"Recalculating” — That’s a familiar phrase to drivers who use global positioning units to get from place to place. If a traffic jam or detour causes a change in plans, the unit can help drivers still find their way efficiently to their destination.
Damco, the third party logistics arm of A.P. Moller-Maersk, said a new product it rolled out in March — Damco Dynamic Flow Control (DDFC) — was developed to give shippers an automated tool that can help adapt their supply chains to changing business conditions.
“We have implemented it with a couple of customers, mainly in the retail and apparel segment,” said Rolf Habben-Jansen, chief executive officer of Damco, in an interview with American Shipper
. He also expects it will be attractive to technology shippers.
“A lot of companies see the need to build more responsive supply chains, because they get confronted with much more volatile demand with ever shortening lifecycles. And also the preferences of the consumer are not always that easy to predict,” he said.
“Certainly today, when inventories in the supply chain are really, really low that means whenever you have a change, especially in the demand pattern or you have a disruption on the supply side, you need to be able to speed up or slow down or adjust the way you bring goods to market,” he added.
Habben-Jansen said many companies have half to a third the inventory that they had 10 to 15 years ago and “if you have less buffer, then you need to make sure your supply chain is much more responsive.”
DDFC allows companies to “influence and change the routing or transport mode… from the moment you issue the purchase order until you put it on the last leg of transportation,” he said.
Habben-Jansen noted the product will allow companies to make changes much later in the process—for example, decide up to 24 hours before a sailing whether to divert a container of goods onto a faster or slower ship, or even switch some or all of a shipment to a plane, if urgently needed.
Many companies have a large number of variables that they need to influence, he said.
“That’s where our solution, which actually automates a lot of steps, helps people to consistently adjust their supply chains and the way they bring their goods to market to what the actual demand is, or when they need to get it to market. Whether that is based on cost, lead time, carbon footprint, those are all choices you can make and which we can design in our business rules,” he said.
|“Whenever you have a change, especially in the demand pattern or you have a disruption on the supply side, you need to be able to speed up or slow down or adjust the way you bring goods to market.”
Damco explained most existing supply chains are planned and executed manually and as a result are slower, less optimized and prone to error. Its DDFC product differs from traditional “control tower” solutions that the company said “only provide information without giving the ability to act upon it, without manual intervention.”
DDFC, it said, “re-plans upon the given change and executes accordingly, while providing total visibility in the process.”
DDFC is a hybrid of a system and consultancy. “We will use our expertise within supply chain consultancy to design the right solution from a business and logistics perspective in conjunction with our customers. Based on such an assessment, decision trees and EDI (electronic-data-interchange) interfaces will be configured in the IT system; new processes will be designed and rolled out to key stakeholders in the customer’s business,” the company said.
Damco said DDFC offers three components:
- Review and optimization/design for a better supply chain.
- Support from comprehensive IT.
- Staff to support implementation, execution and continuous improvement.
Damco believes the customers that could obtain the full benefits of the product will be large, moving about 10,000 TEUs a year, though Habben-Jansen said somewhat smaller customers could also use DDFC.
He added the target audience for DDFC is not restricted to companies that rely on Damco or another non-vessel-operating common carrier to buy freight capacity for them, but could be used by companies that have their own contracts with liner carriers.
The company said DDFC is now up and running with a number of customers, but said it was not yet able to share specific names.
Damco said some companies have achieved operational efficiency gains of about 15 percent globally, reduced IT costs with fewer EDI feeds, and improved the productivity of their logistics staff. It said overall DDFC customers have saved millions of dollars on ocean freight through higher fill rates, better container mixes (and use of more 40- and 45-foot containers), reduced use of air transport, and reduced inventory costs through a more than 20 percent reduction in origin processing time. Damco also said its customers have smaller carbon dioxide emissions by reducing their number of container and truck moves and using less air transport through DDFC. — Chris Dupin