The Top 5 Threats to Delivering the Intermodal Promise – Part Four

25 10 2011

By Cento Sharp, Cento Sharp Consulting

Cento Sharp#3 – Lack of End to End Supply Chain Integration

Supply Chain Management 101. A supply chain requires a minimum of three entities; a supplier, a producer and a consumer and each must share information and exchange currency in order for the supply chain to work.

How simple is that?  Why isn’t every supply chain completely automated if it is that simple?

As common practice indicates, the minimum of three entities in a supply chain is just a basic tenet of supply chain management and holds true as theory only. In reality, supply chains are often both explicit and implicit to their participants and are highly complex spatial algorithms.

Let us momentarily ignore the obvious technology and orchestration issues with integration between suppliers, manufacturers, logistics providers, wholesalers, retailers, and the like. These are the explicit supply chain nodes that we know requires constant integration efforts in order manufacture freight and transport it from point A to point B at a profit.

Let us look at a less obvious and oftentimes hidden detractor of end to end supply chain integration. This hidden detractor is what makes end to end supply chain integration impossible for some organisations.

Transportation providers are the most egregious offenders of this principle, which is…

Supply chain companies that don’t realise they are supply chain companies.

Using transportation providers as an example; companies must see themselves as a part of their customer’s supply chains; as key enablers and an optimisation tool for their customers. Many transportation organisations do not operate in this manner; the keyword is “operate”. The operations mentality of “find more freight”, “book more freight”, “move more freight” reduces the level of intimacy needed between transportation providers and their customers in order to create a fully integrated supply chain.

These transportation providers see their role as more transactional instead of strategic, which causes distance and a lack of trust between customers and suppliers.

With a lack of trust and relational distance between just two of the three supply chain entities comes EDI messages that require constant manual fixes, web portals that add more work for the customer and irate phone calls to customer service for status updates on the most rudimentary of tasks.

End to end supply chain integration starts with all participants in the supply chain first realising that they are a supply chain company, regardless of their size, service offering or role.




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