SC&B BLOG 2020

 Sustainability Analytics has identified itself as one of the significant catalyzers for organizations looking to revamp their end-to-end value chain operation to be carbon-neutral, all the while being cost-effective & scalable. 

 Sustainability is at the forefront of the supply chain functioning globally. With prominent industries lining up their scalability objectives – it becomes imperative for organizations to be mindful of their global carbon footprint. Conglomerates on a vast scale have noted the benefits of going carbon neutral not just by the metrics of finance but also from the point of view of brand value. With value chain management beginning to invest in decarbonization strategies, Sustainability Analytics has come to the fore to help enterprises make informed decisions by considering their environmental impact based on their operational data. Let's look at how an organization's historical statistics might be the key to its sustainable future. 

Analytics, by definition, stands for computational insights derived from a systematic data analysis during a specific period. And when accounting for a company's environmental impact by keeping in its ecological, economic & social impact – it falls under the umbrella of analytics in sustainability. With carbon offsetting analytics, management can ideate the most optimal methods to reduce their operating cost & instill proactivity against supply risks while making end-to-end framework environmentally responsible.

Let's look at some of the crucial metrics directly impacted by analytics for sustainability.

• Material Consumption: With informed insight, management gets to know the environmental impact the raw material might carry with its subsequent footprint covering its GHG emissions.

• Product R&D: The conversation around climate change & a company's action towards it pushes the envelope to make every supply chain activity, from raw material procurement to delivering finished goods, more efficient & eco-friendlier.

• Cost: Going green is a long-term strategy that requires total commitment but pays off in the subsequent run with sustainable actions being welcomed by the authority with tax benefits & compliance aid.

• Risk Management: When informed of the derivative effect of traditional supply & demand practices, companies can course-correct their value chain activities to avert harmful impacts on the climate while applying sustainable working conditions for their workforce.

• Sustainability Partnership: Being vocal & definitive about climate actions yields many opportunities for an enterprise to partner with organizations sharing the same thought process, opening up new avenues for climate-related action plans.

The path to decarbonization starts with sustainability analytics. An organization's operative data from procurement to production holds many answers for its long-term prospects, especially if it wants to align itself with an upgraded environmental brand value. Here are a few key pillars that make a case for analytics in sustainability.

• For Stakeholders & Customers: Both investors & customers are two powerful entities carrying huge impetus on final decision-making. Customers want to be associated with a label that keeps the environment first & stakeholders would like to invest in an organization that carries the potential of being adaptive as & when required, more so when it comes to being proactive on climate impact.

• Compliance: A business can only function to the fullest once it complies with regulations. It is, in simpler terms, one of the most crucial ground rules to put focus on.

• Annual Sustainability Report: Computing CO2 footprint requires management to implement sustainability analytics to steer their value chain action toward greener pastures. With many countries' regulatory authorities requiring annual sustainability reports, organizations across the globe are now implementing carbon monitoring tools in their supply planning.

• Being Proactive with Sustainability: A large-scale business must be smart enough to act first rather than react later. If anything, on the contrary, happens, it simply transpires into heavy losses incurred with regulatory penalties. With many conglomerates targeting to make their value chain process carbon neutral by 2050, companies have onboarded the notion of go-green principles by aligning their end-to-end operation with carbon monitoring KPIs.

The core reasoning for any business operation is directly proportional to how well its data gets managed. The better the health of stats, the better the supply chain's potential to transition onto the path of greener & more efficient functioning. 

Here's a list of the essential building blocks of analytics.

• Data Collection: House your relevant data from the key components of your value chain. From procurement to production to delivery, align all the essential vital pointers required to run analysis from a framework point of view.

• Data Processing: The next step is vetting your facts & figure for subsequent analysis and data-led insights. This stage involves segregating not-so-useful specifics from those required for meaningful information, sidelining any potential errors which might ruin the calculation – redundancy or incomplete information.

• Data Interpretation: Data interpretation involves analytics making sense of information by churning out informative crucial pointers that will subsequently help the end-to-end operations of the supply chain. This might cover prescriptive methods to improve sustainability metrics or suggest radical changes in how the value chain works to initiate green performance.

• Evaluation: Post applying the suggested framework changes, management evaluates the impact new initiations have had on the overall working of the value chain. Such assessment helps determine shortcomings in day-to-day functioning, if any. This can also continue in helping companies identify the perfect roadmap to green supply chain benefits.

