What Every Shipper Needs to Know about Supply Chain Engineering Today (Part 2 of 4)

Our first post in this series highlighted how leading shippers are making decisive moves to supply chain engineering (SCE). In this post we’ll dive into what makes SCE such a powerful tool.

The opportunities inherent in SCE today are too big to ignore. Transportation costs are typically 9% – 14% of sales, according to transportation technology leaders CTSI-Global. That fact reveals the enormous potential for shippers who can leverage SCE to achieve ongoing efficiencies and cost savings.

Today it’s crucial for shippers of all sizes to understand what SCE is and why they need to consider it.

What is supply chain engineering?

Supply chain engineering is a three-part process for evaluating, planning and realigning networks to better manage demand, avoid or adjust to disruption, and position shippers for future growth.

1. SCE starts with data. Data determines the baseline profile of customer operations. Internal shipment and order data is collected and structured. Situational data is also collected and structured on delivery facilities, traffic or weather constraints by route, industry or market trends, and regulatory requirements. These provide critical visibility into shipment patterns, order-management processes and network configuration.
2. Analysis comes next. During analysis, the focus is on the shipper and a specific set of objectives, whether it’s claims reduction, cost savings, improved utilization or something else. Datapoints are used to create models that allow engineers to analyze how well that solutions achieve objectives when variables change.
3. Optimization and execution follows. The speed of SCE today streamlines the process and reduces the time lag between analysis and optimization and execution. The ability to perform SCE quickly and accurately enables shippers to easily manage new KPIs, optimize at the micro level, measure results, and then do it all over again.

Why supply chain engineering?

SCE processes must meet the uncompromising delivery standards buyers are used to today. 74% of consumers expect delivery within two days, according CapitalOne Shopping Research. A program that collects data, measures results and guides effective action is a given because there is so much to gain.

Companies who do smart SCE experience benefits that start with cost savings and improved efficiency. Agility is another advantage. SCE provides fast analysis that enables shippers to flexibly respond to changing conditions. SCE can also be used to optimize service quality and reduce emissions.

To compete in our technology-enabled world

Many smaller shippers still analyze data using Excel sheets. It works for some optimizations, but it takes ten-times longer than SCE software and it’s prone to mistakes and inaccuracies.

Leading-edge SCE technology enables shippers to explore more options than ever before. AI is analyzing huge amounts of data to instantly identify patterns and devise solutions. Shippers can optimize routes, loads, equipment utilization, service, sustainability – literally everything. And they can do it constantly. With supply chain engineering technology, companies operate on a higher plane.

To stay ahead of market swings and disruptions

Supply chains are increasingly affected by complex factors outside of a shipper’s direct control. Freight rates can change from day-to-day and week-to-week. Events on the other side of the world reverberate locally because of interconnected global supply chains.

Anticipating changes and making necessary adjustments isn’t seen as going over-and-above anymore. It’s now a critical function of regular supply chain engineering. Modeling, simulation, and predictive analytics are the SCE tools widely being used to support short- and long-term business continuity.

To optimize fuel and carbon savings with precision

Nowhere are the benefits of supply chain engineering seen more directly and immediately in a company’s bottom line or return on investment than fuel cost reduction, which is also at the core of broader supply chain sustainability. A recent sustainability whitepaper from TA Dedicated observes that trucks in the U.S. are typically 57% full. Optimized routes and utilization lead to significant savings in fuel consumption and related emissions.

Additionally, companies planning for long-term growth will have to factor sustainability into their decision-making as a strategic business objective. Over 75% of CFOs said they expect to maintain or increase sustainability-focused investments after the recent presidential election, according to advisory firm BDO.

Advanced SCE supports companies’ initiatives for reducing GHG emissions by providing formalized processes for measuring and verifying current emissions and progress over time.

How SCE changes everything

Previously viewed as optional, SCE is a paradigm shift in the making. The sooner shippers get onboard and understand its potential, the sooner they can unlock its benefits. Read our next post to learn all you can do with SCE when today’s technology tools are intelligently applied with the right expertise.

Ready for a deep dive into SCE? Download the white paper, Supply Chain Engineering: Efficiencies and Optimizations for Fleet Operators.

To learn more about TA Dedicated’s supply chain engineering strategies and how we can help you meet your goals, contact us at 651-686-2500.