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About the Author

Kevin Harris
Director of Freight Data and Marketing
Compliance Networks

Kevin Harris has over 11 years of experience as a project and marketing manager with Compliance Networks, helping retailers develop and implement process and profit-improvement solutions. Kevin has managed successful distribution operations for very large and small retailers and manufacturers. He got his start in operations and logistics in 1983 as an infantry officer in the U.S. Army, serving in the 3rd Ranger Battalion.

For more information, please visit www.compliancenetworks.com.


Supply Chain Comment

By Kevin Harris, Director of Freight Data and Marketing, Compliance Networks

March 28, 2013



Retail Distribution Optimization – Minimize Brute Force and Ignorance to Maximize Supply Chain Value and Profits

A Competent Distribution Management Solution will Enable Continuous Improvement of the Extended Supply Chain's Execution of the Merchandising Plan



There is plenty of compelling research that makes the case that many retailers are losing money to poor supply chain performance. Common opportunities for improvement include fill-rate, on-time shipments, accurate advance ship notifications (ASNs), problem shipments that require resolution, and failure to leverage readily available data and technology. Below are some thoughts as to the most efficient ways for retailers to tackle these challenges.

Bringing a Sledgehammer to a Data Fight

Many warehouse management systems are not well-suited to support the needs of modern retailers, particularly retailers’ needs to leverage advance shipment notification, flow through and cross-dock processing, and improved store in-stock performance. They are designed to support traditional distribution activities within the four walls of the distribution center, but lack the capacity to capture and process the data necessary to effectively enable the distribution center to optimize the velocity and continuity of freight flow from the vendor through the D.C. and to the store.

Harris Says:

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An important intent is to detect and resolve exceptions as early as possible in the life cycle, to eliminate or minimize delays.
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Current, accurate and complete visibility into supply chain activity - Often warehouse management systems do not facilitate visibility into
comprehensive and accurate supply chain activity. With adequate supply chain performance history retailers can enter into more effective and productive collaboration with vendors and other stakeholders in the extended supply chain. A robust supply chain data warehouse component of a warehouse management system will inform merchandising, logistics, and supply chain planning and execution. Effective analysis of supply chain data enables adjustments to planning and execution that provide continuous incremental improvement in extended supply chain performance.

Preservation of supply chain source data – Effective analysis of supply chain events is only possible if original, source data is maintained. Best-in-class distribution management solutions must preserve the integrity of source documents (PO, ASN, and receipts), as opposed to most receiving systems that require changes to source documents in order to receive merchandise. This includes, for example, the requirement that many receiving systems impose that demand that a PO be changed to enable the receipt of a substitution against the PO.

Proactive identification of trouble shipments – Because they lack visibility into inbound shipments, distribution centers are often unaware that an inbound shipment is a trouble shipment, because analysis of the shipment was not possible, due to lack of information, or is cumbersome, due to a lack of automated tools to conduct an analysis. Because a trouble shipment is not identified until it arrives at the receiving dock, it is likely to linger on a trailer, on a receiving dock, or in storage, until it can be resolved.

Rapid resolution of trouble shipments - Compounding the problem is the lack of distribution solutions that facilitate communication, research, resolution, and execution of the resolution of trouble shipments. Shipments that arrive at distribution centers early or late, do not match their corresponding PO or advance shipment notification, do not include necessary value-added services, or are damaged create bottlenecks throughout distribution center processes that slow merchandise flow, and waste human, equipment, and storage resources. Distribution

management optimization depends on proactive trouble identification and tools to facilitate and expedite trouble resolution and communication.

Flow though, cross-dock, pick-from-stock, and future best practices – Warehouse management solutions based on traditional manufacturing distribution may provide adequate support for pick-from-stock practices, but often lack support for flow through and cross-dock practices that offer retailers the most gains in distribution optimization. Many WMS offerings also lack the configurability necessary to adapt to future best practices and distribution technologies.

Without the availability of effective distribution solutions, retailers are forced to implement expensive warehouse management solutions and spend additional money to design and implement middleware solutions internally, or with the help of a third-party, or to pay for modifications to the warehouse management solutions themselves. In-house, middleware solutions, or modifications to existing software are not likely to benefit from best practices input to future design enhancements. They are also likely to lack the flexibility necessary for retailers to enhance or change distribution or MHE systems to maintain competitive supply chain and enterprise performance.

