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Control towers: how to train the supply chain dragon

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What with challenges like last-mile issues, emissions regulations and the chance of a Brexit, the supply chain can seem very similar to a multi-headed dragon. But how can it be trained? A control tower appears to offer the answer to this increasingly urgent question. A structured approach to monitoring and managing the supply chain from a single hub: it sounds almost too good to be true – and it often is, because the path to setting up an effective control tower is littered with pitfalls. This article outlines the advantages of control towers and provides tips for avoiding the pitfalls.

 Significant benefits and cost savings

A control tower creates more visibility, more control and a much smoother-running logistics process, in both the long term and the short term. The control tower gathers data from various sources and applies detailed ‘business rules’ to turn it into information as the basis for decision-making. That results in significant benefits and cost savings, including in terms of:

  • End-to-end supply chain visibility
  • Planning, optimization and real-time monitoring of shipments
  • Predictive analysis to identify problems early
  • Streamlined communication between all stakeholders
  • Improved inventory management
  • Simplified freight handling

In other words, a control tower gives supply chain professionals insight into inventory, transport planning, warehouse management and workforce planning. They receive information that helps them to not only make strategic decisions, but also to reduce the number of trips, choose alternative routes, manage stocks, estimate risks or spot potential bottlenecks before they occur.

Weakest link

But therein lies the danger. Because if information is being exchanged in the whole supply chain, the chain is only as strong as its weakest link. That weakness can manifest itself in various ways. Carriers that have not yet undergone the digital transformation or that do not have a sound technical strategy pose a risk for the integrity of the data used in the control tower for decision-making purposes. Besides that, many supply chain management systems are focused only on optimizing the goods flows within the organization’s own four walls. Once the organization opens its doors (both figuratively and literally speaking) to a control tower, that creates problems with compatibility or metadata. In that case, end-to-end supply chain visibility actually means insight into just a small part of the chain. Furthermore, although it is nice to be able to identify potential problems in advance, what happens next? A control tower that merely issues alerts has limited added value in the logistics process. To be truly effective, it must also enable managers to take action – not only by making manual changes, but also by suggesting possible solutions. This is only possible if the control tower is able to learn from the past and can act autonomously based on strict business rules. Last but not least, a control tower that relies too heavily on specific carriers, warehouses or shippers can prevent the customer from discovering the most efficient logistics solution.

So how can you avoid the pitfalls?

The ideal control tower is a broad ecosystem based on transparency, continuous improvements and extremely solid generic data. To achieve this, it is above all important to make the right choices at the right time. Choices that are not only focused on operational processes, but that also demand tactical and strategic decisions. At IDS we know from experience that the key factors for successful control towers are scope, speed and patience. Start small, achieve results and don’t scale up until the control tower has proven its worth. We help our customers by providing independent control towers that are precisely aligned with their specific supply chain needs, at a pace that suits them. In fact, we sometimes even advise our customers to take things a little more slowly so that they can gather enough speed to subsequently train the dragon.

On 28 March, we will be joining Buck Consultants International (BCI) during the IMCC College Tour to discuss these success factors in more detail. Would you like to attend? Sign up now by sending an email to: jeannet.kornelis@bciglobal.com.

Digital transformation for small carriers: one step at a time

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For many small transport carriers, the idea of extensively digitalizing their processes can seem like a huge step. The big logistics service providers have often already made substantial progress in this area, resulting in an ever-widening gap between the small carriers and their large-scale competitors. With their flexibility and expertise, the small and specialized carriers are an indispensable part of the transport sector. But how can they keep pace with the changing market?

digitalization logistics processes

High-risk operation

According to research by the German agency Herzig Marketing, 54% of small companies (with max. ten employees) have not yet implemented any digitalization projects. In comparison, that figure is just 8% for large companies (with more than 100 employees). The majority of the companies that are not yet executing digitalization projects indicate that they do not consider it to be necessary, mainly because of the high costs involved and the high risk of failure. In this era of rapid technological advancement and artificial intelligence, however, the small and specialized carriers cannot afford to fall behind in the digital transformation.

IDS relieves the burden

At IDS, as a 4PL service provider, we are used to relieving the burden on our customers when it comes to logistics processes. Small carriers are very valuable for our customers; they reduce our clients’ reliance on the big carriers and have the flexibility to cope with unexpected situations or peaks in demand. If small carriers are not yet in a position to digitalize their own processes, our solutions such as the IDS Dashboard ensure that the end-to-end provision of information throughout the supply chain runs smoothly. Hence, our 4PL solutions enable customers to benefit from the flexibility and expertise of all relevant carriers – even the smaller ones.

