Logistics and its systems - from TMS to MCN and AX4
The problem: one example among many
Does this situation sound familiar? I have some production lines at my factory that are critical for supply, or simply too expensive for me to afford stopping. My analyst, Wilson, tells me there's a risk of a stoppage due to lack of material. We check the ERP and find a Purchase Order generated and accepted by the supplier 15 days ago, with arrival forecast for today. Everything should work out and my factory shouldn't stop. But the risk is large — I need to know if the load is on the road — and I ask Wilson to check his emails with the supplier (he does periodic follow-up) for the latest update. After a few minutes he says: "3 days ago it was in the final operation before packaging!" Argh, that doesn't help me. We decide to call the supplier and, after 3 attempts and 30 minutes on hold, we find out there really was a delay and the load is leaving today and arriving tomorrow. Now I must reschedule the factory with other products to try not to stop it. And hope transportation goes smoothly.
This story is a small sample of the day-to-day of most industries that, working in a disintegrated way from their supply chain, lose agility and decision-making precision — generating impacts on service level and efficiency that hurt costs and revenues, while creating immense operational stress and wasting a lot of time to obtain basic information.
MCN, TMS and the Control Tower with AX4
This kind of problem gave rise to the concept of Multi-enterprise Collaboration Networks (MCN). According to Gartner, MCNs are solutions that support a community of trading partners of any level and type that need to coordinate and execute business processes that span multiple enterprises. Gartner considers cloud-based MCNs an essential technology for coordinating, orchestrating and automating an organization's extended supply chain within the overall business ecosystem in which it operates. The main capabilities of MCN solutions include three layers: network representation and management, application functions, integration analytics and intelligence.
The AX4 logistics management software from the Siemens Digital Logistics (SDL) portfolio is an MCN, enabling collaboration among industry, its suppliers and carriers through workflows designed to automate and optimize logistics processes between different stakeholders. For example, you can define in the system the actions required after a supplier invoices a shipment, what notifications will occur and to whom, and define an action flow for exception cases, such as a lost or damaged shipment. Users are connected to the platform from their desktops, but also from their mobile apps, to make it easier for carriers to update shipments.
Beyond these cross-company functions, AX4 is a transportation management software, also meeting the requirements of a traditional TMS (Transportation Management System) which, according to Gartner again, is a category of systems designed to manage increasing levels of transportation complexity across multiple transportation modes and geographies. The Siemens solution handles inbound and outbound transportation management, manages freight rates, the purchasing flow and even collaborative dock scheduling. But the cherry on top: AX4 is also a solution integrated with Opcenter APS, so any update to a transportation forecast is automatically reflected in material availability within a factory schedule made by PPCP. Here you'll find a comparative article between AX4 software and TMS software.
In short, it enables a Logistics Control Tower for the company and, by presenting traditional TMS execution with chain collaboration of an MCN on a 100% cloud platform, AX4 becomes an extremely differentiated logistics technology.
But what results can we expect?
When we talk about AX4, we're referring to a solution with over 20 years of experience, a base of more than 600,000 users and over 50,000 shipments managed daily. Companies adopting a platform at this level see impacts on their status quo in several aspects, such as:
More resilient logistics chain: Through the visibility and collaboration provided, which allow workflow and information among the different supply chain stakeholders to happen in an agile, unified and therefore reliable way.
Cost reduction: If information is available in advance (remember our opening story), we avoid poor asset utilization, late penalty payments, extra truck yard fees due to badly organized loadings, freight costs inconsistent with contracts, and so on;
Risk mitigation: In a global environment today with such sharp trends they earned a nickname — VUCA (volatility, uncertainty, complexity and ambiguity) — being prepared for the most varied situations your production chain can face (wars, strikes, climate disasters, accidents and others) means mitigating risks that could unexpectedly generate stratospheric costs. After the problem, the remedy can be very expensive and bitter. So the ability of your operation to react quickly and accurately through what technology can provide is crucial.
Digital Transformation: More than a buzzword, it's a change in how your operation works, eliminating extremely manual activities and turning mechanical work into analytical work. Moreover, this move triggers a structural change in the relationship between companies — from paving the way for better partnerships between them to reducing the costs of multiple system interfaces by simplifying to a unified, commonly used system. Lastly, AX4 enables the company to base itself on real (and voluminous!) data to improve management, since we all agree analyst Wilson's inbox or your spreadsheet won't transform how we work with data.
Of course, not all these impacts are ends — some are means. However, these means to get where we want to be will, very soon, be imperative for those who want to remain competitive. Simply put: those who don't get to know and develop their operation well through good data use, or don't adapt to new sustainability regulations, will be out of the game. And since we know in industry nothing happens overnight, it's good to sleep on it as soon as possible.
Need technical guidance on how to implement this logistics technology in your industry? Talk to NEO and one of our specialized consultants will reach out to lay out the paths.