A critical component of any successful business depends on its ability to source and transport services or products. Guaranteeing a customer, the precise moment a product will arrive is crucial to customer success. Since spontaneously filling out orders is not practical, organizations will need to focus on two key areas to enhance their values: real-time visibility and improved velocity of delivery. Organizations that offer their customers frequent and accurate status updates on their shipments will continue into the future.
The e-commerce retail model, with its predictable high-volumes, low-margin orders and regional fulfillment locations, is not a suitable business model for all industries. Amazon’s exponential growth within the retail sector is a recent example of a company which applied technology to deploy time managed products and services efficiently. An early example of Amazon’s strategy and innovation included offering Customers transparency as to when an order was expected to deliver.
Amazon provides their customers with regular milestone updates and proactive notification of any delayed orders before the due date. Amazon also recently announced plans to offer Customers a one-hour delivery service of fresh produce further demonstrates its commitment to improving the velocity of its service offerings. Both examples highlight where Amazon provides added value to its Customers by arranging for heightened visibility of an orders status and their desire to quickly fulfill orders as fast as possible. When combined these value-added services and products enables Amazon’s Customers to receive the following added benefits:
- Maintain low household inventories, allowing reallocation of cash resources.
- Remove undue stress by proactively communicating late deliveries.
- Avoid non-value-added activities associated with driving and buying items from a store.
- Coordinate additional value-added functions that will coincide with the receipt of the order.
For manufacturers within the high-tech, industrial or aerospace sectors, orders are significantly higher in value and are purchased with a variable frequency that is more challenging to anticipate. Current distribution models often rely on air transportation service providers (next flight out providers) to fulfill the function of delivering these valuable or time-critical shipments as quickly as possible.
One air freight option entails utilizing the services of an asset-based integrated carrier (i.e., FedEx, UPS, DHL). The second uses the services of a non-asset-based freight forwarder. In both options, Customers can select pre-defined time deliveries whose cost vary depending on the velocity of the services provided. Typically, the faster the delivery service is requested, the higher the price for that service. In many instances, Customers opting for either service need to actively monitor the on-time performance of their shipments from their approved service provider as automated “live” tracking updates are not readily available.
Also, Customers will notice that the nominated service provider may offer an insufficient amount of accurate data details on their website as to when their order will deliver. This inaccurate delivery data further adds confusion and disappointment to the management teams that are actively managing all of the various order priorities.
The inability for next flight out providers to communicate complete transparency of shipments in transit or create automated, proactive notifications, creates an opportunity for many world-class manufacturing companies to improve their processes. When time-critical shipments fail to arrive at the expected delivery date, a staggering amount of money is wasted enduring these types of delays. For many companies it is difficult to quantify the additional costs incurred when a delivery date is missed, which may include the following:
- Maintaining artificially high levels of inventories as a buffer stock.
- Added operational stress to personnel in the process that has to endure regular changes.
- Delaying other value-added events that were set to coincide with the receipt of the order.
- Increasing non-value-added activities and costs associated with managing delayed orders.
- Penalties and fines for missing production deadlines or delayed maintenance services.
- Lost future sales due to the inability to have Customers orders reliably deliver on time.
The opportunity for improvement in both the supply chain lies in the ability for providers to communicate with the real-time transparency of shipments and advanced notification of any delays.
Watch How Airspace Technologies Automates Logistics
Airspace Technologies has created a solution that enables heightened visibility and real-time communication of notifications or delays which will empower world-class manufacturing organizations to increase their inventory turns. Allowing manufacturing companies, the ability to attain reliability in their transportation process will enhance all facets of their business cycle from prototypes, production, scheduled asset deployments, or MRO activities. Freeing cash and other resources into value-added activities such as research and development and capital investments expenditures that will create the next generations of technological advancements.