Five Ways to Measure ROI of Your Supply Chain Technology Platform

Supply Chain Brain — Today’s businesses are relying on a growing number of transportation modes and carriers, which can help to mitigate risks and costs but creates additional complexity. The rise of e-commerce is complicating matters further, with both B2B and B2C businesses reshaping their supply chains to meet omnichannel demands and customer expectations for fast delivery. With online spending now accounting for 10 percent of total retail sales, products take countless paths from production to final destination — which means just as many opportunities for something to go wrong. Meanwhile, the recent wave of tariffs enacted in July on $34bn in Chinese goods, as well as China’s retaliatory tariffs, have many importers and exporters concerned about their ability to move goods around the globe.

This tsunami of factors is contributing to an uptick in spending on supply chain technology, with organizations of all sizes investing in solutions to improve efficiency and productivity. Supply chain management software purchases grew 11 percent year-over-year in 2017, according to Gartner, with businesses spending an estimated $13bn. That number is expected to climb nearly 50 percent higher to reach $19bn by 2021. The linchpin of the modern supply chain, a robust technology platform is key for gaining end-to-end visibility and control over supply chain activities. Coupled with the right processes and logistics expertise, supply chain technology can help businesses identify trends, uncover inefficiencies, react quickly to inevitable logistics hiccups and lower overall costs.

Delivering ROI with the right platform

For executives looking to invest in a supply chain management platform, however, the number of solutions available can be overwhelming. From tech start-ups to 3PLs entering the technology game, a wide array of providers all promise the latest and greatest solutions. Businesses also want the assurance that such a significant investment will pay off down the line by improving efficiency, boosting productivity and eliminating unnecessary spending. By taking the time to research and choose the right platform, organizations can reap the dividends of a high-functioning supply chain for years to come. Here are five ways organizations can recognize a return on investment from their supply chain technology, along with key features to consider during the selection process:

  • Design more efficient workflows. A supply chain platform that’s configured around your business’s existing workflows, not the other way around, can help shed new light on your processes and areas for improvement. Look for a solution provider who will work with you to map out the players and hand-off points in your current supply chain before launching the technology. For one chemical manufacturing company, going through this onboarding exercise revealed significant inconsistencies in its supply chain processes, enabling the company to reduce the burden on its team by adjusting its workflows.
  • Automate more of your supply chain. If your team is used to reviewing every single shipment manually for accuracy, adopting a supply chain platform will help supercharge your productivity. Consider technology solutions that feature exception-based management built around your business rules, from required documentation to delivery timelines. By automating approvals based on those requirements, you can focus your attention on anything that doesn’t look right and free up more time for higher priority tasks. For one major retailer, implementing an exception-based platform allowed the company to increase container volume by 50 percent without adding headcount.
  • Fix bottlenecks in production processes. Slowdowns in the supply chain can end up costing your business customers who aren’t willing to wait around for delivery. End-to-end supply chain visibility is key for identifying those breakdowns, yet two-thirds of businesses lack that type of insight into their operations. One important, but often overlooked, area is the actual manufacturing process. By building production into the overall supply chain picture, businesses can gain a more accurate understanding of lead times and address any vendor issues. For one manufacturer, measuring progress across each step of its five-step production process yielded huge improvements in customer service.
  • Avoid customs compliance fines. With the U.S. cracking down on global exports, businesses that don’t follow the law to the letter can face significant fines or shipment delays. Centralizing all supply chain data in a single platform makes it simpler to review and update harmonized tariff classifications to ensure compliance. This is also where a supply chain partner can provide value by helping to manage auditing processes, minimizing the risk of errors and time spent on post-summary corrections and petitions. For one furniture retailer, putting these measures in place helped to slash its error rate from 7 percent to 0.5 percent while reducing the number of hours its team spent on compliance.
  • Minimize the financial impact of disruptions. Seventy percent of businesses experienced at least one disruption over the past year, ranging from IT outages to supplier insolvency, a recent report found. To remain competitive, businesses need the technology, processes and systems to identify where products are and redirect them quickly around the globe. A technology system allows you to see instantly where you have extra inventory if needed, while a well-connected supply chain partner is key for sourcing capacity or creative transportation solutions. For the furniture retailer mentioned above, receiving multiple transit options from its partner for each shipment, based on cost and transit times, allows the company to balance price with speed and make changes quickly if problems arise.

With supply chain complexity showing no signs of slowing, many businesses are recognizing that technology is key for an effective logistics program. By combining the right platform, processes and people, businesses can deliver ongoing value through their supply chain software.

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Article written by Jon Slangerup. Jon Slangerup is the chairman and CEO of American Global Logistics, one of the fastest-growing and most respected international supply chain and logistics solutions companies in the world. AGL’s technology solutions extend beyond the walls of ocean, air and domestic transportation services for customers across the globe. Previously, Jon was CEO of the Port of Long Beach, and prior to that he served as president of FedEx Canada.