From two days to two minutes

Supply chains never rest. Instead, they have to be tweaked or changed completely in response to changing consumer demand or disruptions. With Damco’s new digital supply chain management platform, companies have instant access to reliable information and tools that can save them millions of dollars across the global value chain.

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Damco’s new digital technology enables customers to predict supply chain disruptions and better forecast demand.

A small mountain of 40,000 boxes has taken over an entire corner of a large warehouse just outside Ho Chi Minh City, Vietnam. Inside are over 400,000 pairs of the latest shoes ­destined for the shores of Europe and the United States to be sold across a number of stores.

“Forecasting demand for ­inventory is important but difficult, and because it’s calculated manually it is also slow,” says Jens Sode, Global Head of Lifestyle Vertical in Damco, whose supply chain customers include some of the world’s largest retail and fashion brands.

“Two days is what it would take for a customer to create an inventory distribution plan that Damco can execute. For a global supply chain, an average increase of two days inventory holding can amount to a cost of up to USD 10 million. With our new digital supply chain management platform, we can make a much more effective inventory plan and execute it in about two minutes.”

Wedding digitalisation with data

The specific capability Jens Sode is referring to is “dynamic flow control” and it is one of many tools included in Damco’s new digital supply chain management platform, which is to be officially launched to customers this summer.

Instead of relying on humans to interact, discuss and communicate back ‘n’ forth, dynamic flow control works by processing incoming purchase orders and automatically adjusting the flow of a customer’s supply chain to meet shifting demand patterns in order to keep inventory costs as low as possible.

Today, we have 95-100% of the important data related to our customers. We just haven’t used it effectively because we haven’t had the technology to do so. Now we do.
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Henning Goldman, Global Head of IT for Damco

The tool and the digital platform itself, which have been created in collaboration with Microsoft, rely on software and algorithms (a process or set of rules to be followed in computer calculations) supported by high quality data.

“Today, we have 95-100% of the important data related to our customers – purchase orders, historic demand patterns, standard operating procedures, transport schedules, etc. We just haven’t used it effectively because we haven’t had the technology to do so. Now we do,” says Henning Goldman, Global Head of IT for Damco.

No opening hours

For the customer, the experience of Damco’s new platform will be via a Damco app on their phone, tablet computer or website or on their PC via their own dashboard. A first version of the app is to be rolled out this summer, and, like any smart phone app today, it will be updated regularly to improve its functionality and respond to customer needs.

One immediate impact of the app is that customers will no longer have to deal with the logistic business’ “opening hours”. Need to change a shipment, create a report or download documents? It can all be done anytime via the app.

All customers will have certain standard features and functions that enable them to control and manipulate the view of their supply chain on their app dashboard. However, since all supply chains are different, exactly how the dashboard is configured and optimised is up to the individual customer. Damco’s supply chain engineers and experts can help set it up.

“If a customer uploads his existing purchase orders and forecasted orders it will show the customer how we plan to ship a particular inventory out along with any potential challenges they will face. Perhaps a big wave of demand is coming they need to prepare for,” says Jens Sode.

Alerts and notifications

Alerts and notifications will be an important function of the app for customers. Take the following example: A customer has a shipment of high-quality plain white T-shirts to send to Europe. It is important, they are selling well, but it is not urgent or time sensitive. The same customer also has highly time-sensitive T-shirts bound for France; these shirts will be printed with the names and colours of the remaining four nations competing in the 2016 European Championships in football. Once the final four teams are known, the shirts will be designed and airfreighted immediately to select locations. If they do not arrive on time they are at risk of selling below price point or not at all.

With the app in hand, the logistics manager can choose how to deal with issue handling for all kinds of cargo. Want the app to handle delays to the plain white T-shirts? It can do that, forwarding alternatives that can be approved with the tap of a finger. It can also deliver regular notifications as to the progress of the Euro Championship T-shirts. If there is a delay, the app notifies a pre-defined person explaining the incident and providing alternatives for them to choose from. If this person does not respond, it moves up the chain of command. In the event that there is no response to its notifications the app acts on behalf of the customer and chooses the best option to meet the time requirements of the cargo.

Adapts to future needs

“When we launch the platform and the app, customers will be able to see many of the platform’s capabilities, however it won’t be finished or perfect,” says Henning Goldman. “We don’t know what lies ahead, so the app has to be adaptable. We need to be able to improve and build on it, both in terms of its standard functionality and in collaboration with customers in relation to the customised portions. It’s infinitely scalable so we can build on it and improve it as customer needs change.”

An example of this aspect of the platform occurred within the last year of development with Damco’s partner, Microsoft, who is also one of Damco’s important supply chain management customers and will therefore be using the app and many of its features.

“They asked us to create something that could improve the forecasting of potential disruptions to important shipments. That led to what we’re calling the ‘disruptor tool’, which basically combs enormous volumes of data in our systems and on social media. It hunts for indications of trouble like storms or strikes or anything that might cause a delay and compares them with an upcoming purchase order. We sat with them and made it ­­in the space of 3 weeks,” says ­Goldman. “Isn’t that just cool?”

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