Besides that, at IDS we can help small carriers to take their first steps towards digitalization by offering them solutions for aspects such as tracking & tracing, delivery-time prediction and digital proof of delivery. As a result, IDS helps small, motivated carriers who provide an excellent service to keep pace with current and future digitalization requirements.

To find out more about how IDS could help your organization in this context, feel free to contact our Business Development Manager, Arno Spoek.

Rate changes in 2019: what to expect?

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The start of a new year is always accompanied by new developments, and it is traditionally the time when any rate changes come into effect. It is important for companies in the transport and logistics sector to be aware of such changes, which is why in this article we outline what rate changes to expect in 2019.

Facts and figures

Research firm Panteia/NEA investigated how tariffs will change in the transport sector in the coming year and came up with the following findings:

  • In 2019, the labour costs for drivers in the Netherlands are expected to increase by 6.73%. This percentage is made up of the pay rise stipulated in the collective labour agreement, the addition of an extra increment to the salary scale, changes in taxes and social security contributions and an adjustment to the compensation for bonuses and overtime. Moreover, the continued shortage of drivers is also leading to higher labour costs.
  • Insurance premiums (third-party and comprehensive) are expected to rise by 8.4% compared with 2018.
  • For other general costs, Panteia sticks to the general price increase which is quantified at 2.4%.
  • The German toll (Maut) will rise on 1 January 2019, which will result in a substantial increase of the kilometre charge – which was previously extended on 1 July this year. The extra costs in Switzerland, the Czech Republic, Slovakia and Poland will also increase by a few percent of the cargo price, depending on the route.
  • The average diesel price in the Netherlands for the whole of 2018 will be around 10% higher than the average for 2017, and in France that percentage will be as high as 17%. Dutch bank ABN Amro expects the oil price to rise further in 2019, by as much as 9%. The French government was planning to raise environmental tax as of 1 January but, after weeks of protest by the Yellow Vest movement, President Macron has now decided to completely remove the ecotax hike from the country’s budget in order to prevent the unrest from escalating further.

Rate increases drive supply chain collaboration

Based on these figures, transport and logistics activities are expected to become significantly more expensive. How can you stay profitable in the face of rising costs?

Over the past year at IDS, we have been exploring ways in which our customers can benefit from supply chain collaboration. Our research revealed the potential for a 14% cost reduction for all shippers if we could achieve full horizontal collaboration. In other words, supply chain collaboration now makes more sense than ever for shippers, not only in terms of huge cost savings but also in the context of reducing kilometres and CO2. Meanwhile, in the context of Brexit, supply chain collaboration for shipments to and from the UK can offer benefits and reduce the risks of disruptions to supply.

Arno Spoek, Business Development Manager at IDS, comments: “Our Control Tower gives us insight into the dynamic relationships between shippers and end customers. This has revealed that a shared problem forms the basis for successful supply chain collaboration. There needs to be a clear business case supported by all sides, and they then have to jointly develop an implementation strategy to turn their collaboration into reality. At IDS we’re currently developing business cases per shipper and per chain so that we can provide our customers with details of the concrete benefits of supply chain collaboration. We will then reach agreements with the shippers and partners in the vertical supply chain to actually make it happen.”

Keen to know more about supply chain collaboration? Listen to the second Logistics & Innovation podcast to hear IDS Business Development Manager Arno Spoek and other specialists explain more, or contact Arno directly: arno.spoek@idsnl.com or +31 (0) 88 437 4370.

 

Brexit: all or nothing!

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We covered the topic of Brexit back in August, but it’s an ongoing concern for businesses throughout Europe. A draft Brexit deal is now finally on the table, but companies on the mainland can’t breathe a sigh of relief just yet.

 

 

Provisional agreement

The provisional agreement stipulates that the UK’s membership of the customs union will be extended if no deal has been reached on a new trade relationship with the EU countries by the end of the transition period. This will avoid having to establish a ‘hard’ border with physical border checks. As a result, there will be minimum disruption to post-Brexit trade. But the draft deal is no guarantee; it still has to be approved by both the European Parliament and the British parliament.

 

Worst-case scenario: no deal

Although the provisional agreement sounds promising, in reality anything could still happen. It is a matter of all or nothing. In the ideal case, the industry will hardly notice any changes. In the worst-case scenario, your import and export activities will grind to a halt.

