8 Key Applications of Supply Chain Engineering Today (Part 3 of 4)

In the previous post in this series, we defined supply chain engineering (SCE) in modern terms and why SCE is impossible for shippers to ignore in the here and now. Having whet readers’ appetite for the benefits of today’s SCE systems and tools, this post will dive into the specifics of key SCE applications today.

Here is a glimpse into the major SCE applications every shipper should pay attention to now.

Network design

Sourcing policies and where to locate plants, distribution centers and fulfillment centers are the work of network design. Proximity to markets, suppliers and transportation corridors as well as real estate prices, labor availability, and weather patterns are key variables in decisions. Network design analyzes variables in different combinations to ascertain their impact on a variety of priorities and objectives led by cost, service, and utilization.

Network optimization

Network optimization is the ability to continuously analyze results and compare them to baseline expectations for designs and optimizations. Network optimization provides regular opportunities to refine processes. Continuous improvement is the greatest advantage of a dedicated supply chain engineering group. Network optimization creates a circle of identifying what engineers thought was going to happen, what did happen based off new information, and what will happen when adjustments are made to lanes, driver schedules, and a wide range of other actions.

Modal shifts

Can LTL shipments be consolidated? Would a drop trailer program be cost effective? The ability to quickly ascertain impacts of mode changes leads to opportunities to streamline service, create efficiencies, and reduce transportation costs. SCE today needs the flexibility to make modal shifts as opportunities arise in the short- and long-term.

Routing

The opportunities for achieving routing efficiencies and economies are as endless as the American highway system. Fuel is the biggest cost of trucking, and the ability to shave miles off routes or avoid traffic in real-time can bring shippers tremendous savings.

In SCE, routing is determined holistically. SCE considers what shipping lanes to take and when to travel, or it determines what’s possible given a driver’s available hours of service (HOS) or with team drivers.

Cost modeling

SCE is used to collect internal and external data for an endless array of KPIs. The data is used to create sophisticated models enabling shippers to quickly get the answer to “If we do this, what will it do to costs?” You could use a model to find out whether adding another truck and driver to the fleet would be cheaper than paying existing drivers overtime. Or you could use a model to determine how much additional capacity you will need to secure for peak season based on past years’ volumes and current economic factors. Modeling has been supercharged by AI and ML, enabling it to be used to analyze and compare costs more granularly and frequently.

Carbon modeling

There are many ways supply chains can be engineered to reduce or eliminate emissions. A key focus of SCE is creating computer models that answer questions like how much carbon could be cut with battery electric trucks (BETs) or the use of LNG- or biofuel-powered trucks.

Modeling also focuses on carbon emissions that can be reduced through routing enhancements or improved driving habits.

Digital twins

At the cutting edge of supply chain engineering today lies the creation of digital twins. These are virtual replicas of systems that enable companies to simulate, analyze and optimize their operations in real-time. Digital twins are always-on models that companies can look to for answers to a host of what-if questions. This allows companies to test moves like adding a plant. It also enables them to analyze outcomes of external events and possible responses. Large companies are currently leading the way. According to McKinsey & Company, 70% of C-level technology leaders at large enterprises say they are exploring and investing in digital twins.

Automation

Opportunities to automate exist from end-to-end of the supply chain. SCE is used to explore, evaluate, and optimize automated processes. For example, taking advantage of opportunities to switch to faster, shorter or safer routes requires a real-time change that is ripe for automated driver alerts. Advanced SCE today can analyze, optimize and execute operational tasks like this as well as customer service functions. Meeting customer demands today requires a dynamic supply chain that can perform with superhuman efficiency. SCE addresses functionality like automated alerts that inform customers of ETAs or alterations to a driver’s scheduled stops to reflect their HOS.

Explore options for upgrading your SCE

Advanced SCE featuring these applications must be the focus of any transportation program today. It doesn’t matter whether you run a private fleet, outsource to carriers and 3PLs, contract with a dedicated fleet provider, or have a model that mixes some or all of these. Fast and accurate SCE functionality has to be there. Here are the important considerations and options for shippers depending on the transportation model they use.

Option 1: Operators of private fleets have the option of performing SCE in-house through their own software and engineering team. The challenges of a DIY approach can be substantial. Investment in SCE technology and an engineering team is considerable. Creating the necessary in-house expertise and hiring industrial engineers is also beyond many companies’ means. Even well-funded in-house SCE departments often operate at a disadvantage because of their isolation and limited experience. Entrenched thinking can also be a stumbling block for in-house private fleets. A reluctance to change established supply chains is common.

Option 2: Shippers who partner with 3PLs or carriers aim to shift some of the responsibility for SCE from themselves, seeking more advanced solutions. Some 3PL or carrier partners may be able to provide workaround solutions. These include TMSs that have SCE modules offering limited functionality. Excel sheet analysis is also an option. Neither of these workarounds can compare to the performance of a bonafide SCE software and skilled engineering team, though.

Option 3: Supply chain consulting firms are an option for shippers who want access to top-of-the-line SCE software and expertise. The consultant path helps shippers avoid the capital outlay and continued investment in in-house capabilities. This solution does not create a continuous solution though. Outside consultants create a plan for shippers to execute. Two potential problems with this arrangement are that continuous optimization and “skin in the game” are lacking.

Option 4: Dedicated fleet providers offering dedicated SCE as part of their contract provide distinct advantages to shippers. A dedicated fleet provider like TA Dedicated will provide top-tier SCE software and the expertise of a team of industrial engineers on an ongoing basis. Like an in-house engineering team, a dedicated team provides continuity that supports continuous optimization. Unlike an in-house team, a dedicated solution also brings the benefit of an outside-in view gained across many different fleets and operations.

Shippers have four options but only one direction

One way or another, shippers must beef up SCE in-house capabilities or engage an outsourced solution. The capabilities of today’s supply chain engineering (SCE) applications are too important to shortchange or delay. The performance gap between shippers using advanced SCE and those who are not is too great to ignore.

Read our next post to learn the essential considerations for shippers who want to achieve a competitive advantage through SCE.

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.