Supply Chain Planning and Logistics integration
There was a time, not so long ago, when various business functions within the enterprises used to function in silos and that was still ok. Simply because that was the norm of the day. Not any more though. In today's competitive environment, managers are continuously looking for avenues to cut costs without compromising service.
Unless the functions in the enterprise collaborate, those objectives are highly likely to fall flat on their face. It is like building a tunnel. If two teams start digging from either side of the mountain without working with each other, the probability of them finding each other half way down is pretty low. What the enterprises need in such situations are systems and processes which work across the functions to recommend what's in the best interests of the enterprise. Availability of better systems is a big enabler in this aspect.
There is an immense opportunity to improve cross functional interaction between Supply Chain Planning and Logistics. There is a perennial tussle between these functions. They have objectives that do not gel together most of the times. Supply chain planning wants to cut costs by cutting down inventory levels and doing just in time replenishments. But logistics would want to cut transportation costs by maximizing the TL percentage in the freight mix. The consolidation comes at the cost of impacted service (delaying the delivery) or elevated inventory levels (pulling ahead the delivery).
If logistics as well supply chain considerations are weighed in right upfront at the planning stage, ensuing decision is more likely to be executed as per plan - on time and on cost. Changes and corrections are much cheaper and feasible when done at planning stage. At execution stage it should be just a matter of executing what has been planned. But all this is easier said than done. Applications that support this sort of integration between Supply Chain Planning and Logistics out of the box are far and few between.
I invite your thoughts and perspective on the best practices, products and solutions in this area.
