4PL Control Towers: Supply Chain Management Use Cases
3 Use Cases for Supply Chain Control Towers: Optimising delivery timings and costs, campaign planning and customer experience management
April 10, 2023
The operations department is the unsung hero of every business that requires supply chain management. The pressure to gain as much efficiency and better results from all they do for lower costs is one they are highly familiar with.
To find gaps in their efficiency they can plug, operations managers need to keep their finger on the pulse of every delivery in their supply chain, which is where tools like control towers come in.
Control Towers Consist of People, Processes, Digital Technologies and Data
For businesses that implement them, control towers form the core of a company’s supply chain management efforts. All its different components come together to gather and analyze data, identify issues and respond to them to continuously improve the efficiency of a business’s supply chain. Control Towers consist of a few components:1
Technology and Data
‘Big Data’ is collected in real-time across all partners, warehouses and delivery interactions are transformed into insights that are derived from proper analysis and visualisation of that data.
This consists of all the systems (e.g. OMS, TMS, HMS, WMS) and data analytics software.
Insights then need to be translated into action. Control tower teams consist of various experts in their fields: logistics and operations specialists who can execute the right steps in response to data signals, people who specialise in events management and communications to respond to exceptions that arise, data analysts and programmers who can transform data into insights and integrate systems, and more.
Exceptions that arise in the delivery process can be immediately dealt with by control tower teams following established processes. These include returns processes, changes to the estimated delivery date and more.
Insights related to gaps in performance can be transformed into gains in efficiency for existing operations processes across different lanes, transportation types and across network partners.
To get the most out-of-control towers, they need to be built around clear objectives with buy-in from internal and external stakeholders. Common objectives for control towers include:2
Lower supply chain risk
Reduced working capital
Increased customer satisfaction, i.e. more on-time deliveries
For clients who use Janio’s Control Tower services, our control tower currently is organised to serve their eCommerce logistics needs. Below are some sample use cases for increased customer satisfaction and increased revenues.
Continuous Optimisation and Transparency in Delivery Cost and Performance
Large corporations tend to have multiple 3PLs that they outsource parts of their supply chain to. These different partners have their own strengths and weaknesses in different areas, such as being faster or cheaper in different postcodes when it comes to last mile delivery partners, or having lanes that they specialise in terms of international line haul capabilities.
Historical data from all deliveries passed to our partners lets Janio track their performance and find which partners excel in which areas. Volume allocation can then be optimised for the best cost and performance through matching the right volumes, weight breaks and destinations to the right partners.
Companies that work with Janio will automatically enjoy any SLA improvements that we make through volume allocation optimisation among our network of 3PLs that we manage.
If you’re working with an eCommerce logistics 4PL like Janio, you’ll gain access to our Shipment Analytics dashboard. All statistics are updated in near real-time from across your deliveries with us, and our delivery performance is available for you to see.
Managing logistics is a continuous process, and we’re always looking for and prioritising our areas of improvement. You’ll be able to see our committed SLAs for all the lanes that we currently serve as well as breakdowns of our service-level agreement performance from early, on time, delayed and more across different destination countries.
Our operations team compares our SLAs to industry standards and are constantly working to improve our standard and express SLAs as we strive to give both you and your customers the best delivery performance and experience available.
One of the methods we use to optimise our service’s SLAs involves analysing the historical performance of the deliveries made by our network partners. Lanes that perform consistently above 95% for deliveries can have their SLAs tightened, while delivery performance that does not perform to market standard will be looked at. Our regular RFQs for new and existing partners help us to plug any gaps in performance from working at or better than market standard in terms of SLAs.
On Janio’s system, you’ll be able to see the historical delivery times at different confidence intervals, from 75 per cent confidence levels, to 85, 95 and 100 percentiles. This sort of data can assist with campaign planning, such as figuring out the cut off timings for certain sales campaigns to have a certain percentage of products arrive in time for the celebration with sufficient confidence.
One example can be a Christmas campaign your company wants to run, where anything bought during the promotion needs to arrive on or before the 24th of December. For this example, your company’s warehouse is based in Singapore and you also want to sell to shoppers in Malaysia’s Klang Valley region using standard shipping. The delivery confidence levels can be used to determine when to cut the promotion period off.
Considering statistics, it would be difficult to commit to a date when 100 per cent of the standard delivery shipments would arrive, so it would be more realistic to provide a date when we’re confident that 95 per cent of the deliveries would arrive for your customers.
If you want to be conservative you can plan your cut off around a lead time with a higher confidence level. In this case, we can expect 95 percent of our parcels to arrive within 5 days which means a conservative promotion cut off date would be the 19th of December. If we want to be more aggressive, we can go with the 75 percent confidence level lead time of 4 days and end the promotion on the 20th of December.
Customer Experience Management
Control towers also go a long way in terms of customer experience management. Janio uses real-time delivery data to power exception processes on behalf of our clients. Some example exception processes we have include aging management and managing customer expectations through estimated delivery dates for delayed deliveries.
When a delay happens, Janio investigates the delivery exception to determine if it’s a naturally aging delivery or an unnaturally aging delivery.
Natural aging refers to parcels that are delayed but don’t need any intervention or action from the clients themselves. Janio escalates these partners to our network partners to expedite the shipments or steps in when needed to keep the parcel within SLA as much as possible.
On Janio’s Aging Management dashboard, the terms stand for the following:
At Risk of Delay
- These shipments are not delayed yet – however we’ve identified in at least one leg of the journey (e.g. first mile, import clearance, last mile, etc.) where the milestone has been missed. We anticipate there is a risk that these parcels will not be attempted before the committed lead time.
- These are parcels where we either need to intervene or if the subsequent downstream details are going to make up for it.
- The delivery has breached the actual promised SLA timing and we haven’t made a last touch attempt yet.
- Shipments that have gone beyond the expiry date* are considered overdue. The expiry date is a set number of days after breaching the agreed delivery SLA.
In the cases of natural aging, when the agreed lead time is breached, a new estimated delivery date is created and communicated to the consignee. During cases like these, 4PLs and their partners will do what they can to keep getting the shipment to the consignee as much as they can.
As part of Janio’s aging management processes, overdue parcels will have the claims process initiated automatically without any action required from the clients themselves to better manage customer expectations.
Unnatural aging or parcels in the exception state refers to deliveries that are delayed and require action from the client to continue the delivery.
After the results of the investigation, the exception state parcels are consolidated into different groups in the ‘Orders in Exception State’ part of the dashboard. These include parcels that have incorrect addresses, are missing customs information, have been returned to the sorting centre and are awaiting instructions on whether to be disposed or returned, etc and require relevant instructions or correct data and documents from the client for the delivery to continue.
A supply chain control tower is made of a combination of people, process, data, organization and technology to improve visibility, control and supply chain management decisions. Control towers can be used as an analytics-driven decision support system critical to different areas of operations and commercial planning.
Janio’s 4PL control tower has use cases ranging from optimising SLA performance, customer experience management and even campaign planning.
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