In the first two installments of our series, we dissected how digitization is the foundation for supply chain sustainability and looked at how to tackle the daunting task of benchmarking and goal setting. Today, we shift our focus to identifying and weeding out waste in your supply chain, which is not only paramount for sustainability but also for bolstering your bottom line.
At its core, a sustainable supply chain is centered around achieving greater results with less resource usage. With that goal in mind, optimizing your operations is a necessity. Fortunately, making the business case for doing so is easy, given the benefits of optimization.
Embracing sustainability doesn’t have to equate to high costs. In fact, it generally means the opposite. When companies streamline their operations for increased productivity or enhanced quality, environmental benefits often naturally follow. Efficient manufacturing and supply chain processes are not only cost-effective, but they also consume less energy, utilize fewer resources and generate less waste.
Transportation presents a multitude of opportunities for cost reduction. For example, optimizing delivery routes using advanced analytics can reduce fuel consumption, leading to significant cost savings and a lower carbon footprint.
Investing in automation and technology can also lead to faster processes, fewer errors and reduced labor needs. For instance, AI can help forecast demand more accurately, reducing the need for safety stock and consequently lowering inventory carrying costs and the amount of real estate you invest in to store your goods.
In addition to reducing costs, optimizing the deliveries from suppliers and to customers can greatly improve performance.
Real-time supply chain visibility allows companies to monitor and adjust delivery routes dynamically, reducing delays and improving delivery time key performance indicators (KPIs) such as order cycle time and on-time delivery. It can also detect potential disruptions early, enabling preemptive measures to be taken to maintain schedules.
This added confidence helps remove a lot of the padding businesses bake into their processes. With a higher degree of confidence, throughput can be maximized, adding more deliveries in a day. In terms of supplier performance, real-time visibility helps suppliers more effectively meet delivery schedules, boosting on-time performance and moving up on supplier scorecards.
From the customer perspective, optimized delivery routes and real-time visibility into the supply chain mean that their products arrive on time, more often. Consistent, timely deliveries lead to increased customer trust and satisfaction. Additionally, by lowering their carbon footprint through smarter logistics and supply chain practices, companies can cater to the growing demand among consumers for sustainable products and services.
Employee satisfaction, on the other hand, stems from the empowering effect of optimization. When employees are not burdened by inefficiencies, they can focus their energy on strategic, meaningful tasks. They can engage more directly in problem-solving and innovation, contributing to greater job satisfaction and ownership. For instance, employees can concentrate on enhancing customer value when you eliminate their need to constantly juggle spreadsheets or engage in time-consuming phone calls. This not only boosts employee morale and productivity but also improves talent retention.
While the benefits of optimizing your supply chain make it a no-brainer, it can be challenging to know where to begin. The following areas are often riddled with waste, making them a great place to start.
One of the most significant sources of waste is the empty backhaul – when trucks return empty after delivering goods. This represents not only wasted fuel and emissions but also an opportunity cost. By employing route optimization software, you can minimize empty backhauls and maximize truck utilization. This software can help find cargo that needs to be moved on the return route, optimizing both the outward and return journeys.
Excessive dwell time, the duration for which goods are stored in your facilities before they are shipped, is not only costly but can also result in product obsolescence. To reduce dwell time, ensure there is synchronization between supply and demand, and foster real-time communication among suppliers, warehousing and transportation.
How often are you shipping multiple orders to the same consignee from the same facility in a day without realizing it? Moreover, how often are you closing the doors on a trailer that is only partially filled? These are inefficient habits that are symptoms of an operation trying to stay on top of tight schedules and customer demand. Using bulk optimization tools can help identify consolidations at a location or in a region to maximize cubage and use lower-cost modes.
Did you know that you can ship on a train from your facility without even needing rail siding? There are alternatives to truckload service that sacrifice a bit of time for significant carbon dioxide savings. With the right visibility tools and change management, tapping into 53’ intermodal shipping can not just reduce CO2 emissions by up to 65%, and it can slash your costs with it.
Your yard and facilities can be treasure troves of waste. From inefficient use of space to energy consumption, there’s much to address. Implement measures such as smart lighting systems, optimized storage layouts and regular maintenance to reduce energy usage. Additionally, consider implementing waste reduction programs and recycling initiatives within the facility.
Disruptions in the supply chain often lead to outdated plant or distribution center dock schedules, causing truck queues and idle times to grow due to schedule misalignment, which in turn increases carbon dioxide emissions. With a Yard Management System (YMS), companies can continually optimize schedules throughout the day to significantly reduce idle time, enhancing efficiency and sustainability. For example, Dynamic Yard users emitted 20% fewer carbon emissions than non-users in the last quarter, thanks to reduced idle time.
Begin the optimization process by seeking feedback from customers, your team, and partners – even considering an advisory board that brings them all together. They have a unique perspective that touches so many different supply chains and can help shed light on best practices and opportunities. Establish KPIs and measure them regularly. Don’t be afraid to make changes and experiment with different strategies. The key to optimization is continuous improvement. Be prepared to iterate and improve as you gain more insights.
Supply chain sustainability is an ongoing journey, not a destination. By focusing on reducing waste in key areas like dwell time, backhauls and facilities, you can make a significant impact. Remember that the optimization process should be data-driven, and human insights from customers, employees and partners are invaluable. Keep an open mind, measure, iterate and evolve. Not only will you see your supply chain thrive, but you’ll also be contributing to a more sustainable and prosperous world.