All The Right Data, Now

In order to provide merchants, vendors, and distribution centers the greatest possible opportunity to resolve a discrepant shipment before it becomes a trouble shipment at the receiving dock, distribution management solutions must capture all the data relevant to the PO life cycle. This data is also necessary for complete, accurate visibility into supply chain activity. Necessary data includes the complete PO record, and:

 

• ASNs

• Order types (cross-dock, flow-through, pick-from-stock)

• Advance freight documents

• Allocations

• Receiving documents

• Storage and retrieval activity

• Receiving activity

• Inventory activity

• Shipment validation

• Distributions (manual or automated)

• Vendor non-compliance

• Outbound shipping

• Trouble shipment activity

• Store receiving

• Value-added services


Distribution Management Optimization Flow

The flow graphic below represents an optimized PO life cycle, starting with the retailer passing the PO to the vendor and ending with the store confirming receipt of the merchandise. The light blue boxes represent opportunities to automate distribution activity and the blue numbers represent opportunities for automated comparison of data for the purpose of detecting exceptions that require resolution and for optimizing the path through which the shipment or part of a shipment will flow.


An important intent is to detect and resolve exceptions as early as possible in the life cycle, to eliminate or minimize delays. Another important
intent is to detect opportunities to redirect the flow of merchandise in order to shorten the cycle time to delivery to the store. Opportunistic crossdocking is a good example of redirecting the flow: if a shipment can be allocated prior to arrival at the dock, the distribution management solution can determine if it is configured to enable all or some of the shipment to be treated as crossdock upon arrival. Opportunistic cross dock merchandise may be routed from the receiving dock directly to the shipping dock, without being subject to non-crossdock processing requirements.

If You Can’t See It, You Probably Can’t Manage It

Ultimately, the primary objective of the supply chain is to execute the merchandising plan. A well-executed merchandising plan implies delivering the right product to the right destination, on-time, undamaged, in the correct quantities and configurations. It also implies that this is accomplished as cost-effectively as possible. Visibility into supply chain activity directly supports the execution of the merchandising plan and of the continuous improvement of that execution. It also enables merchants to have an accurate view of the effectiveness of the merchandising plan, which enables continuous improvement of that plan. When supply chain failures occur without adequate visibility, planners are required to make assumptions. Forecasting is challenging enough without unnecessary guesswork.

Effective supply chain visibility includes, but is not limited to:

 

• A facility for requesting allocations and managing pending allocations

• A facility for notifying responsible parties of exceptions, for enabling resolutions, and for executing resolutions

• Real-time information:

  o Where a shipment is: inbound, internal, outbound, or completed

  o What has been done to the shipment and what needs to be done to the shipment

  o Who has performed processing on the shipment and who will perform additional processing on the shipment

  o When can the shipment expect to move on to the next activity

• Historical information to inform tactical decisions and strategic supply chain planning.


We Got Troubles, Troubles, Troubles

A best-in-class distribution management solution will not only leverage supply chain data to pro-actively detect exceptions (or allow them to be manually entered into the application), it will also provide a facility that communicates the exception to appropriate parties for managing exceptions, resolving exceptions, and implementing the resolution. In some cases, timely trouble detection could enable a shipment to be corrected before it leaves the vendor’s shipping dock.

Profiting from Distribution Management Optimization in the Retail Supply Chain

 

A competent distribution management solution will enable continuous improvement of the extended supply chain’s execution of the merchandising plan. It will also provide information to support continuous improvement of the merchandising plan itself. The benefits to the enterprise include reduced supply chain costs, increased sales due to fewer stock-outs and better merchandise planning, and mitigated risk due to supply chain visibility that informs planning and execution.



Agree or Disagree with Our Expert's Perspective? Let Us Know Your Thoughts at the Feedback section below.

Recent Feedback

Great read. It really highlights the potential impact of poorly executed ASNs.


Chris Brunelli
Director
RedTail Solutions
Apr, 05 2013
 
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