Mitigating The Impact Of Cargo Loss And Damage With Logistics Orchestration™

Damage and loss to shipments can happen throughout an organization's supply chain, from defective packaging at a manufacturing plant to sloppy loading and unloading, crush damage from other cargo, theft, misrouting and mislabeling. 

In January, the Mediterranean Shipping Company vessel Zoe had 270 containers go overboard into the North Sea. In the North American less-than-truckload industry, claims are filed on up to 3 percent of all shipments. 

The cost of lost cargo can be enormous. Given the tight profit margins that prevail in the retail industry, a single lost shipment can represent a significant drag on profits. In the first quarter of 2019, Ralph Lauren RL posted a net profit margin of 6.83 percent. If the company lost a shipment worth $100,000, it would take an additional $1.46 million in sales to pay for the lost shipment.

The potential for large losses has caused shippers to insure their cargo, but the regular pace of claims drives up insurance costs. Moreover, cargo insurance policies are narrowly construed and up to 50 percent of cargo claims are denied. 

Even more painful than the loss of the cargo itself can be the damage to relationships with wholesale and retail customers, especially if the missing inventory cannot be replenished in time to meet demand. Often the choice for the shipper comes down to the eternal trade-off between cost and service. Is the loss so financially significant that it's worth it to engage in a lengthy and complicated claims process that may involve multiple parties, including third-party logistics providers (3PLs), transportation providers, receivers and insurance companies? Or should the company take the hit in order to preserve an important relationship?

Logistics Orchestration, a product offered by Slync, accelerates the time-to-decision when responding to exceptions like lost or damaged freight. Slync connects the systems, information and people needed to discover, assess and resolve logistics and related supply chain issues in real-time with greater predictability and with less effort.

"While all supply chains have inherent risks accounted for, unpredictable events still occur," said Chris Kirchner, chief executive officer at Slync. "Increasingly volatile demand for certain kinds of products means that accurate, fast responses to damage, loss and delays are more important than ever."

There are two key components to Logistics Orchestration that make it crucial for responding to loss and damage in a swift, intelligent way. The first is the integration layer that Slync provides. Slync's platform lifts siloed data from organizations and divisions and puts it into the cloud, creating a multi-party visibility solution. With Slync, your company and your partners have a single source of truth. 

The second component is the intelligent workflow engine that Slync customers leverage to enable instant, rules-based responses to exceptions. Because the integration layer is fully tied in to enterprise resource planning, warehouse management and transportation management systems, an event at one company's facility can automatically trigger an event at a partner's facility. For example, the reception of a damaged shipment at a Macy's retail location can push an alert to Ralph Lauren, and order replenishment without human intervention.

The ability to automate structured, repeatable processes that traditionally rely on manual (human) effort to execute adds significant efficiency into our customers' operations saving them time and money.

"Slync built a sophisticated, cloud-based platform to help supply chain partners respond immediately and intelligently to unforeseen events," Kirchner said. "Our clients can customize their workflows so that decisions are made differently based on cost and customer service in a variety of scenarios."

As Slync's customers ingest their data into the platform, they gain visibility into the historical performance of their facilities, lanes and partners. Then, Slync can generate predictions on exceptions – i.e., there is a 10 percent risk of shipment loss at this facility or this point is historically associated with an 18-hour delay – and help human supply chain managers think proactively about their networks. 

"Our bottom line is to directly impact our customers' bottom line," said Kirchner, "Many of these manual processes are easily executed by great software like Logistics Orchestration and as we get more into predictive or prescriptive insights, Slync will further drive the next generation of operational processes for our customers all over the world."

When algorithms handle the rote chores that come with recurring, predictable exceptions, people are freed up to think creatively, collaborate on long-term plans, and deepen their relationships. The stakes are high – in a business environment where supply chain performance and service can be a valuable point of differentiation, it makes sense to create space for your managers to focus on higher-order problems, instead of simply putting out fires day after day. It could be the key to your company's survival.

Image sourced from Pixabay