The Need: Shipping Optimization is Maxed-Out
If one asks a shipping company where to further optimize its supply chain - goods coming inbound, going outbound -, the carrier might reply: We have optimized our chain to the maximum possible extend.
Probably the carrier is right with such a statement. Looking at his own individual chain of supply, indeed he probably sees not much cost reduction or operational improvement potential.
But that might change if we take a look at multiple supply chains in lieu of an individual one. Supply chains have changed significantly in the past few years. While carriers were prepared to deliver supply to retail stores, packed upon pallets and referred to as “B2B” business, online shopping has massively increased, and such did the need for the delivery of individual goods in small packets directly to the end customer, “B2C”. It has turned out that carriers are not well prepared for such type of delivery; trucks are being sent out to their destinations half empty, while the number of direct deliveries to consumers stretched the cities’ traffic situation massively, as well as the environment with regard to air and noise pollution.
Smart Cities: Mutualized Supply Chains
Although urban retailers are still in need of obtaining supply to their stores, online shopping is further growing. Serving online shoppers with the traditional approach to supply will increase logistics costs rather than reducing them. Applying the traditional B2B approach to B2C business is simply suboptimal.
Hence, the new world of digital revolution also requires a paradigm change for supply chains. If the supply chain is reorganized appropriately, further cost reductions can indeed be recognized. Reorganize - but how and to what exactly?
The ground-breaking concept of mutualization suggests
that all parties involved in a supply chain agree to being a community. Shippers, carriers, and cities reorganize together into a
supply pool rather than competing againts each other for the supply. Supply capacities are being offered to the entire community, and so are
the shipments. For the delivery, virtual warehouses are being set up, defined as “region” or destination area. Supply is then being assigned
to a carrier that serves all recipients of the community beloging to a certain destination area - an approach being referred to as multi-channel. To be more precise and give a very simplistic example: If the destination area was a specific road, in the best case only one truck would
serve that one road and all retail stores or consumers at once - rather than only one recipient, while the second recipient would receive his supply from another carrier, and so forth and as it
is the case today. In other words, to supply to a destination area, to the “last mile”, only the minimum of trucks required shall be sent out.
The objective: Reducing traffic; and pollution. Also the city will participate in the community and provide parking space for the carriers to the destination. Teramark's SuppliLabs algorithms for truck load optimization, route optimization and a multi-agent based real-time event management makes mutualization complete.
Reducing cost of supply; reducing pollution.
Reorganizing the supply network into a supply community. The trustee of the community offers a software to the community, advertising shipping requirements and capacities. The software assigns shipments to predefined destinations areas, optimizes truck loads, routes and manages transportation events in real-time.
Supply Community's Benefits
- B2B and B2C operations combined
- Lower global logistic costs
- Less traffic congestions
- Lower carbon footprint
- Larger orders, maximized truck loads
- Higher local employment