Tuesday, March 5, 2013
Internet Technologies and Global Supply Chain
Historically, the origin of Internet, which can be dated back as early as the 1960's has changed the way of life of humankind significantly. Internet has affected the governance systems of nature, it has immensely changed the way business is conducted, it has affected communication significantly and now it impacting global supply chain systems quiet rapidly.
Early before the internet came into existence business were conducting their supply chain with what was know than as the Traditional Model- with this model businesses doing business together did so directly that is each supplier maintains individual links to each customer or buyer.
FIG 1 Traditional Model
The introduction of the Internet has changed the way supply chain is conducted recently this is known as the Net Model. In this model intermediate nodes practically links buyers and sellers in the supply chain network. The figure below illustrates Warren H. Hausman’s Net model.
FIG 2 Net Models
Currently, Internet technologies, which include Decision Support Systems, Public exchanges and others, have aided the global supply chain immensely. A decision support system is described as software, which provides decision support for a defined management function normally supported by optimization software. Many global businesses are grouped in regions like North America, EMEA, and Asia Pacific to foster operational interaction between these group regions. The Internet had made it possible for global companies to create synergies, example a resource plant in one particular region may be short of a particular component which that component may be surplus in another plant in another region there is an easier match of these resources. The Internet has made such synergies easier to exploit with the assistance of optimization done with a Decision support System. The below diagram is an example of a DSS in Pennsylvania and California where it assumes the factory at Pennsylvania has run out of resources and it been supplied with some from the Closest in California.
FIG 3 Decision Support System
Other internet technologies which have aided global supply chain includes Enterprise Application Integration which includes ERP, CRM and others which are applied across global supply chain networks of partner companies enhancing integration and making supply chain easier. This is normally called the B2B integration, which helps companies reduce their global supply chain IT infrastructure.
Another area where Internet technologies have the huge potential to impact the global supply chain system is the technology of Internet of things (IoT).
The RFID technologist Kevin Ashton is credited with coining the term Internet of things (IoT) where he described it as the connectivity of objects with radio tags, which could be easily identified and inventoried by computer systems. The figure below shows the technology roadmap of Internet of things.
FIG 4 IoT Technology Roadmap.
The introduction of Internet of things has enhanced the paradigm of global supply chain visibility; that is business are now equipped with the tools to effectively monitor and swiftly react to the inevitable situations that will result from transportation latency and inventory imbalances. Some of the best global companies like Amazon, Zara and others have their supply chain being customer –centric and allowing demand signals to easily travel upstream without delays and distortions. In the year 2011, certain early adopters prototyped their consumer - driven technology initiative with IoT to achieve new heights in their supply chain visibility. The IoT is a system where ordinary objects are connected to the internet via microchips and sensors ,RFIDs,DASH7 and NFC for example unlocking cars from hundreds of miles always whiles en route to customers home is will probably be a huge motivation to supply chain . The idea of situational awareness of the physical environment, which IoT delivers, is a huge boaster to global supply chain systems for instance a transportation fleet system which is optimized based on the evolving weather situations and others. Again, IoT holds significant potential for supply chain systems to evolve from being intermittently aware to a paradigm of being always aware.
In brief, Internet technologies in the past have aided global supply chain systems quiet immensely. It seems with the introduction of Internet of things there seem to be endless opportunities in global supply chain networks, do you agree with this hypotheses?