Companies are increasingly turning to supply chain optimisation through advanced technologies to mitigate increasing costs, most recently due to NI changes in the budget. Automation and data analytics can streamline operations, reduce inefficiencies, and enhance productivity, enabling businesses to manage growth without additional staff. By adopting proven technology, firms can maintain service levels and customer satisfaction while controlling labour costs.
The budget has increased NI contributions and costs for all employers, particularly impacting those that employ relatively unskilled workers, such as air cargo. Each worker now costs more to employ, and there are potential changes around casual labour and flexibility, further increasing costs. The air passenger sector has a well-established process of optimising operations, revenue management, crew pairing, and crew rostering, resulting in greater efficiency and lower costs for air travellers. Optimisation technology can also benefit air cargo similarly and is undoubtedly worth adopting. Still, the more significant opportunity is to look across the supply chain from manufacturer to customer and consider cost reduction and value creation.
Supply change optimisation is a technically demanding challenge, and traditional solutions are unable to deal with the scope, scale, and details required. However, recent advances in optimisation and AI mean that hitherto unsolvable problems can now be addressed. For example:
• The choice of carrier can be optimised, considering the cost structure, timetable, reliability and other factors for each leg of a journey.
• The timings of a journey can be adjusted, within constraints, to minimise cost.
• Aggregation and disaggregation can be organised to make maximum use of available capacity.
• The optimisation process created detailed schedules that link to timetables, enabling optimal mode changes.
To be useful and deliver the maximum business benefits, supply chain optimisation must consider all the complexities and complications and address the real problem, creating practical solutions.
A recent project brought these ideas to life. A supplier of high-technology products had gradually off-shored production due to cost pressures. All that remained on-shore was the manufacturer of products with short customer delivery times. However, the on-shore factory was sub-scale and becoming inefficient and potentially uncompetitive. The customer proposed an analysis of the previous decision, and a model of the complete supply chain, in some detail, was built. Some exciting conclusions emerged, including:
• Previous decisions to off-shore should have considered the overall impact on costs.
• There were opportunities to reduce costs in the supply chain through better decisions.
• Airfreight was attractive in the broader scheme of things for products requiring short delivery times, even though that option had been initially discounted on cost grounds.
To summarise, supply chain optimisation significantly benefits the air cargo sector. The first identifies occasions where air freight is the most time and cost-effective, and the second enables efficient execution across the entire chain, not just each leg. Increasing productivity and customer value will allow the sector to manage higher employment costs and remain competitive.