With the components for analytics in sustainability figured out, let's have a simple overview of how exactly an SCM applies the titular concept in practicality.

• Know What You Need: Sustainability can be as broad a concept as you want it to be. A scalable prospect by nature, management needs to know their standing on what exactly they want to cover when focusing on offsetting their carbon footprint.

• Identifying KPIs: Supply chain planners need to brainstorm what KPIs to cover when investing in decarbonization projects. An organization's goals are better laid out when crucial indicators are well thought out.

• Data Management: A redux of the point mentioned under analytics components, data management, is the ground zero for any decarbonization project. Be it collecting essential information, vetting it, or figuring out valuable parameters.

• Evaluation: With evaluation, insights are funneled to ensure progress on the go-green initiatives. Post figuring out your sustainability performance, the management works out a report highlighting their organization's performance in the context of the regulatory guidelines.

Analytics in sustainability can unlock many virtues for your organization's success. Expanding far beyond the metrics of finance (though important), commitment to decarbonization reflects the company's whole-hearted attempt to improve the world.

• Minimizing Resource Deficit: Going green means opting to root out traditional supply chain practices, and that means reducing resource consumption, subsequently leading to your business being insulated from cost volatility. This also enables management to forecast raw material procurement better and be more adaptable to future consumption metrics of the customer base.

• Edging out the competition: Going carbon neutral goes a long way in acquiring a new user base and retaining the current one. Such news does a whole world of good for an enterprise looking to scale up its business & collaborating with companies with similar goals.

• Proactive Risk Management: With analytics at the crux, businesses can be well-equipped to handle possible supply bottlenecks, minimizing any cost impact while keeping themselves on the right track of revenue generation.

The need for sustainability has picked up momentum for all the right reasons. Businesses nowadays need all the intelligence to optimize their supply & demand operation, and intuitive tools have made their quest easy. Supply Chain and Beyond with 3SC, with its advanced decarbonization analytics platform CarbonX, enables organizations to fulfill their Sustainable Development Goals by monitoring GHG emissions across the value chain activities, helping companies attain their carbon-neutral goal & stay compliant with regulatory compliances.

A 3PL logistics solution opens up avenues that make your business scalable & revenue-driven by taking care of the core supply chain activities from warehousing to shipping. 

 A business's key measure for its success is how well it scales in response to customer demands. More order means more investment for an organization to boost end-to-end operations. This also includes keeping up with the products' delivery timelines, which requires upping the ante of the logistical leg of a company's supply chain. And to achieve such operational magnitude, enterprises employ 3PL. 3PL stands for third-party logistics, which with their services, provides comprehensive logistics prowess which aids the organization in covering its freight management, warehouse functioning, distribution network & overall order shipping timelines. In this write-up, we will cover the essential aspects of 3PL logistics that fuel the core functioning supply chain.

Every enterprise needs a comprehensive framework that keeps it informed of the actual operation info of the product status, availability & the metrics which directly influence the revenue of the company. So, if one has to define third party logistics in layman's expression, a 3PL warehouse oversees the crucial aspects of supply chain management, from managing the stock of the inventory to keeping up with the order fulfillment metric while also addressing the forecast by aligning the required aspects of freight & the transportation involved. Under the umbrella of third-party logistics, a business can meet all the requirements to manage the simple equation of supply & demand. And 3PL in SCM does the same.

With its key performance orientation guided through managing inventory & shipping-related tasks, a 3PL logistics company can categorize its services based on the organization's requirements. Here's how a third-party service provider presents its offerings to prospective clients.

