Can 3PLs plan demand and inventory better than clients? That was the question addressed by Charles Pryce, head of demand and replenishment planning at Gist, when he spoke at the 3PL Conference on Thursday.
Although of course there is not a definitive answer, Pryce explained how a 3PL is can handle the planning of an operation.
After analysing the inventory of one of its clients, Gist found that the company had inventory that was 40 per cent in excess. The company, he said, was very conservative when it came to stock management – essentially with the philosophy “don’t run out of stock”.
Pryce said that this is a “pretty common philosophy”, that results in excess stock. Most concerning for Gist’s customer, was that the analysis found even after six months there would still be six figure stock excess. “This is something a 3PL is able to handle,” said Pryce.
He outlined six ways a 3PL can approach planning in an effective way:
- Don’t underestimate scale of investment in ERP systems
- Truly integrated planning. He said that this is 10 per cent statistical forecasting, and 90 per cent market intelligence from the client.
- A jointly agreed clear on-boarding approach
- Sales and Operations – the spirit and essence of this being finding a platform where you have something to add to it.
- Being open eyed about pitfalls. “You’d be amazed how many data holes there are that are essential,” said Pryce. He said that it is difficult to agree agency ownership of inventory. Although you are using it as a 3PL you don’t want ownership of it, be aware of constraints, he said.
- An unbiased mandate with a clear philosophy.
See pictures from the conference on Flickr
In his presentation, Kevin Appleton, managing director of Yusen Logistics, looked at the issues involved in turning around a customer’s operation via investment and upgraded IT systems.
The client in question was experiencing increasing compression in stock turn-round times, and a customer base more dependent on major multiples drove increasing amounts of order customisation.
In 2014, the client experienced its highest ever peak. One area had to perform at 152 per cent of potential capacity, and they had to use the weekend to catch up. More and more inventory was arriving late – with the weekly cycle seeing lanes filled partially, with partial orders because they coming in late. Martialling lanes were also full – in fact they were often over capacity.
Appleton said that Yusen, alongside the client, turned the operation around with investment and upgrades, and as a result in 2015 it experienced its best peak ever.
The system development reflected a moved from a “storage and pick” operation to a JIT cross dock.
By upgrading its WMS system with new functionality, they were able to develop tighter algorithms for transport.
An automated pre booking process, with a set routine was introduced.
Appleton said said that from a transport point of view, the pressure during peak times on bay management is substantial. Yusen automated the bays so signals are now sent to the transport team, letting them know the goods are ready to be pulled off at close to real time.
Yusen also took out a bottleneck by implementing voice recognition, as well as introducing an integrated web portal that pools all the information together. An HTML web enabled visibility layer gives insight into outbound delivery performance and documentation. “It can make the difference between hitting and failing,” said Appleton.
The combined changes have resulted in information transfer becoming more automated – the operation no longer relies on phone calls and spreadsheets. Yusen’s client now has access to the booking profile, and is able to actively plan how to prioritise stock.