Every supply chain in the world sees an immense incentive in pushing their stock for faster distribution. The expectation for shorter lead times is compounded with an expectation for reduced operational costs and high efficiencies. This implies the smooth fulfilment of orders, handling of damaged goods, cancellations, and returns without causing excessive delays and costs.
For businesses, the model of dispatch differs relative to order volumes. Orders may be dispatched in bulk to a network of dealers, distributors, or retailers on receipt of order requests, or in smaller quantities directly to customers. Irrespective of the nature of the operation, each business strives to fulfil all existing and new orders within a short time window. This calls for an efficient dispatch planning and management process.
Improving the dispatch performance of a business is fraught with challenges.
- The challenge of vehicle scheduling and space utilization. Perfecting the dispatch process implies capturing the complete set of orders for a product line with the available logistics capacity with effective vehicle allocation and scheduling. Since the fleet size for most businesses is limited, optimal vehicle scheduling poses a challenge. Further, the allocation and assortment of stock in vehicles should be made within space limitations and with the view to ensure the safety of stock during transit.For instance, for a two-wheeler industry, certain constraints of stock allocation exist, such as the maximum allocation of only 40 two-wheelers is possible within safety limits. Further, only four units of the same model of scooters can be positioned in one row, whereas the positioning of four units of different models of motorbikes is allowed. The planning of dispatch for such criteria and constraints is challenging.
- Network inefficiencies. Planning dispatches to customers or dealers from the nearest warehouse may seem like the right strategy but the supply chain is rarely strategically designed with positioning inefficiencies. Further, orders may arise from far-flung areas with implications of greater freight cost and lead time. Long transit routes also have a higher risk of damages. In such circumstances, planning needs to balance the cost and benefit aspects.
- Frequent order changes. There can be sudden order cancellations and payment failures. The dispatch process needs to be adjustable for all such scenarios to avoid unwanted delays in delivery.
- Lack of visibility. A lack of end-to-end and real time visibility does not allow monitoring and performance evaluation of dispatch operations, thus allowing inefficiencies to creep into the system.
Creating an error-free and agile planning process for such a complicated and dynamic dispatch environment is extremely difficult if done via manual or traditional methods. Considering that most businesses today are still heavily reliant on legacy systems, dispatch planning often results in piling inefficiencies and high spending.
The Solution to Greater Dispatch Performance
The most important step towards implementing a dispatch improvement strategy is to capture data in real-time. Most organizations today have a digital transformation strategy in place. With the right technology leverage, such as through implementation of Industry 4.0 technologies, including machine learning and artificial intelligence, businesses can attain the perfect dispatch solution.
An effective dispatch strategy requires planning such that customer requirements can be met in full cost-effectively. Especially as the number of orders increases and the distribution network expands, creating a plan involves finding an optimal solution from within millions of data points. A problem of such nature requires a framework of automation and optimization of the dispatch planning process combined with end-to-end visibility that allows control over the complete dispatch process. With dispatch optimization, the challenges of logistics infrastructure, variable order changes, and network inefficiencies are addressed, while a visibility solution helps to fulfil the visibility requirement for performance monitoring and analysis.
A. Dispatch Optimization
Enabling dispatch optimization in an environment of high product variety, variable order volumes, a large consumer base, and varied order destinations are difficult for human processing. Optimization requires an analysis of the data space of dispatch to find the most efficient and cost-optimal dispatch plan within the constraints of the environment. The planning time and human effort given to generate dispatch plans is also quite significant.
This makes dispatch optimization largely an algorithmic task. Dispatch optimization systems, like Verdis Dispatch Allocation and Planning (DAP), apply machine learning with high-fidelity software-based logic to optimize for both efficiency and cost. Such systems process millions of data points and take fast decisions within economic time limits. Consequently, planning is fast and precise.
Dispatch optimization systems tackle the challenges of dispatch and offer
a. Maximum fleet utilization, where the scheduling of dispatches is planned based on vehicle availability to minimize waiting times and late deliveries. This, in turn, improves on-time arrivals.
b. Shipment Consolidation, where different orders are clubbed through club loading strategies to minimize the number of dispatches and costs.
c. Maximum vehicle space utilization, where the loading of the stock is done within the size and tonnage capacity of carriers to lower damage risks and improve space utilization.
d. Dispatch Optimization enables efficient Inventory Management through optimal inventory holding for lean management and waste reduction. Further, dispatch can ensure a smooth flow of inventory across the supply chain.
Inventory management through dispatch optimization is possible through stock transfer.
- For differences in the stock required versus the stock available at a warehouse, it is possible to implement stock transfer strategies, wherein there is a distribution of the available inventory across multiple stock-holding units. As an example, stock from two warehouses can be transferred to a third warehouse, through optimal vehicle loading and utilization, so that the latter warehouse can have the adequate inventory to meet the requirement of order fulfilment for the destinations near it or avoid potential stockout scenarios.
- Further, when the fulfilment of certain orders requires a combination of inventories existing in different warehouses, the stock from these can be clubbed for order fulfilment.
e. Besides the above, dispatch planning can be configured for faster lead times with dynamic routing and route optimization. For businesses relying on more than one shipping solutions or logistics providers, dispatch analytics can offer performance evaluations to determine the efficiency of dispatch and make the right decisions.
An orchestration of the fulfilment process requires real-time and end-to-end visibility. Visibility can ensure monitoring control over each aspect of dispatch and order management, including diverse aspects such as payment clearance or the status of dispatch. When such visibility is combined with intelligent insights and analytics, the dispatch process can acquire an operational edge.
Through visibility, the following can be achieved.
- A high-level view of dispatch performance. Verdis-enabled visibility for the supply chain, for instance, extends also to mapping the variability of specific KPIs, including quantity, dispatched, cost, and lead time across the supply chain path. This ensures the proactive monitoring of dispatch, such that the performance of the different dispatch processes can be evaluated and compared with the desired outcomes of performance over a period of time.
- Granular view of dispatch performance. Dashboards that support analysis and monitoring can be utilized towards the monitoring of dispatch performance. Through intelligent analytics and insights, businesses can be alerted to undesirable scenarios of delays in delivery, or bulk returns, such that they can initiate quick responses. Further, fulfilment failures can be analysed to reveal root causes – information that can be utilized towards better planning.
- Quick Responsiveness. Based on the real-time visibility of the inventory present across the supply chain, quick dispatch plans for stock transfer or club loading can be generated. For example, alerts can be set to notify managers or raise dispatch orders whenever inventories drop below a certain threshold or there is excess inventory in certain warehouses.
The End Goal
The precision with which dispatch is orchestrated determines whether the customer experiences a satisfactory buyer journey and if he/she would return for future purchases. Organizations that prioritize the improvement of the dispatch performance process realize that it is not an equation of profit margins but an endeavour to deliver a good customer experience. As long as this goal remains foremost in the day-to-day planning and execution of supply chain tasks, the attainment of the perfect dispatch will remain an attainable challenge.