With the rapidly growing technology, most of the logistics companies have made tremendous strides in automating and innovating. Automation and innovation reduce the cost by reducing manual effort but that’s not its greatest impact. They are the essential enablers for optimising supply chain and logistics decisions and that is its greatest impact.
Supply chain and logistics optimisation give the grand opportunity to reduce the cost by 10% to 40% by offering better decisions but there’s a price you have to pay for it. We have listed down the five things you must pay attention to for the success in logistics optimisation.
What we want to achieve with logistics optimisation is what we may call “objectives”. This is how a computer decides the best possible solution for the company and management determines if the optimisation process is providing acceptable ROI. So we must keep in mind that objectives should be quantified and measurable. For eg: if the objective is to minimize the cost of fuel per mile or labour per hour, it can be done with ease as our objectives are easily measurable.
It is through models that we translate translational requirements into computer language which is used by the computer in algorithms. For eg: a very simple model such as the total weight/volume of the shipments will faithfully represent some loading requirements but the same model won’t work for loading new cars on a car hauling truck. Thus, it is important to faithfully represent the required logistics processes.
Needless to say, data accuracy is very important to drive logistics optimisation. If the data is not reliable or not received in time, the resulting solutions will obviously be suspect and give you very little than you expect. Data must be accurate, timely and complete.
◼ AUTOMATION AND INTEGRATION
Logistics companies usually have too much of data which generally includes data regarding the orders, customers, trucks, drivers, shipments, addresses and so on. Manually entering this data is too error-prone and time-consuming. That is where technology and automation come to the rescue and make it easier to feed, save and share data. The large amount of data that must be considered by logistics optimisation makes integration important.
◼ PLAN EXECUTION
Plans and optimisation won’t work until the people do. Solutions provided by supply chain and logistics optimisation models will be there but people in the field must also understand and execute the plan and management should assure that the expected ROI is being achieved. Whether or not the plan will work also depends on the people working for the company.