 

Be prepared

Last time, we gave you some tips to help you prepare for the potential post-Brexit chaos. Nanette van Schelven, Managing Director of the Dutch Customs Administration, also warned logistics transport companies to register with the customs authorities in good time. According to Van Schelven, as a result of the Brexit, 35,000 companies will have to deal with the customs office for the first time ever in order to continue exporting to or importing from the EU. If these companies wait until the last minute to register, the Customs Office cannot guarantee that they will all be dealt with in time.

 

Because so many aspects are still uncertain, many businesses are unsure of which preparations they need to make. That’s why at IDS we’re helping our customers to gain insight into all their freight flows, in order to evaluate the potential Brexit-related risks. We analyse various scenarios based on the possible outcomes of the current negotiations. As soon as the real implications of Brexit become clear, we will already have the most suitable solution lined up and ready for rapid implementation.

 

If you would like to know more about our Brexit-related services, contact Arno Spoek at IDS on arno.spoek@idsnl.com or +31 (0) 88 437 4370.

Lower carbon emissions? Make a start today!

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In order to limit global warming to 1.5 degrees, we all need to be carbon neutral by 2050. Companies have no choice in the matter; they must make a serious effort to reduce their CO2emissions. As Ban Ki-Moon, former Secretary-General of the United Nations, said in his speech during the presentation of the new global climate commission, the next two years are crucial.

Lower emissions without major investment

For many companies, achieving energy neutrality appears to mean major long-term investments in things such as electric trucks or trailers fitted with solar panels. And yet it can be quicker and easier to take the first step than you might think, because smarter freight transport immediately reduces your CO2emissions. Consolidating shipments can generate huge savings in terms of mileage and trips, so this means it’s possible to achieve considerably lower CO2emissions without making sizeable investments or adjustments.

Your contribution

Customers of IDS have continuous insight into their carbon emissions, because we register the emission level of each freight movement so that they can inform their own customers about the CO2 emissions of their activities. Visibility into CO2emissions enables companies to work towards the most optimal emission scenarios in the following two ways:

  1. A less-fragmented production process. Strive towards a supple and streamlined supply of materials and seamless transitions between the various processes. Glitches in the production process are not only inconvenient in terms of warehousing and storage, but also create unnecessary freight movements.
  2. Talk to your clients and encourage them to place optimized orders. This revolves around connecting logistics and data; ordering efficiently supports the optimal use of the load capacity in trucks, for example. It is therefore wise to consider bringing forward or delaying deliveries to enable consolidated shipments, or to order larger volumes less frequently.

Connected Logistics

Clearly, when it comes to reducing the CO2emissions, it is once again all about making the right connections – between different information sources, between different companies and between suppliers and customers. In this context, ‘Connected Logistics’ will be a key theme at the ICT & Logistiek event. We warmly invite you to come and visit us at the event in Utrecht so that we can explore together how your freight transport activities can become energy neutral as quickly as possible. We are exhibiting at the IMCC Plaza, stand 01.B010.

 

See http://www.imcc.nl/evenementen/ict-logistiek-imcc-plaza/ (in Dutch only) for more information about the IMCC Plaza, or register now for free admission to the event.

Turn logistics exceptions into profit

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There is no such thing as ‘standard’ logistics handling and transportation for many companies. Their lack of standard routes, sizes, quantities and delivery frequencies can make it difficult for them to find efficient solutions because of the large number of variables involved: different suppliers, margins, risks and so on. Needless to say, in their quest for efficiency, it is also important that they continue to deliver on their promises.

When the exception becomes the rule
Therefore, when the exception becomes the rule, it can be particularly challenging to identify where there are opportunities for boosting profit through collaborative partnerships. Usually, each shipper looks for the right transportation partner for them, yet the real potential lies in bundling various transport orders together. If a neutral third party can combine several different freight flows, the risks are spread across multiple shippers and everyone involved shares in the benefits. And those benefits are not to be sneezed at: fewer empty vehicle-kilometres and fewer transport movements, which in turn reduces CO2 emissions as well as logistics costs.

Solving the puzzle for you
Helped by student Jamie van Kam, IDS has conducted research into the opportunities for supply chain collaboration by intensively analysing and recalculating all the order data from the past year. The results were very promising; as a neutral third party, IDS can consolidate numerous shipments to save up to two million kilometres a year. Based on the calculations, this approach improves the load factor by between 8 and 12%. In other words, rather than them having to solve the logistics puzzle themselves, IDS helps customers to improve their bottom line and also frees up time that they can spend on turning the exception into the rule.

 

Would you like to know more about the research findings, or are you keen to hear how IDS could help you to improve the efficiency of your non-standard transport activities? If so, feel free to contact Arno Spoek: arno.spoek@idsnl.com or tel. +31 (0) 88 437 437 0.

