Triple A Supply Chain

Traditionally, companies have approached the optimization of their supply chains focusing on speed and costs. However, it has been shown that this is not enough and that additional qualities are necessary in order to have a competitive advantage.

Dr. Hau L. Lee, a professor at the Stanford Graduate School of Business and director of the Stanford Global Supply Chain Management Forum, discussed the supply chain strategies of more than 60 companies that were currently in leading market positions, publishing the findings of his study in a Harvard Business Review (hbr.org) article in 2004.

Following economic cycles, when the economy was growing, supply chain management focused on speed, even if this meant higher costs, in order to meet growing demand. In recessionary phases, supply chain management focused its efforts on cost reduction. But the large companies that had followed this scheme, even having built efficient supply chains, did not manage to have competitive advantages in the market. Some of the most successful large companies, which not only emerged from the various economic and industry crises of the past decades, but are still at the forefront of global markets today, had supply chains with additional qualities. Dr. Lee synthesized these qualities in what he called Triple-A Supply Chain (“The Triple-A Supply Chain”), determining that a supply chain, in addition to speed and cost efficiency, must have Agility, Adaptability and Alignment (“Agility”, “Adaptability” and “Alignment” in English).

The optimization of the supply chain, focused solely on the efficiency of its speed and its costs, was highly oriented towards economies of scale, based on longer product lives and a lower diversity of references than in current markets. With the evolution of the markets, the low capacity to react to rapid variations in demand, to changes in consumption patterns, or to globalization that requires serving emerging markets and establishing more complex relationships between different phases was revealed. of the chain. A supply chain must be able to react quickly to all these variations.

New product launches can cause serious problems in less agile supply chains. Seasonal campaigns, such as traditional Christmas campaigns or, with more recent globalization, other consumer campaigns such as Black Friday, can introduce specific demand peaks to which a supply chain has to respond with sufficient agility, as well as return to normal levels within a few days.

Globalization is also causing smaller but more frequent orders to proliferate, which hinders traditional approaches where only large batches of merchandise were released in order to reduce transport costs. The reaction to this reality has been the establishment of collaborative relationships to share resources, or the outsourcing of functions to logistics operators that can optimize the use of said resources by serving the logistics of various clients.

In addition to the fluctuations of the markets, supply and demand, the supply chain must face unstable situations and respond to disruptions in the flows of raw materials and merchandise, both from suppliers and towards customers, being able to react quickly and continue to function, which is called resilience.

With globalized markets, international relations between the different phases of the supply chain are more complex, being affected by natural disasters in other parts of the world, international political conflicts, etc.

To gain agility, the different actors in the modern supply chain have to promote a greater flow of information between them, establish deeper and broader relationships, adapt manufacturing methods to postpone the phases of product differentiation to later stages of the process. process and have contingency plans for critical situations.

In all those stages along the supply chain where the merchandise must stop, warehouses are needed. This includes manufacturing plants, where raw materials or semi-finished products are stored, large distribution centers for the geographical redistribution of merchandise, and small urban logistics warehouses to provide service to the last kilometer.

Each type of warehouse has specific needs and must have the most suitable storage systems for them. Live racking for FIFO flow, high-speed automatic order preparation to meet peak demands, expansion of storage space with mezzanines and raised aisles due to rising land prices in urban areas, etc. The metal racking systems of ATOX Storage Systems and the automated systems of ATOX Soluciones Tecnológicas, designed to suit each client, provide great reliability, versatility and efficiency, contributing to the agility of the supply chain.

If one word sums up the current markets, it is volatility. The life cycle of products is shortening considerably and advances in technology allow new products to be brought to market more quickly. Electronic commerce has also facilitated the expansion of markets, but in the same way it has encouraged consumers to change their consumption patterns more quickly.

All this introduces greater complexities in the supply chain, having to face new problems, but at the same time opens up new business opportunities. Nowadays, immediate and direct information from consumers is available, with which their trends can be more easily monitored. Possibilities of accessing new markets are opening up and new business models are created based on the Long-Tail with more diversity of references but less volume of each of them.

Competitive supply chains must remain in continuous evolution, ensuring their adaptability, which allows them to transform as markets, technology and consumers also evolve.

ATOX’s commitment to R+D+i has allowed it to expand its range of metal racks with ATOX Soluciones Tecnológicas automations. Systems such as Light Guidance for pick-to-light operations and Disban H automatic dispensing allow for high-speed order picking, reducing inventory errors. Its combination with the intelligent roller transport system manages to optimize internal logistics and facilitate the work of warehouse operators, and can also assist in reverse logistics tasks. The SHERPA 800 Radio Shuttle system turns drive-in racking into high-density storage systems, while providing greater speed and safety in forklift operations.

All ATOX Soluciones Tecnológicas systems are modular, versatile and energy efficient. Its characteristics allow warehouses to adapt more easily to current and future needs.

Undoubtedly, the supply chain of the 21st century has become more complex, having to deal with the volatility of the markets, its global reach and the introduction of new technologies. These are some of the reasons why in recent years many manufacturers have chosen to outsource part of their supply chain, thus proliferating 3PL logistics operators and, more recently, 4PLs.

Given the new logistics scenarios, alignment is necessary to maximize the performance and flexibility of the modern supply chain. This means that the different actors that participate in the chain must pursue their own objectives that are in turn aligned with the objectives of the rest of the actors. In this way, it is ensured that the efforts that each actor invests in improving their stage of the chain will not only provide the best results for them, but also for the rest.

Strategies such as vendor managed inventory (VMI) and 3PL and 4PL outsourcing require sharing information, costs and risks. But good alignment also means sharing advantages and benefits. In this way, all the actors in the chain will benefit by helping to optimize the supply chain and this, as a whole, will achieve maximum performance.

ATOX Soluciones Tecnológicas automated systems integrate with any WMS, ERP or management software used by warehouses, keeping inventory control synchronized. The intelligent roller transport system designed and manufactured by ATOX integrates sensors and incorporates diverters for the automatic classification of merchandise acting as sorters. This favors the traceability of the merchandise during handling operations. The versatility of ATOX systems and their integration with new technologies contribute to the alignment of warehouse performance objectives as integral parts of the supply chain.

ATOX Storage Systems has been designing and manufacturing metal shelving for more than 50 years, internationally recognized for its high quality.

In order to respond to the needs of its customers and optimize the performance of its warehouses, ATOX has opted for R+D+i, designing the automated systems of ATOX Technological Solutions. This makes it possible to combine the reliability and space optimization of metal racks with the versatility and agility of new technologies.

ATOX has facilitated the optimization of storage in large distribution centers, manufacturing plants and urban logistics warehouses in many business sectors at an international level, contributing to the agility, adaptability and alignment of their supply chains.