WHITE PAPER

®

Transportation Centric

Supply Chain Execution Convergence

2 n KEWILL

Disparate, fragmented technology solutions are preventing companies from achieving supply chain excellence

in a business environment where everyone is demanding above-par performance, on-time delivery, and consistent quality. Add the growth of omni-channel distribution, increasing govern-ment regulations and oversight, and the growing need for better supply chain visibility to the mix, and the scenario becomes even more challenging for today’s shippers.

To overcome these and other challenges, ship-pers need a streamlined and collaborative approach that allows them to do a better job of orchestrating and synchronizing processes, sub-processes, and activities across warehousing, transportation, and manufacturing functional domains.

Unfortunately, most supply chain organiza-tions continue with functional silos—warehous-ing, transportation, and manufacturing—with minimal, if any, process integration and synchro-nization among execution silos.

The good news is that through a process known as supply chain execution convergence (SCEC), shippers can break through these age-old barriers and tap into supply chain function-ality that allows them to more effectively serve their customers, adapt to changing business cycles, and save both money and resources.

In this white paper, we’ll explore the concept of SCEC, explain what factors are driving its adoption, discuss the differences between inter-nal and external convergence, and consider the implications of SCEC on the future supply chain.

What is supply chain execution convergence?When research firm Gartner first introduced the concept of SCEC about six years ago, the buzzword “omni-channel” had yet to become a top-of-mind topic for the average logistics professional.

The national economy was in a slump, supply chain software spending was flat, and companies were doing what they could to survive in extremely difficult business condi-tions. Fast-forward to 2013 and the landscape was quite different, as companies began to wrap their minds around the new realities of transportation and warehousing.

As part of this effort, some of them real-ized that the “individual” parts of their busi-ness were focused solely on optimizing those specific entities—as opposed to the entire organization.

In a 2013 user survey, for example, Gartner found that 41 percent of companies couldn’t syn-chronize end-to-end supply chain processes, 37 percent lacked visibility across the supply chain, and 35 percent were challenged by supply chain network complexity.

Inability to synchronize end-to-end supply chain processes

Lack of visibility across supply chain

Supply chain network complexity

Unify End-to-End Logistics Processes With Supply Chain Execution Convergence

41%

37%

35%

Supply Chain Challenges

Transportation Centric Supply Chain Execution Convergence

3 n KEWILL

Transportation Centric Supply Chain Execution Convergence

“At that point, we started to see a grow-ing need for visibility based on the fact that companies couldn’t get information to flow across the independent aspects of their opera-tions,” says Evan Puzey, chief marketing officer for Kewill. “And without that internal flow of information, there’s no hope of extending visibility externally across trading partners, carriers, and customers.”

Enter SCEC, a process that helps compa-nies break down silos and better synchronize processes across many different internal and external functions. By eliminating the functional silos that exist among warehousing, transpor-tation, procurement, yard management, and global shipping activities, for example, shippers can better optimize activities across functions that previously didn’t communicate or work with one another.

“Today, shippers that use converged systems gain access to a ‘common platform’ that includes

common hardware, software, and architecture, all with the goal of achieving a lower total cost of ownership (TCO),” says Bart De Muynck, research director at Gartner.

In addition to lower TCO, shippers also gain efficiencies, enhance visibility, and improve pro-ductivity during an era when the typical internal information technology (IT) is both shrinking and stretched to the limit. “Why wouldn’t you go with a single vendor and one platform if it offered the capability?” De Muynck states. “That’s the question a lot of shippers are asking themselves right now.”

Key factors driving SCEC In today’s complex business environment, agility is the new normal, and functions like transpor-tation management are moving to newer and higher levels.

It’s no longer enough to simply add a new transportation management system (TMS) to the

mix, or use the transportation functionality within an enterprise system, with the hopes that it successfully talks to other systems while meeting customer demands. Shippers have to move to the next level and consider exactly how their supply chain software is working together, collaborating, and creating a seamless experi-ence for valued customers.

“Many companies still go out and buy applications and then deploy those solutions within individual silos,” says Puzey. “Then they’re optimizing those applications on an individual basis, not realizing that this

• Integrate raw data across silos

• Use tools to ensure data is moved accurately and in a timely fashion

• There is minimal, if any, cross-functional transaction orchestration

• Synchronize process flows across applications silos

• Orchestration logic drives process tasks from one silo to the next

• Consolidate and aggregate data across silos

• Exploit analytical tools to identify cross-functional issues

• Plan and optimize work across functional silos

• Consider silo-level constraints when building optimal cross-functional workflows or plans

Analytical

Transactional

Synchronization

Optimization

React Anticipate Collaborate Orchestrate

SCE Convergence Maturity

Demand-Driver ValueNetwork Maturity

Source: Gartner

4 n KEWILL

Transportation Centric Supply Chain Execution Convergence

approach doesn’t provide the best overall solu-tion across the entire supply chain.”