1. Transportation services - An enterprise's supply chain can seek to plug its transportation needs to ensure that its finished goods reach their destination on time. A 3PL e-commerce fulfillment can leverage its network of carriers or engage its fleet to meet the criteria for its potential client. In some cases, a company would willingly want the external logistics partner to use the assets it already has while syncing in benchmarks of deliveries to be met.
   From a consultation point of view, third-party logistics also offers end-to-end transport management services. This can include integrating the entire freight operation through a TMS, a.k.a. Transport Management Service, to sideline heavy manual workflow, tiring repetitive operation flow, which is time-consuming, rhetoric documentation to introduce more visibility & a firm control of the stakeholder and the processes. Such upgrades make for a sound investment as they cascade their impact in the form of a better reporting structure, giving you complete access to day-to-day logistics execution and eventually transforming its efficiency virtues to better return on investment.
2. Warehouse/Distribution services - Some supply chain management need an address to stock their inventory. A 3PL supply chain can take care of the titular aspect covering all the actions of warehouse/distribution from inventory management, storage, return order fulfillment, and inventory availability across various stock centers to maintaining the OTIF metric, which is a crucial barometer to gauge the efficacy of end-to-end supply chain.
3. Finance Services - The more extensive the network is, the bigger the financial intricacies to manage. A 3PL logistics can handle the commercial aspects of the business, from monitoring the payments to the vendors to keeping an accountable ledger covering all the transactions to forecasting the required capital to cover the scalability of operations during seasonal demands of customers.
4. Information Services - Every organization has a framework filled with IT networks, and management sometimes looks for expertise outside the in-house resources to manage the security aspect of the whole operation, including product tracking to real-time tracking, which ensures timely package delivery.

The role of third party logistics in the supply chain is to make sure that the order fulfillment rate is met day-in, day-out. And, for such an astute & responsive structure to be in place, a 3PL logistics service needs to cover the below core functionalities.

1. Housing Inventory - The starting point for any external vendor providing third-party services is to house inventory in accordance with the stated demand of customers. A 3PL point of contact is responsible for coordinating with the freight partners directly involved in the influx of goods, ensuring that the quality is not compromised while in transit. Many partners provide warehouse management systems to automate the usual workflow while incorporating all the critical working information tagged along.
2. Picking & Packing - The fulcrum between inbound products & shipping, Picking & Packing, involves a workforce in place to align goods meant to be transported on the lines of destination, quantity & delivery timeline. An effective 3PL logistics service does all that while balancing the efficiency & operational cost of the processes involved.
3. Shipping - From a 3PL ecommerce fulfillment perspective, timely shipping of the product under the metrics of timeline & cost is directly proportionate to the revenue generated by a business. Considered the most human-centric process under the logistics arm, third party logistics has to comprehend potential carriers, transportation costs, and shipping routes, among others, to design a strategy that matches the scale of the organization with its efficacy.
4. Return Order Management - Managing order flow is two-way traffic. With the boom in the e-commerce industry, the scale of return orders is also growing exponentially. Amongst the services rendered by a third-party partner, streamlining a vetted return order flow & with a transparent policy is of utmost requirement as it directly impacts a company's operation cost.

When opting for a third party logistics company, a complete walkthrough must be provided on how an external vendor will fit into an organization's supply chain planning. Here are some fundamental principles when signing a pact with a 3PL logistics company.

1. Do a SWOT Analysis - Always know the key advantages, disadvantages, potential opportunities & risks associated when doing business with a 3PL vendor. Having a thorough insight by placing analytics at the core of decision-making helps supply chain management make better-informed decisions. More than the cost it potentially might save, the process's longevity should be kept in mind when onboarding the titular services.
2. Have a robust selection process - Outline your requirements; make sure that the solutions offered by the 3PL partner plug the supply chain gaps you were aiming to fix. Know what infrastructure benefit their implementation might have on your existing system and if they can deliver on future scalability prospects if/when your business expands. These are a few pointers that should be considered when gauging a potential third-party service.
3. Real-Time Implementation Strategy - Proactive homework by a 3PL supply chain partner works wonders to corroborate the initial plan covering the scope of work. A near-perfect real-time implementation of third-party services can be related to flawless collaboration among various stakeholders. So, to sideline any practical errors, management must align all the required IT support, knowledge upgradation, a service matrix, and customizable procedures to ensure smooth operations post application of third party services.
4. Set proper metrics for performance - Define key performance indicators (KPIs) when entering a service level agreement (SLA) with a 3PL logistics company. This helps in aligning goals & setting markers for end-to-end accountability for third party processes that subsequently achieve pre-defined business objectives. This also gives a proactive edge if & when the management witnesses a performance dip, thus giving scope to course-correct core functionalities at work. Such cyclic performance measurement sets precise criteria for constant evaluation & process evolution.

Challenges

While 3PL services are considered a boon that technically outsources a lot of the planning headache, every process has its limitations & potential challenges. Here are a few bottlenecks that an enterprise might come across when employing third-party in SCM.

