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Transportation Centric

WHITE PAPER

Supply
Chain
Execution
Convergence

Transportation Centric
Supply Chain Execution Convergence

isparate, fragmented technology


solutions are preventing companies
from achieving supply chain excellence
in a business environment where everyone is
demanding above-par performance, on-time
delivery, and consistent quality. Add the growth
of omni-channel distribution, increasing government regulations and oversight, and the growing
need for better supply chain visibility to the mix,
and the scenario becomes even more challenging
for todays shippers.
To overcome these and other challenges, shippers need a streamlined and collaborative approach
that allows them to do a better job of orchestrating
and synchronizing processes, sub-processes, and
activities across warehousing, transportation, and
manufacturing functional domains.
Unfortunately, most supply chain organizations continue with functional siloswarehousing, transportation, and manufacturingwith
minimal, if any, process integration and synchronization among execution silos.

Supply Chain Challenges

41%
Inability to synchronize end-to-end
supply chain processes

37%
Lack of visibility across supply chain

35%
Supply chain network complexity
Unify End-to-End Logistics Processes With
Supply Chain Execution Convergence

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The good news is that through a process


known as supply chain execution convergence
(SCEC), shippers can break through these ageold barriers and tap into supply chain functionality that allows them to more effectively serve
their customers, adapt to changing business
cycles, and save both money and resources.
In this white paper, well explore the concept
of SCEC, explain what factors are driving its
adoption, discuss the differences between internal and external convergence, and consider the
implications of SCEC on the future supply chain.
What is supply chain execution
convergence?
When research firm Gartner first introduced
the concept of SCEC about six years ago, the
buzzword omni-channel had yet to become
a top-of-mind topic for the average logistics
professional.
The national economy was in a slump,
supply chain software spending was flat, and
companies were doing what they could to
survive in extremely difficult business conditions. Fast-forward to 2013 and the landscape
was quite different, as companies began to
wrap their minds around the new realities of
transportation and warehousing.
As part of this effort, some of them realized that the individual parts of their business were focused solely on optimizing those
specific entitiesas opposed to the entire
organization.
In a 2013 user survey, for example, Gartner
found that 41 percent of companies couldnt synchronize end-to-end supply chain processes, 37
percent lacked visibility across the supply chain,
and 35 percent were challenged by supply chain
network complexity.

Transportation Centric Supply Chain Execution Convergence

At that point, we started to see a growing need for visibility based on the fact that
companies couldnt get information to flow
across the independent aspects of their operations, says Evan Puzey, chief marketing officer
for Kewill. And without that internal flow
of information, theres no hope of extending
visibility externally across trading partners,
carriers, and customers.
Enter SCEC, a process that helps companies break down silos and better synchronize
processes across many different internal and
external functions. By eliminating the functional
silos that exist among warehousing, transportation, procurement, yard management, and
global shipping activities, for example, shippers
can better optimize activities across functions
that previously didnt communicate or work
with one another.
Today, shippers that use converged systems
gain access to a common platform that includes
SCE Convergence Maturity

Transactional

Analytical
Consolidate and
aggregate data
across silos
Exploit analytical
tools to identify
cross-functional
issues

React
Source: Gartner

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Integrate raw data


across silos
Use tools to ensure
data is moved
accurately and in
a timely fashion
There is minimal, if
any, cross-functional
transaction
orchestration

Anticipate

common hardware, software, and architecture,


all with the goal of achieving a lower total cost
of ownership (TCO), says Bart De Muynck,
research director at Gartner.
In addition to lower TCO, shippers also gain
efficiencies, enhance visibility, and improve productivity during an era when the typical internal
information technology (IT) is both shrinking
and stretched to the limit. Why wouldnt you
go with a single vendor and one platform if
it offered the capability? De Muynck states.
Thats the question a lot of shippers are asking
themselves right now.

Key factors driving SCEC


In todays complex business environment, agility
is the new normal, and functions like transportation management are moving to newer and
higher levels.
Its no longer enough to simply add a new
transportation management system (TMS) to the
mix, or use the transportation
functionality within an enterprise
Optimization
system, with the hopes that it
Plan and optimize
successfully talks to other systems
work across
functional silos
while meeting customer demands.
Synchronization Consider silo-level
Shippers have to move to the next
constraints when
Synchronize
building optimal
process flows
level and consider exactly how
cross-functional
across applications
their supply chain software is
workflows or plans
silos
Orchestration logic
working together, collaborating,
drives process
and creating a seamless experitasks from one silo
to the next
ence for valued customers.
Many companies still go out
and buy applications and then
Demand-Driver Value
deploy those solutions within
Network Maturity
individual silos, says Puzey.
Then theyre optimizing those
Collaborate
Orchestrate
applications on an individual
basis, not realizing that this

