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Intelligent Logistics or Just Good Old Common Sense?
What does the word 'Intelligent' suggest when used in conjunction withLogistics? It connotes "smart," foresight-driven, sensory, responsive, andadaptive Logistics.
How can one equip Logistics to have foresight, be able to sense changes, respondto those changes and be adaptive to changes in the environment? These are hottopics in the Supply chain and Logistics world today. This article does notprofess to address all components of creating 'Intelligent Logistics'. However, itprovides an introduction to the logisticians of the current thoughts and trends inthe arena and opens avenues for enthusiasts to explore further.
The Four Pillars of Intelligent Logistics
Embedding "intelligence" into Logistics processes and systems involve buildingfour robust pillars of Integrated planning and execution, Visibility, Collaborationand Analytics.Intelligence in Planning and ExecutionThe foresight and responsiveness are essentials at all levels of the logistics -strategic planning, tactical planning, operational planning as well as execution. Itis equally important to build strong linkages between planning and executionprocesses and systems to embed "smartness" into Logistics.The strategic planning addresses such issues as network design in terms of plant,warehouse, partner facility locations and capacity planning based on thecustomer demand, supplier positions, transportation and other fulfillment costs.The periodicity may range from six months to five years. By its very name,strategic planning is supposed to be intelligent. However, in reality moststrategic planning exercises neither embed foresight, nor create responsivenetworks. In the dynamic world of constantly escalating oil-prices (and hencefuel and transportation costs) and increasing demand-side and supply-sidepressures, network planning needs to be almost continual; and create anadaptive network that can quickly respond to market changes.Tactical planning addresses how best to use the existing facilities and assets foroptimal customer service at least cost. It also includes 'what-if' sensitivity
 
analysis and simulation techniques to sense the effects of delta changes indemand, supply, or network and helps respond better to changes.Operational planning generates realistic inventory and shipment plans either based on constrained-optimization or heuristics. Historically, most operationalplanning engines have been batch-oriented. Then the transactional systemsexecute the plans generated by the batch engines. However, in the real world,orders keep changing, carriers reject tenders, inventory is not found in thewarehouse due to discrepancies, or equipment breaks down on the road and soon. The uncertainties in the Logistics network are increasing both on the demandside and the supply side. On the demand side, orders would change moredynamically based on the real customer demand. On the supply side, Logisticsnetworks are also lengthening with global supply chains.A key ingredient of "smart" Logistics is to have a tightly integrated planning andexecution. Batch-oriented optimization and transaction-oriented execution must be give way to 'real-time optimization' and 'responsive execution' with a closedloop feedback linking planning and execution.
Visibility
Visibility refers to true understanding of the customer demand, real-time trackand trace of inventory at item level, and track and trace of shipments as well asalerting when events deviate from expectations. This visibility into orders(demand), inventory and shipments (supply) help sense the changes in demandand supply in near real-time and respond quickly to these changes. This willhelp reduce safety stocks and hence costs, improve customer service and makethe Logistics network more adaptive. They will also help execute such bestpractices as cross-docking, in transit inventory merging, and delayed allocationstrategies.The key tools of visibility are:
Track and trace within the enterprise through event monitoring engines
Track and trace
across partner network by receiving partner messagesthrough EDI, XML or Web.
Integration Hubs
manage connections among heterogeneous systemslocated in multiple enterprises.
 
Exception Detection and Alerting
compares status messages withpredefined metrics and workflows, sending alerts when pre-definedtolerances are violated.
Collaboration
Intra-enterprise and inter-enterprise Collaboration is closely related to visibility.It also extends beyond visibility into multiple levels of Collaboration, particularlyfor inter-enterprise collaborations.At the lowest level of Transaction Automation, inter-enterprise Collaborationinvolves data and document exchange through EDI or Web. They will helpautomate no of otherwise manual transactions reducing the administrative costs,errors etc. Coupled with track and trace functions, these can help introduce someintelligence into the network by monitoring events and generating alerts.At the next level of Collaboration, demand, inventory, schedules etc are shared,enabling better planning. This can help make all the parties "smarter" through better decision making.True Collaboration involves re-engineered business processes across the partnernetwork with closed loop planning and execution.The integration of systems, processes and people across the network creates highvelocity network that is lean, agile and adaptable to respond quickly to thechanges in the environment. The cost of this true collaboration is fallingdramatically with the advent of new web-based tools.Retail and Consumer goods industries undertook a number of initiatives likeCPFR (Collaborative Planning, Forecasting and Replenishment), QR (QuickResponse), ECR (Efficient Consumer Response), CRP (ContinuousReplenishment Programs), VMI (Vendor Managed Inventory), CMI (Co-Managed Inventory) etc in the last ten years or so to leverage inter-enterprisecollaboration for creating responsive networks.
Analytics
Metrics are critical to an Intelligent Logistics Network. Real-time capturing oflogistics metrics enables a performance-driven, responsive logistics network. 360degree score cards, logistics dashboards, performance reporting, and ad hocqueries are some of the tools in this category. Six Sigma methodologies are also
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