• Visibility: A vital challenge if not automated, 3PL can lack visibility in its operation, more so in cases of last-mile delivery, which requires constant tracking & trace of parcels in transit.
• Keeping up with the Demand: A sudden demand surge leaves little room for scalability for the logistics model if unprepared; hence, to keep up with the required stock & delivery targets, a third-party service might be faring poorly from asset management to planning & execution.
• Warehousing Balance Sheet: There are times when demand for one particular product rises while the stock of others plummets big time. Since a warehouse has already invested in the resources, the sudden lack of orders leads to a wastage of resources, ultimately hampering the final balance sheet. Such impromptu events can be better planned for through better-collaborated efforts and intelligent demand forecasting software in place.

While challenges are always prominent when a supply chain operation is in full swing, a few fundamental designing principles, such as those below, can help set a precedent for a proactive logistic model to help overcome potential bottlenecks.

• Agility: A business model has to incorporate flexible marketing & financial plans, which makes it more adaptive to customers' fluctuating demand. This opens up avenues for supply chain functioning which drives more growth-oriented results.
• Innovation: Management should be open to the latest technological advancement that helps make business-as-usual activities much more responsive, accountable, visible & scalable. With automated systems like WMS (warehouse management system) & TMS (transport management system), one can witness the acceleration of processes involved in warehousing activities to last-mile delivery.
• Stability: A supply & demand operational framework positions itself to come good on customer requirements no matter the shortcomings prominent in the system. More importantly, such stability is sought after in case of an impromptu risk which enables much better collaboration & communication across the supply chain factions.
• Revamping: One of the key benefits of the adaptive logistic model is to iron out outdated processes which are not yielding desired outputs. Such restructuring helps create a flexible environment enabling decisions that matter for SCM in the long run. From employing relevant practices to ensuring workforce safety by following the latest guidelines, staying updated with the norms which are globally accepted gives an organization an edge over its competitors.

Every investment needs to be gauged by its key performance metrics. And when it comes to evaluating the effectiveness of a 3PL partnership, one can run a checklist of the points below.

• Inbound Inventory: A significant factor for a logistics service provider to prove its worth is to ensure that the timely stock of required products is done under the designated timeline. The statement holds more merit when managing bulk orders during seasonal demands.
• Dispatch: A decisive factor in setting the marker for product shipping, dispatch timelines set the bar for order fulfillment. Though the time taken for dispatch is entirely subjective to the number of orders processed, it helps make prior arrangements to ensure that the final output is closer to the specified targets.
• Accurate Inventory: Shipping the right product at the right time to the correct destination is the ultimate defining goal for any 3PL logistic service. And for that, the whole order fulfillment process needs to be vetted by avoiding any error while processing inventory-related transactions – this includes regular stock updates and checking product info, among others. Having precise information makes subsequent processes easier to execute.
• Return Orders Capabilities: Smooth management of return orders sets the hallmark for the ability of a 3PL ecommerce fulfillment service. With the online marketplace seeing a multifold increase in daily transactional status – it becomes imperative for a third party service provider to process return orders on time which is both cost-effective and time-saving.
• Cost of Operation: All the above key performance metrics require capital to ensure 24x7 functioning. While no process can be bartered with a lesser one, nor does it have any replacement, management can strive for a cost-effective 3PL partnership that doesn't hamper their financial plans in the long run while allowing them room to focus on the other aspects of the business.

With the 3PL industry all set to hit USD 2.43 Trillion by 2032, it is expected that many companies to accommodate their diverse business with scalability prospects will get in partnership with a third-party logistics company. Targeting new customer acquisition with faster last-mile delivery services & better return order management, companies will showcase heavy investment in potential 3PL service agreements allowing them to keep up with the presented market opportunities & maintaining their ever-impressive customer satisfaction metrics. The added advantage of outsourcing warehousing activities also enables supply chain management to put perspective on other business factions that collectively drive the enterprise's market share.

In retrospect to the current application and the potential third-party logistics carry in the supply chain world, it is safe to say that global supply & demand will greatly benefit from the 3PL offerings. All the possibilities of expansion & a more superior brand value stand to be achieved with Supply Chain and Beyond and 3SC's 3PL logistics services.