New Damco solution helps shippers to adjust to unexpected supply chain developments
April 05, 2012 - LM Editorial
Damco, a third-party logistics (3PL) subsidiary of A.P. Moller-Maersk Group, recently rolled out a new Web-based service that it said enables shippers to increase flexibility, respond quicker to changes, and reduce manual work.
Entitled Damco Dynamic Flow Control, company officials said this offering provides shippers with the ability to constantly re-plan shipments based on priority, whether it is delivery date, cost, or carbon footprint and not have to deal with the typical complexity and manual workload typically required when changing purchase orders. What’s more, it allows shippers to adjust to last-minute demand and supply changes which can lower inventory levels, allow for higher levels of customer service, and quicker responses to market needs.
“Our customers want more responsive supply chains,” said Erling Nielsen, global head of supply chain development at Damco. “In the last couple of years the need for speed and quick adjustments has increased a lot, bringing a higher need for more speed as well as flexibility and efficiency.”
This sentiment is particularly true when it comes to inventory management and demand planning and forecasting, given the efforts shippers are making to maintain tight inventory levels and be able to flex inventories up or down as needed.
A typical example of Damco Dynamic Flow Control at work could involve a U.S.-based retailer buying clothes or apparel from a China- or India-based manufacturer, said Nielsen. The retailer would tell Damco when it needs a shipment with a copy of the purchase order, which contains delivery dates for when it is needed in its U.S-based distribution center.
“If there was a supply disruption such as a port strike, Dynamic Flow Control can automatically contact all of the retailer’s service provider partners (such as an ocean carrier or freight forwarder) that are involved in transporting the shipment, which eliminates many phone calls and e-mails and keeps everyone on the same page,” said Nielsen. “In the old model, when something unexpected occurs, it required manual adjustments to deal with something unexpected. In Dynamic Flow Control, these things are already defined so that if it becomes clear a delivery date cannot be met, we can provide an alternative mode of transport for the shipment to still be delivered in a timely manner or re-book a shipment.”
Damco officials likened Dynamic Flow Control to a GPS in that it can dynamically recalculate the optimal route for a shipment when a change in demand or supply occurs and subsequently provide shippers with a revised estimated time to destination based on current speed and traffic information.
And they added that Dynamic Flow Control’s planning optimization engine generates plans on predefined business rules and criteria like delivery time, cost, carbon, mode, and carrier mix at purchase order and SKU levels. When an unexpected change occurs, shipments are then re-planned and automatically executed with Damco’s proprietary decision tree methodology.
Nielsen said that less than ten customers are currently using Dynamic Flow Control and was piloted by a large global shipper he did not name over the last year, and he said it has been up and running in different forms for the last two years.
“As most leading 3PLs understand, it has become critical to have leading IT to increase overall customer satisfaction and loyalty,” said Evan Armstrong, president of supply chain consultancy Armstrong & Associates. “Information flow and business intelligence reporting has become almost as important as the physical movement of goods. Damco’s ongoing systems development seems to be headed in the right direction. Being able to maintain shipment visibility throughout extended supply chains and having the flexibility to change orders prior to tender and while in transit are significant functionality pluses. It will be interesting to see how tightly the links are between Damco’s freight forwarding operations and its domestic U.S. distribution operations. This systems and operational coordination has been a key for 3PLs such as UTi Worldwide and APL Logistics.”
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