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Supply-Chain Visibility in Post GST Scenario 1.0

Jun 15, 2017

India is running through GST implementation era. Post GST there will be one taxation system for one commodity throughout the country and it will help seamless movements of goods across the state border. Almost all companies and logistics players completed their homework on “To Be” infrastructure and network strategy. Consolidation of distribution centers and factories, presence in strategic nodes, faster & efficient delivery mechanism these are few key indicators everyone will follow post GST. Fewer distribution centres means high dependency on transportation network because market demand will remain same. Also in this competitive market scenario, compiling service level is not enough, you have to exceed your service levels. E-commerce and Express Logistics companies has already started challenging its own service level and came up with day definite delivery and slowly moving towards time/hour definite delivery. These whole set of new service levels raising customer’s expectation and making them more impatience. (yes, you read correctly… impatience… as processor gains speed our patience level reduced and we want everything to be happen fast, faster, fastest…)

As we were discussing, fewer distribution centres means high dependency on transportation network. It means more vehicles will fly in primary & secondary network. So on one hand distribution centre (DC) management cost will reduce and other hand transportation cost will increase. Supply-chain experts, strategic & planning team are breaking their heads to reduce logistics cost so that optimum trade-off can happen between DC cost and transportation cost. But most of the time due to lack of visibility of full gamut of supply-chain network optimum trade-off won’t happen.

Common Myth

Supply-chain visibility is a need of modern supply chain age and it’s also an important tool for optimization. Most people do a common mistake by considering track & trace system as supply chain visibility. Track & Trace is a small part of it. It helps in shipment visibility only, not supply chain visibility.

So what is Supply Chain Visibility?

Supply chain visibility involves a Control Tower approach. It means closing the loops between planning and execution and synchronisation of end-to-end activities from raw material to the delivery to the end customer. Logistics control tower will provide complete visibility of primary and secondary transportation with help of technology. It will help an organisation to optimum use of fleets and better distribution planning thus reducing overall transportation cost.

Logistics Control Tower:

According to Marcel te Lindert, “Right across the logistics landscape, control towers are emerging: platforms where information about various flows of goods converges and is analysed so that the freight flows can be towers enable companies to centralise their transport planning and to reduce the number of empty kilometres their delivery trucks travel. They are increasingly also used as a Cross Chain Control Centre (4C) in order to combine several different companies’ flows of goods. So far, however, there is no definitive model for designing and running control towers.”
Thus logistics control tower is a proven concept and can be customized as per organisation needs.

In any organisation control tower needs can be characterized into three level:

1. Beginning Phase of Logistics Control Tower : Introductory Level

In this phase organization starts thinking about visibility activity. Organisation may decide to do via in-house team or outsource it. Following activities generally get part of control tower:

Integrating primary-secondary transportation & warehousing supply-chain network with IT/ERP connectivity.
Track & Trace, EPOD etc.
Demand planning and order creation activity
Issue & Event management

2. Tactical Phase of Logistics Control Tower : Tactical Level

In this phase control tower responsible for more complex activities and starts optimizing supply chain scenario. Organization generally deploy transport management software (e.g. OTM, SAP TM, IBM TMS etc.) for bringing entire sets under one roof. Since this stage involves more complex activities hence most of the organisation outsource it to 3PL players.

Generally control tower handles following activities:

All activities of beginning phase
Carrier Management (Selection, Management, Performance Audit, Coordination, Billing)
Invoicing Control
Backhaul Management
Real time Dashboard Visibility
Transport Optimization
Analysis and statistics

3. Strategic Phase of Logistics Control Tower : Advance Level

Once an organization harvest maximum advantages of tactical level, it then start using analytics of control tower for strategy building. When you have complete visibility of supply-chain system and accurate data available in transport management system then you can easily use statistics analysis report for strategy building.

GST Process

Generally an organization builds following strategy (It’s an indication only):

Redesigning supply-chain network for more efficiency
Reframing channel management strategy
Identifying super service level pockets and use it for branding promotion.
Redefining Go-to market strategy
Building cost trade-off strategy
Multi-level planning

This article was first published on LinkedIn by Somenath Roy

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