What do bananas and patio tables tell you about supply chain efficiency? Collaboration can deliver more value than most people generally expect from a Procure to Pay (P2P) supplier collaboration solution. By integrating customer labeling, scanning and pack and stack functions the suppliers become the outpost of your inventory management process. Understand how double manual work is avoided, information expedited and both product and data quality improved.

How Supply Chain Collaboration delivers value where you may not expect it

The nice thing about existing customers is that they always come back for more savings and collaboration benefits on top of the value previously delivered. Traditionally rolling out a supplier collaboration solution starts with forecast processes or purchase orders to manage planning and execution. Last year we had customers in two very distinct industries; consumer packaged goods (CPG) and automotive OEM looking to streamline their goods receiving and inventory management processes and trigger a whole new level of efficiency savings.

The old process

Traditionally in supply chains, customers and suppliers have their own ERP systems, Warehouse Management Systems (WMS) and integration tools. If goods are going to be physically shipped they are typically packaged and labelled by the supplier, palletized or containerized and subsequently packaging documentation is prepared for shipments. Even in the rare cases where this type of information is electronically shared (EDI) the physical process is still the same. On the inbound side customers typically receive shipments delivered by a 3PL. Warehouse personnel needs to unpack the goods, book them for goods receipt and handle them in their inbound warehouses, commonly adding their own labeling/ item coding etc.
To be quite frank: our customers often don't look at such processes during initial selection. Most supplier collaboration projects are initially started by corporate procurement driving savings from spend management and purchasing efficiency. In such large organizations the purchaser (defined as the person who actually calls off the goods), the warehouse staff and the accounts payable team hardly ever really know each other and the end process involved, considering multiple sites/ countries etc. Often this is by choice: start at the beginning of the process and then move on.

How to outsource warehouse staff to your suppliers with Lean

What is it we did to take these duplicate steps out of the process? Well, just by applying DRIFT (Do It Right First Time). We empowered the shipping department of the suppliers by making it possible for them to provide labels of their customers that exactly match the Purchase Order (or line detail) information corresponding to the handling unit such as box, crate etc. by printing these locally through an online connection to the Supplier Portal that containts all the required information. They need to apply labeling anyway, so better use the one the customer needs including customer format, item codes, barcode etc. The next step is that we provide a simple wireless scanner or the supplier uses his own scanner when announcing a shipment for one or more purchase order lines. Just scanning the pre-printed labels when the Purchase Order is opened in the portal, creates with the Advance Ship Notice (ASN) that is sent to the customer and to the 3PL as well as the packing list with detailed pack and stack information. Including important details such as manufacturing batch or serial numbers, depending on the industry context.

Instead of receiving this information and updating their systems upon goods receipt in the warehouse, commonly taking quite some time before all systems are updated, customers now have a very accurate view of the shipment and all detailed content in advance. Not only do they save internal labour in goods receipt, they also benefit from having this information way before the goods actually arrive, helping them manage dock schedules more efficiently and pre-empt any issues from potential short shipments or announcements that should have been made, but were not made. Not to mention all the errors avoided in figuring out what is actually received against which Purchase Order, how it was packed etc.

For this blog post I will not dwell on how 3PL fits into the picture, but it should be obvious that another redundant set of manipulations is avoided here as well. To give you an impression of what type of savings we are looking at, here are some facts and figures from 2 customers:

  • Within 3 months of Go-Live on a small scale with a limited number of suppliers, one of our customers avoided breaking down and re-labeling 42.000 pallets in the warehouse, being received in 30.000 individual shipments with no errors or manual intervention and without calls to the supplier.
  • For another customer, 130 suppliers shipped 39.000 labeled boxes and containers that were automatically received in a ramp up period of 6 months. Just take a minute trying to visualize the sheer volume of stuff moved with a simple scanning click at the unloading dock.

The actual implementation of these modules was obviously achieved in the course of weeks, not years as with most system implementations. You can invest in the most sophisticated pick by voice, pick by light systems, as long as you basically keep doing unnecessary double work you are still losing money. If you are looking to make money with your suppliers without asking them for yet a bigger discount, this is how you can make it happen. Contact me for an out of the box workshop at your back door!