JDA study shows how some shippers need to update processes in the name of efficiency

As global supply chains become more complex and detailed over time, there still remains a fairly significant disconnect, when it comes to shippers, specifically retailers and manufacturers, counting on outdated tools and ineffective processes in managing their supply chains. That was a chief takeaway from a study recently issued by supply chain and logistics software and technology provider JDA Software Group Inc., entitled “JDA Vision 2015 Supply Chain Market Study.”

Findings in the study were based on a global survey of 255 retail and manufacturing supply chain executives in 17 countries. The study was prepared for JDA by Talant.

One of the study’s key focus areas was transportation management, with JDA reporting that on average its respondents noted that 33 percent of all customer orders require expediting, which, in turn, has a negative impact on margins. What’s more, it found that only 26 respondent of respondents leverage a shared services model for centralized transportation management and 46 percent have created a core carrier program (while 31 percent of them said that it is currently an area of focus for them or will be in the next 12 months), with another 43 percent using off-the-shelf, or commercially available, software to optimize transportation moves.

JDA Chief Marketing Officer Kevin Iaquinto said in an interview that the relatively low percentages for these things was unexpected.

“We were surprised that a lot of these companies sort of ‘voiced over’ some of the plans they had in terms of what they were actually doing to solve problems like implementing a centralization strategy or something like that,” he said. “While they are working on these things, some of it felt more like lip service, which made it surprising.”

As is the case in many supply chain research studies, the theme of network visibility was prevalent, with nearly 7 in ten respondents citing network visibility as the top challenge to their transportation process, which JDA said was interesting in that network visibility provides “little immediate value,” whereas lane capacity coverage, which JDA said is a much bigger issue, was cited by fewer respondents as a top challenge, while matching network visibility as a top challenge.

JDA’s Iaquinto said that the due to the disruptions that happen across supply chain and transportation operations, having network visibility helps to mitigate related risks and is viewed as something shippers deal with on a day-to-day basis as well.

Another one of the study’s main findings saw that “improving service levels” was a top-three priority by 93 percent of respondents, with “moving inventory closer to demand” next at 88 percent, although for the latter, JDA said it found that respondents said shippers lack a clear way to measure and improve effectiveness in that area.

“For improving service levels, that speaks to the point that some shippers had service level issues with some of their providers, 3PLs, and other suppliers and want to rectify and improve service levels on that end,” he said. “There are also downstream issues related to deliveries, which create two-way pressure there, one of which in being able to deliver to the end customer by creating pressure on the front end, shippers need to optimize service levels they are relying on in the supply chain. It is all about having real time access to optimize and build an omnichannel environment and doing it efficiently.”

For moving inventory closer to demand, that theme is becoming more commonplace in the e-commerce supply chain to get products ordered closer to consumers and also reduce transit times and delivery times although there are no clear ways to measure the effectiveness of moving inventory closer to demand, according to JDA.