And I’ll soon explain why only ‘potentially’.
Instead of only two transport options: ‘high speed-high cost’ (air) and ‘low speed-low cost’ (sea) options, the new rail line offers middle-of-the-ground costs while also shaving off 35 days of the sea transport time. Till now, if you encountered an unplanned delay in sea transport, the expensive airfreight was your only option to fulfil demand on time. Now, train may be the alternative at a much lower cost.
In more strategic terms – transport alternatives are essential in dynamic logistical environments. Yet, there’s one catch. Achieving a dynamic, agile supply chain requires more than abundance of transport options. Two other essential prerequisites are:
- The ability to respond (efficiently) to unplanned events
- Rapid decision making
Can you respond to unplanned events and disruptions?
On a daily basis, multiple events can dramatically affect logistics processes: a transport delay, a sudden rise in product sales, a supplier issue, a capacity constraint, or a severe production disaster.
Setting up a system that can help you assess the impact of unplanned events on your entire supply chain, as well as proactively alert your team when action is required, is essential. The sooner you are alerted the more time you and your team have to rectify the issue. With this new transport route for example, this could mean that if you were aware of the issue sooner, the logistical team could use the rail option instead of the air option and save substantial logistics costs, without compromising product availability.
Typically, supply chain organization rely on nightly batch processes of data assembled from multiple data silos, which considerably slows down any response. Instead, you’d want to connect the various supply chain systems (ERP, POS, TMS, WMS, carrier data) in a single, real-time analytical platform. Such an end-to-end view will allow you to see the current and future state of your supply chain.
Once you have the visibility in place, you also want to be alerted in case any of your indicators (KPIs) move outside of the boundaries. For instance, if your SLA contract includes 95% on-time delivery, you’d want to alerted anytime a distribution delay may affect your commitment.
How fast is your decision making?
Next is the ability to quickly decide on the best course of action. How can you swiftly simulate the various transport options and accurately assess the impact of each on overall service levels, stock levels, earliest availability and logistics costs?
Typical simulation methods include extensive Excel spreadsheets with endless tabs, and time-consuming iterations. Multiple file versions are passed between users to the point that it’s difficult to track and ensure that data is up to date or accurate.
Instead, you want rapid simulation capabilities that will ensure you make the best decision in the shortest possible time, without compromising any of the company objectives. Being able to simulate options, instantly view results (that is, within seconds rather than hours), and work in a collaborative environment makes all the difference. Decisions can be made faster with the assurance that the full impact on all KPIs have been taken into account.
Watch our demo, and learn how to improve order fulfilment and respond to unplanned events