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SCM Middle Mile
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Strategic SCM: Leveraging the potential of the Middle Mile

by Editorial Office

It is a long way from production to delivery of a product to the end consumer. For many companies, it’s a key priority to ensure that the ordered goods are available on the agreed dates. After all, the more efficient, reliable and punctual the transport of goods, the higher the level of customer satisfaction. To achieve this, it is worth focusing on the middle mile. As the interface between procurement and the final provision of the goods,  the latter represents a crucial and complex section of the supply chain.  Find out here how strategic supply chain management can help to optimize transport between warehouses with the help of digital solutions in order to shorten delivery times, better manage inventories and meet customer expectations.

How the Middle Mile affects Supply Chain Performance

The Middle Mile usually includes the movement of goods between the distribution center and transit warehouses and often involves inbound and outbound logistics, inventory management and picking. Subsequently, the goods are delivered to the end customers in the course of the Last Mile. To optimize distribution, warehouses must work closely with carriers to match schedules, product quantity and available warehousing capacity in order to ensure smooth delivery processes. Coordinating the shipping and receiving of goods as precisely as possible plays a crucial role in ensuring that transportation between the various warehouses runs smoothly.

The way the Middle Mile is managed influences the entire value creation process and has an impact on a company’s efficiency, costs and competitiveness. Disruptions in processes, delays or delivery problems in this important section of the supply chain usually also shape the Last Mile: If goods are not transported from one warehouse to another on time, onward transport is delayed and orders are very likely to arrive late at the end customers. Organizing the movement of goods between warehouses is therefore one of the most complex tasks. So how can this process be optimized to meet agreed delivery times and customer expectations?

Optimizing the Middle Mile with strategic SCM

Strategic supply chain management helps to make the processes of the Middle Mile clearer and more transparent. It involves the planning and coordination of all activities along the supply chain and thus has a direct influence on the part of the supply chain that involves the transport of goods between warehouses. SCM can optimize the following aspects of the Middle Mile:

  • Warehouse Management: The warehouse forms a hub for the smooth flow of goods between suppliers and customers. After all, it must be ensured that the required quantity of goods is available at the right time. If the use of storage space in distribution centers, for example, is controlled by appropriate SCM software, goods can be managed and placed more efficiently and transport times within the warehouse can be shortened. This in turn helps to avoid bottlenecks and thus increase throughput.
  • Inventory Management: If companies use approaches such as just-in-time (JIT) or vendor-managed inventory (VMI), those responsible can reduce excess inventories and minimize storage costs. In addition, in the event of sudden changes in the market, it is easier to quickly expand or reduce the warehouse if there is a reliable overview of the inventory. Scalability enables managers to adapt their capacities agilely to longer delivery times or material bottlenecks.
  • Route Optimization: Geographic information systems (GIS), route planning software and traffic management systems (VMS) are used to determine the most efficient and cost-effective routes. Factors such as distance, road conditions, weather conditions, traffic flow and planned delivery times are incorporated into the calculation in order to avoid detours and meet deadlines.
  • Improved Supplier Relationships: Strategic supplier development is a promising method for companies to minimize the risk of disruptions in the supply chain and to generate improved value creation together with suppliers. The approach is supported by specialized SCM software.
  • Data Exchange: A well thought-out supply chain management enables the seamless networking of the various actors involved in the transport and logistics processes of the Middle Mile. The transfer of information and data and the integration of the various systems are necessary to improve the flow of information about orders, inventories and transport times between suppliers, carriers, warehouses and customers with real-time tracking.
  • Risk Management: By implementing supply chain risk management, contingency plans and measures that can be realized quickly can be developed to respond appropriately to unforeseen events such as natural disasters, delivery failures or material shortages.

A key objective of SCM is customer satisfaction, and the Middle Mile has a direct impact on this goal. Optimal transport routes, minimization of inventories, coordination of delivery dates – as a significant component of the supply chain, the Middle Mile offers many optimization opportunities to support the on-time delivery of goods to customers.

These technologies support optimization of the Middle Mile

Generally speaking, the more digital a supply chain is, the greater the transparency of the individual workflows and processes. Data can thus be collected, processed and analyzed as seamlessly as possible. Logistics managers are therefore increasingly turning to software solutions in order to optimize middle-mile transport processes, drive innovation and increase customer satisfaction. The automation of logistics processes using digital technologies enables improved control of product tracking and facilitates the management of vehicle fleets.

Through the use of the Internet of Things (IoT), GPS tracking technologies, mobile communication or telematics systems, shipments are continuously tracked and monitored during transport. Via the system, logistics managers receive real-time information about where the goods currently are and what condition they are in. This in turn enables them to respond to disruptions as quickly as possible and pass on relevant information to the warehouses. In addition, artificial intelligence (AI) and machine learning can be used to analyze historical data, identify trends and patterns, and make forecasts about delivery times, traffic obstructions and suchlike issues.

With the help of cloud computing, transportation companies and warehouses have the opportunity to store and manage their data and applications in a secure, adaptable and scalable environment. Cloud-based solutions promote collaboration between the partners involved and provide an economical option for accessing critical information regardless of location.

Conclusion: The Middle Mile as the key to customer satisfaction

Optimizing the Middle Mile holds enormous potential to improve the overall supply chain performance. However, it also requires careful planning, investment in the appropriate technologies, as well as a constant monitoring and adjustment of processes. A smart SCM helps coordinate and optimize operations across the supply chain. By integrating technologies such as AI, cloud-based solutions or GPS tracking, companies can optimize the exchange of data as well as the planning of transport routes and thus track shipments as precisely as possible. As a bridge between distribution centers and warehouses or stores, the Middle Mile plays a key role in meeting delivery times and increasing customer satisfaction.

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