As new and increasingly complex distribution routes to market emerge, it is vital to understand the total number of interactions and costs right through to the end customer, to ensure quality and most efficient route selection.
Supply chain directors need to know the delivery routes of their products right through to the end customer, especially in developing markets. This means understanding the specifics of everything from the inventory holding, SOP, route scheduling, logistics facilities, security and product integrity right up to is point of usage, even if that is in the middle of rural China.
Too much emphasis is placed by buyers of freight services on the cost of shipment from port to port, whereas in reality, the cost of rail road and demurrage services are disproportionately high.
Supply chain managers instinctively protect themselves from variable lead times by keeping buffer stock rather than investing time in understanding what drives delays. Issues such as a recurrent problem with customs documentation are rarely tackled as a priority.
Producers need shipment consolidation strategies with other companies in place in order to minimise distribution costs.
Freight category managers need to be ahead of market pricing so they can make informed decisions about contract rates, lengths and cost review points.
Detailed network reviews should be conducted every three years together with a rigorous annual challenge.
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