Improve the Supply Chain with Asset Quality Control
Address the challenges in your supply chain
Written by: Marvin Harris
One of the challenges that every business faces, with the emergence of e-commerce is increased customer expectations. They demand greater efficiency and visibility which could lead to a reduction in your quality control process without the proper processes in place. Bad quality control leads to higher costs and makes you less competitive. So, the question becomes how can I implement controls that work seamlessly with our supply chain process?
A combination of business process and technology advancements is the answer. Let’s use a real-world example, you are responsible for the housing and transport of baked goods to a network of grocers and restaurant retailers. While the goods are stored in the warehouse you face four challenges;
1. Monitoring the goods for theft
2. Losing reusable pallets & containers
3. Late deliveries due to inefficiency in last mile operations
4. Spoilage of items
You’ve done all you can to address each of these issues with training, cameras, and supplier management, yet you still lose about 10% of your inventory. Not only that, customers complain about late delivery arrivals, somehow pallets continue to get lost, and the time and expense related to these activities is costing you an extra $2 million annually. What can you do to tackle each issue that is easy to implement and has instant benefits to your bottom line?
Virtualize components of your quality control process.
Virtualization can assist you and your staff in tackling each of your challenges around insight and behavior modification to improve your quality control process. The most common way is using “asset tracking” or “asset quality control assistant" tools, but first you need to understand the difference.
Asset tracking relates only to being able to track the physical location and other details of your goods. You need more than dots on a map understand why these events are happening, so you can take corrective action. Asset quality control assistants take a holistic view. It focuses on how the information intersects with your overall supply chain process and ties that information to your supplier networks, asset management, and delivery operations. It sounds overwhelming, but it is much easier to implement.
To sum it up, the primary difference is that asset tracking focuses on the technology and less on the business process, while asset quality control assistants are about managing the business process and using the optimal platform and devices to do so. It sounds subtle, but they are miles apart.
Asset quality control is managing the business environment around events, rules, and triggers, then integrating that information to be preventive and take action in real-time. Let’s go back to the spoilage issue inside your warehouse. If I know that 40% of my spoilage happens when temperatures on the pallet or rack rise above 75 degrees, I can set a rule to notify personnel when temperatures reach 70 degrees to prevent temperatures from elevating further. If the information was conveyed and our loss rate did not move, then I know I have a personnel or process issue because none of my staff took the action necessary to address the problem.
Now you see it is not only about the information conveyed but what is being done with that intel to raise or lower operating costs and brand value. Ultimately, you want a reliable asset quality control assistant to ensure quality of your products is maintained throughout the entire product lifecycle from manufacture to customer arrival.
How It Works
An asset quality control system provides a way of tracking and reacting to situations that arise while your assets are in various stages of the supply chain process either traveling to a customer or waiting on fulfillment. If unauthorized personnel open a truck carrying your goods, the exposure to light can notify you in real-time there is a potential breach with your goods.
Quality control is not something that lends itself to being stitched together through different systems and tools. The right type of asset quality control assistant takes a larger approach to managing your assets instead of the components being piecemealed together. While there are many tools that are outstanding on their own, to keep your products safe you want a system dedicated to all aspects of asset quality control. Members of your quality control team do have individual tasks, but they are still a single team. Trying to tackle different aspects of quality control without relating them to other aspects of your business is a mistake that is likely to end up costing you, sometimes in a big way. By trying to stitch several different systems together to cover your quality control management, you significantly increase the risk of something critical being missed.
A robust asset quality control system monitors all of the environmental factors under one umbrella so that you can easily track everything in one place and integrate it into other systems to prevent redundancies and rework. By making it part of the larger process flow, you enahnce the likelihood that potential problems can be remediated.
Globalization has made logistics boom in a way that was unimaginable 20 years ago, but it has brought with it a wealth of challenges that could not have been anticipated. According to Supply Chain Digest, the trade volume doubles every five to seven years. This means that the volume of products that you ship will be twice as much in 5 to 7 years. Trying to track an ever-growing demand seems like a dream problem, but in truth, it means you are at risk of much greater asset losses if you are unaware of issues before the product arrives.
Consider your current customer concerns regarding asset quality control. Every industry is different, so what your customers consider a potential problem may be vastly different from the problems of others in asset transportation. If your customers are concerned about someone tampering with the goods (a problem you are likely concerned with as well), you can offer additional quality control to monitor for it. If your customers are concerned about damage from traveling on a ship crossing the ocean, you can offer a way to monitor for the conditions that the assets are exposed to while making the trip.
Next, consider the problems that you are already aware of, the kinds of challenges that have routinely given you problems with managing the quality of your assets over time. Take a look at your current processes and procedures. There is always a way to improve asset management, especially if you find that the same few problems are recurring. Are there inherent risks that you can mitigate by making changes? Are there things that are done that are more of a risk to asset quality control than a help?
Though technology has certainly been a contributor to complicating logistics and asset management, it also offers a number of solutions that can reduce the challenges you may be facing. You can review all of the potential technological solutions that will resolve the concerns of your customers while alleviating some of the problems within your own procedures. It can bridge gaps in communication, making it easy for you to coordinate with those moving the assets. Your customers can also be kept in the loop for potential problems so that they can prepare before shipments arrive.
Make sure you’re accounting for brand value costs. If you don’t start to address issues with quality control during the different stages of supply chain process stages, your brand could suffer for it. You want your company to be known for providing exceptional quality even under the most extreme conditions, not as a company that can’t ensure that goods arrive in good condition and on time.
Despite the problems it creates, technology provides some incredibly unique solutions that are seemingly unrelated. According to a study of the 2016 logistics, the trend is to outsource shipping, which can create an entirely new set of problems. With the right technological solutions, you can integrate a third-party carrier into your process so that they work to your standards instead of becoming a black hole while your assets are in transit. You can digitize records, and grant access to customers so they can verify that the quality of a product has not diminished since it left your facility. Technology not only provides a way of easily communicating and coordinating problems that arise, it can help change the behavior of everyone involved in the process. Please read our post on lowering third-party transporter risk to learn more.
Technology can also give you a few quick wins once it is implemented. For example, if you are losing too many reusable pallets and containers during the transportation process, you can start determining where in the process they are most likely to get lost or damaged and need replacing. If your customers complain about having too much waste from your shipments, you can investigate reducing packaging without exposing your goods to inclement weather. Both of these factors are gaps that technology can help solve because it can help you understand where the problems arise.
You want your asset quality control assistant to improve your business, which means it should not detract from the things that matter. It should not create a number of additional steps that bog down the process without providing better protection for your goods. Nor should the assistant be an undue burden to staff. If the technology makes your carrier’s job more difficult, it likely will not have the desired results. A 360 degree approach will help you ensure that your technological solutions streamline the process instead of fraying it.
One of the best uses of a great asset quality control system is that it reduces or eliminates the gap between receiver and supplier risk because it automates components of your business process. By receiving notifications as soon as a potential issue arises, you can ensure that corrective steps are taken to reduce the loss and improve operational efficiency.