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Supply Chain Best Practices – When to Engage a Pop Up Supply Chain

02/27/2017

As a logistics professional responsible for setting up the supply chain, you can spend years developing solutions for the unique challenges that occur within your operation.  Whether it involves understanding the complexity of your operation, the potential for increased efficiency or the hazards that may delay your inbound materials, every day you face the never-ending challenge of providing value to your customers.  In many ways, the process resembles nurturing a child, and just as you would never abandon your offspring, the concept of impulsively disregarding your tried and true solutions in favor of an alternative seems like a crazy and very risky endeavor.  However, knowing when to adopt a more innovative solution, while difficult to determine, can provide unparalleled value to your organization when applied judiciously.

The first sign you may want to look outside of your current process is easy to identify.  If you find yourself looking at a significant volume surge that is temporary in nature, it may be a good time to get creative.  Surges like this can put strain on the current infrastructure you have built and disrupt daily operations.  This situation is a common occurrence in the automotive sector, where campaigns to repair or replace vehicle components can cause sudden surges in parts demand.  If you follow your established process, you run the risk of stretching your transportation and warehousing beyond their limits, which can put your ability to service the campaign in jeopardy.  Equally important, it also can disrupt normal operations to the point that your customers have to wait for parts due to the bottleneck.

It’s helpful to keep in mind that you’re not expanding the supply chain for a new normal velocity. Instead, you’re temporarily trying to force more through the pipeline, so you want to minimize the amount of damage you do in the process.  As a logistics or transportation manager there’s also value in bringing in experts in a surge demand environment.  Decisions will need to be made quickly to adjust to changes in demand, so involving others accustomed to this type of environment will assist in providing sound advice.  It can also prove advantageous to have the resources at your disposal so not all of the work rests on your shoulders.  A pop up supply chain allows you to handle the surge without impacting current daily operations.  And once the surge is over and things return to normal, your customers will never know what was going on behind the curtain.

Another component to consider is that as volume increases so too does the opportunity to enhance efficiency and lower your incremental transportation costs.  A solid logistics company can identify the savings potential of volume leveraging via advanced optimization technology and creative solutions that come from investing in and focusing on their core competency.  TMS technology can be very costly and difficult to capitalize when your focus is not logistics services.  The infrastructure most third party logistics organizations have built brings flexibility to your supply chain and the ability to quickly and easily handle changing demand.

One industry where this concept has delivered value is retail.  Retailers may experience peaks during the holiday shopping season, seasonal sale events or, in extreme cases, natural disasters where product availability becomes critically important.  While these types of projects may reoccur, they’re not representative of consistent demand, so retailers need not modify their supply chain to handle such events.  Logistics experts can readily apply technology designed to optimize your supply chain and subsequently manage your operation with their existing resources. Optimized solutions of this sort are normally less expensive incrementally and logistics companies can further innovate by leveraging their entire transportation spend to get the best deal available.  As such, these economies of scale can be used to increase capacity while avoiding the higher costs a peak demand situation normally dictates.

Finally, one of the most important advantages of utilizing a pop up supply chain is the need for increased visibility and focus.  At the most basic level, this may prove beneficial due to the need for reporting and visibility beyond your organization’s capabilities.  This brings us back to the investment in technology and TMS platforms, which drive visibility.  The 3PL industry understands the importance and need for advanced reporting to track organizational shipping success rates.  This understanding has pushed the development of visibility tools like automated reporting engines and customized project dashboards, allowing organizations working through fluctuating demand to have instant visibility, in turn enabling quick decisions to help you stay on track with your end goals.

While it can be difficult to look outside your organization and your entrenched supply chain structure, there are clear advantages in doing so, beginning with the experience and resources gained from forming a partnership to handle surge or inconsistent demand.  With robust TMS platforms and optimization technology, a 3PL can ensure you’re not spending unnecessarily while maintaining the capability to find existing customer synergies that drive savings to your organization.  Plus, you’ll gain more robust visibility and reporting so you can share the success throughout your organization in a timely, professional manner, turning your biggest challenges into big wins for you organization.

 

Thanks as always for reading, and please feel free to share your thoughts and experiences with me at swilson@unyson.com

Making Virtual Supply Chains a Reality!

 

Steve Wilson

Senior Director, Operations

Unyson

swilson@unyson.com