Transportation Centric Supply Chain Execution Convergence

approach doesnt provide the best overall solution across the entire supply chain.
This, in turn, creates an extremely fragmented supply chain where critical functions cant
communicate or collaborate with one another in
an automated fashion. It can send even the most
tech-savvy shipper back to the telephone, email,
or instant message application to solve critical
transportation problems after the factrather
than in a proactive, streamlined manner.
Another key driver of SCEC right now is the
transition from the right product, right place,
right time mantra to one thats focused on any
product, any place, any time. This switch is
largely being steered by the rapid growth in omni-channel distribution, and it creates an entirely
new set of demands for a shipper striving to meet
its customers requirements.
Shippers need to be thinking about how
they can be agile in certain fixed stopping
points, says Puzey. This mindset is pushing
companies to better understand exactly where
products are at any given pointbe it in a
warehouse, a distribution center, a stocking
location, or in transit.
This level of demand generation goes beyond
basic order fulfillment, Puzey adds, and requires
a dynamic transportation management approach
thats in sync with other technology systems and
platforms in a true, converged manner.
When you start to include a broader view in the
equation, says Puzey, you begin to take advantage
of dynamic transportation management and more
deftly manage the demands of omni-channel.
Best practices for implementing SCEC
On the SCEC spectrum there are two major
components that must be considered: internal
convergence and external convergence.

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Internal includes manufacturing, warehousing,


transportation, procurement, and both inbound
and outbound supply orders, while external
convergence comprises all of the other players within the supply chain network (and their
technology platforms and processes). Combined,
these two components make up the completely
converged supply chain.
Its about getting all of the players in the supply chain to converge around a single, defined
supply chain process, Puzey explains. When
that happens, everyone can share information
in an exception-managed environment and then
deliver information to those entities that need to
act when an exception occurs.
As a starting point on the road to SCEC,
Puzey says that shippers should think carefully
about how to optimize the supply chain across all
internal teams (not just silos). Calling this process internal SCEC, he says that once shippers
achieve this goal, its time to extend the same
effort out across the external supply chain. When
this occurs, shippers gain unprecedented levels of
visibility and cost/resource savings that couldnt
be achieved with traditional, siloed supply chain
software execution approaches.
When we survey our customers across a
broad range of industries, their top two concerns
are visibility and analytics, says De Muynck. For
most companies, visibility is both the biggest
opportunity and the biggest issue, and it goes
beyond just knowing where a truck or a product
is at a certain time.
In fact, De Muynck says that visibility is a
complete process that starts when raw materials
or products are sourced, extends out onto the
plant or warehouse floor, and then transcends
into the yard, out of the gate, and onto the
roadnot ending until the product reaches its

Transportation Centric Supply Chain Execution Convergence

intended recipient (be it a company, a retailer, or


an end consumer).
Of course, visibility doesnt stand on its
own; it needs an owner. As businesses go down
the SCEC road, they will need to put one part
of the organization in the lead role as an owner to ensure success.
Manufacturing

Warehouse

Buyer

Multimodal Transportation Software Process

Supplier
Cargo Freight Station

Store

The transportation team potentially has end-to-end visibility due to having to


move or manage the movement of the goods.

Shippers must consider customer needs


in the process, Puzey points out. As such,
the transportation team is a natural fit for this
leadership position as it has end-to-end visibility
into all the stages of the process. Warehousing
and manufacturing lack this overarching view.
Implications of SCEC on the future
of transportation management
As companies continue to wrestle with constantly-evolving supply chain demands, and as they

look to the future to try to determine whats


around the next corner, those that invest in SCEC
are already seeing the rewards of their efforts,
particularly within the transportation aspect of
their operations.
After all, transportation is the one connecting
point that maintains constant contact with goods
as they move throughout the supply chain.
And while technology plays an extremely
important role in creating connections, automating processes, and helping companies work
smarter, better, and faster, the reality is that
companies are comprised of individuals who
also need to be on the same page with their internal constituents, business partners, transportation providers, and customers.
The first step to achieving SCEC is to bring
everyone together and talk them through an
end-to-end view of the supply chain, Puzey says.
Combine that effort with good, interconnected
systems and business processesall supported
by a layer of visibility that gives everyone the
information that they need to act and make decisionsthen youll have the perfect environment
for SCEC success.
Today, leading-edge companies are adopting
the SCEC approach because they realize that by
deploying integrated technology solutions in
conjunction with revamping internal processes,
they gain a tremendous competitive advantage.
With such an approach, having the additional visibility and analytics and the ability to proactively
manage the end-to-end supply chain is a win:win
for everyone.

www.Kewill.com

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