No-deal Brexit is a big deal for logistics

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Brexit continues to be a cause for concern, both in the United Kingdom and in mainland Europe. Although the negotiations are still in full swing, The People’s Choice organization is pushing for a new referendum. In the meantime Liam Fox, the UK’s Secretary of State for International Trade, has stated that there is a 60% chance that Brexit will occur without the UK having reached a trade agreement with the EU. The growing chaos is bringing the ultimate worst-case scenario – a no-deal Brexit – ever closer, with huge potential consequences for the transport and logistics sector.

Shock waves

Without a trade deal, no air traffic will be possible between the UK and the EU – and that’s just for starters. As of 30 March 2019, movement through ports will grind to a halt because all shipments will have to be checked at customs. Import and export duties and VAT will have to be paid on all cargo. Fuel prices in the UK will go through the roof due to lack of supplies. Sterling will lose much of its value, with severe knock-on effects for businesses. The Independent predicts that supermarkets will be hit by shortages and empty shelves within 24 hours as food supplies become disrupted. In other words, a no-deal Brexit will send shock waves through the transport world.

Scenario analysis

The Freight Transport Association of Ireland is warning its members to make the necessary preparations to stay a step ahead of the chaos. To help you avoid nasty surprises, we at IDS have put together a number of tips for you:

  1. Prepare a detailed overview of your current import and export activities:
    • Where, when and to what extent are you doing business with the United Kingdom?
    • Can alternative suppliers or sales markets help you spread the risk?
  2. Review all your contracts in terms of product specifications, delivery guarantees and just-in-time delivery.
  3. Talk to your customers, partners and stakeholders about the possible implications. What do they expect, and where are the potential problems?
  4. Take steps to offset exchange-rate fluctuations.
  5. Invest in your employees’ knowledge and skills to improve their problem-solving abilities.
  6. And last but not least, conduct scenario analysis, even for the most unlikely scenarios you can imagine. That’s the only way to really understand the potential consequences of a no-deal Brexit and to put measures in place to minimize the impact.

At IDS we’re happy to help our customers gain insight into all their freight flows in order to evaluate the potential Brexit-related risks. If the worst-case scenario should become reality, it’s good to know where you stand.

To find out more about how we can help you, contact Arno Spoek at IDS on arno.spoek@idsnl.com or +31 (0) 88 437 4370.

Growing volume, margins under pressure in Dutch transport sector

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These days, transport companies are pressed to quickly offer the best delivery. But that which was good enough only yesterday, is far from sufficient today. In its yearly monitor on freight, CBS observes that both domestic and international freight is growing and that the growth is not slowing down any time soon. But with that growth, the independent research bureau Panteia concludes, the efficiency of road transport is also in decline.

With increasing fuel prices and labour cost, it is becoming especially difficult for transport companies with a fleet of 10 to 50 vehicles to achieve sufficient margins. It seems that these companies are too large for the benefits of a nimble operation, yet too small for the benefits of scale. What’s remarkable is that those transport companies that specialize to a great extent are more likely to have better margins, regardless of their size. Especially those companies that operate in physical distribution, refrigerated transport, and tank-bulk transport saw positive returns last year. For shippers in the middle segment the question that arises is whether to grow of whether to specialize further.

What does this mean for shippers in 2018 and the future? Customers are becoming increasingly demanding, with stricter delivery times and demands. A good understanding of transport flows and the carriers of your choice is one of the first things to consider. Analyse your supply of goods and learn to understand where there is room for improvement. That is far from easy and requires insight, knowledge of the market, and making the right combinations. At IDS, we have a lot of experience with making that optimisation and we can help you make those combinations. Contact us for more information on https://www.idsnl.com/contact-us/ or give us a call on +31 (0)88 4374370.

IMCC Webinar

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As a preview to De Nationale Voorraaddag 2018 the days’ chairman Walther Ploos gives a webinar in which 3 strategies for cooperation with suppliers will be discussed together with Jan Kraaijeveld van Slimstock. Do you also want to know more about this and the three phases of product life cycle management? Tune in to the webinar on May 17th, 16:00. Check out the website and surf to ‘webinar’.

Looking ahead to a day of inventory: ‘De Nationale Voorraaddag 2018’

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If your company is involved in holding inventory, block your diary now for the Netherlands’ national event called ‘De Nationale Voorraaddag’. On 7 June 2018, our partner IMCC will bring together over 200 supply chain professionals to share knowledge, experiences and lessons learned. This year’s theme is ‘Supply Chain Management’. Sign up and pick out a knowledge session of your choice.