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What does the word 'Intelligent' suggest when used in conjunction with
Logistics? It connotes "smart," foresight-driven, sensory, responsive, and
adaptive Logistics.
How can one equip Logistics to have foresight, be able to sense changes, respond
to those changes and be adaptive to changes in the environment? These are hot
topics in the Supply chain and Logistics world today. This article does not
profess to address all components of creating 'Intelligent Logistics'. However, it
provides an introduction to the logisticians of the current thoughts and trends in
the arena and opens avenues for enthusiasts to explore further.
The foresight and responsiveness are essentials at all levels of the logistics -
strategic planning, tactical planning, operational planning as well as execution. It
is equally important to build strong linkages between planning and execution
processes 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 the
customer 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 most
strategic planning exercises neither embed foresight, nor create responsive
networks. In the dynamic world of constantly escalating oil-prices (and hence
fuel and transportation costs) and increasing demand-side and supply-side
pressures, network planning needs to be almost continual; and create an
adaptive network that can quickly respond to market changes.
Tactical planning addresses how best to use the existing facilities and assets for
optimal customer service at least cost. It also includes 'what-if' sensitivity
analysis and simulation techniques to sense the effects of delta changes in
demand, supply, or network and helps respond better to changes.
Visibility
Track and trace within the enterprise through event monitoring engines
Track and trace across partner network by receiving partner messages
through EDI, XML or Web.
Integration Hubs manage connections among heterogeneous systems
located in multiple enterprises.
Exception Detection and Alerting compares status messages with
predefined metrics and workflows, sending alerts when pre-defined
tolerances are violated.
Collaboration
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.
Analytics
Near real-time analytical tools that provide incisive service and cost metrics help
intelligent decision making. Analytics combined with six sigma methodologies
also enable root cause analyses to address the core issues. Last month's feature
article talked about 'Information Factory'. The logistics information factory
provides an excellent infrastructure to enable Logistics analytics.
Conclusion
Injecting intelligence at all levels of the Logistics network has never been more
critical than in today's Demand-driven, Globalized supply networks. Affordable
tools are available today for making the logistics networks "smarter" through
Collaboration, Visibility and Analytics. There are still challenges in tightly
integrating the planning and execution processes in a closed-loop, but that is
clearly the direction for the Logistics industry.