This, in turn, creates an extremely fragment-ed supply chain where critical functions can’t communicate or collaborate with one another in an automated fashion. It can send even the most tech-savvy shipper back to the telephone, email, or instant message application to solve critical transportation problems after the fact—rather than in a proactive, streamlined manner.

Another key driver of SCEC right now is the transition from the “right product, right place, right time” mantra to one that’s focused on “any product, any place, any time.” This switch is largely being steered by the rapid growth in om-ni-channel distribution, and it creates an entirely new set of demands for a shipper striving to meet its customers’ requirements.

“Shippers need to be thinking about how they can be agile in certain fixed stopping points,” says Puzey. “This mindset is pushing companies to better understand exactly where products are at any given point—be it in a warehouse, a distribution center, a stocking location, or in transit.”

“This level of demand generation goes beyond basic order fulfillment,” Puzey adds, “and requires a dynamic transportation management approach that’s in sync with other technology systems and platforms in a true, converged manner”.

“When you start to include a broader view in the equation,” says Puzey, “you begin to take advantage of dynamic transportation management and more deftly manage the demands of omni-channel.”

Best practices for implementing SCECOn the SCEC spectrum there are two major components that must be considered: internal convergence and external convergence.

Internal includes manufacturing, warehousing, transportation, procurement, and both inbound and outbound supply orders, while external convergence comprises all of the other play-ers within the supply chain network (and their technology platforms and processes). Combined, these two components make up the completely converged supply chain.

“It’s about getting all of the players in the sup-ply chain to ‘converge’ around a single, defined supply chain process,” Puzey explains. “When that happens, everyone can share information in an exception-managed environment and then deliver information to those entities that need to ‘act’ when an exception occurs.”

As a starting point on the road to SCEC, Puzey says that shippers should think carefully about how to optimize the supply chain across all internal teams (not just silos). Calling this pro-cess “internal SCEC,” he says that once shippers achieve this goal, it’s time to extend the same effort out across the external supply chain. When this occurs, shippers gain unprecedented levels of visibility and cost/resource savings that couldn’t be achieved with traditional, silo’ed supply chain software execution approaches.

“When we survey our customers across a broad range of industries, their top two concerns are visibility and analytics,” says De Muynck. “For most companies, visibility is both the biggest opportunity and the biggest issue, and it goes beyond just knowing where a truck or a product is at a certain time.”

In fact, De Muynck says that visibility is a complete process that starts when raw materials or products are sourced, extends out onto the plant or warehouse floor, and then transcends into the yard, out of the gate, and onto the road—not ending until the product reaches its

5 n KEWILL

Transportation Centric Supply Chain Execution Convergence

intended recipient (be it a company, a retailer, or an end consumer).

Of course, visibility doesn’t stand on it’s own; it needs an owner. As businesses go down the SCEC road, they will need to put one part of the organization in the lead role as an “own-er” to ensure success.

“Shippers must consider customer needs in the process,” Puzey points out. “As such, the transportation team is a natural fit for this leadership position as it has end-to-end visibility into all the stages of the process. Warehousing and manufacturing lack this overarching view.”

Implications of SCEC on the future of transportation management As companies continue to wrestle with constant-ly-evolving supply chain demands, and as they

look to the future to try to determine what’s around the next corner, those that invest in SCEC are already seeing the rewards of their efforts, particularly within the transportation aspect of their operations.

After all, transportation is the one connecting point that maintains constant contact with goods as they move throughout the supply chain.

And while technology plays an extremely important role in creating connections, auto-mating processes, and helping companies work smarter, better, and faster, the reality is that companies are comprised of individuals who also need to be on the same page with their in-ternal constituents, business partners, transpor-tation providers, and customers.

“The first step to achieving SCEC is to bring everyone together and talk them through an end-to-end view of the supply chain,” Puzey says. “Combine that effort with good, interconnected systems and business processes—all supported by a layer of visibility that gives everyone the information that they need to act and make deci-sions—then you’ll have the perfect environment for SCEC success.”

Today, leading-edge companies are adopting the SCEC approach because they realize that by deploying integrated technology solutions in conjunction with revamping internal processes, they gain a tremendous competitive advantage. With such an approach, having the additional vis-ibility and analytics and the ability to proactively manage the end-to-end supply chain is a win:win for everyone.

www.Kewill.com

The transportation team potentially has end-to-end visibility due to having to move or manage the movement of the goods.

Cargo Freight Station

Multimodal Transportation Software Process

Manufacturing

Supplier

Buyer

Store

Warehouse