Companies have compensated for the lack of coordination of logistics activities in the supply chain. Inventories fill warehouses, trucks wait for loads, customers get lower fill rates and shareholders get less return as a result of gaps in software and methodology. This article explores gaps in the internal supply chain that cause inconsistency in what should be a smooth flow of information and materials.

Production and distribution even in the same plant are often not tied to each other. Distribution complains that they are the recipients of push from manufacturing to distribution. In the internal supply chain, the logistics of push is hard to deal with. Each hour the warehouse is faced with decisions of where to put product as it arrives off the line. This is far from a linked activity.

Purchasing and production are two links in the supply chain that have often been at loggerheads. This may be caused by purchasing’s incentive system that is structured to reward the better price but cant count the additional costs caused by inferior product reaching the production line. The logistics of fixing this are hampered by a lack of good data.

In large companies where the transportation department is divided into operations and procurement, the linkages here are often weak as procurement works to find the best prices while operations are more concerned with availability, quality, and payload. This approach does little to optimize the supply chain.

And our last example of dysfunctional internal supply chain practices is the gap between the planning and execution. How often does a plant get blamed for cutting product from a shipment when they physically cant get it all on the truck? Often, it is the distribution planner on the order management system that makes the mistake not the plant. Without information on product stack-ability, an understanding of different states axle restrictions, they plan in such a way that it cant be executed. The cost to the supply chain can be large as customers are hurt.

The internal supply chain doesn’t have to be dysfunctional. There are easy ways to improve communications and create a linked internal supply chain. Reward everybody in the supply chain using the same set of metrics. In this way, purchasing prospers when manufacturing succeeds in lowering total product cost. Coordinating planning and execution requires planning systems to link to execution systems ” or better, use the same systems.

The systems that coordinate activities are relatively new on the market. By replacing existing load builders, an optimizing vehicle load builder can provide detailed execution instructions to the loader and ensure damage-free, optimized axle-weight, maximized, or cubed-out loads. Distribution master scheduling systems create a schedule for all activities while not over consuming constrained resources (people, dock, doors, inventory). This type of system integrates all the supply chain information from order management systems to WMS location data.

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