Wednesday, October 2, 2013

Need for Technology- Is it an asset or is it a drug?

Supply chain management is the “chain” linking each element of the manufacturing and supply process from raw materials through to the end user, including several organizational boundaries. As the process involves several organizations, information flow plays a vital role to the success of the supply chain management especially in terms of keeping all the components (i.e. suppliers, manufactures, logistics, warehouses etc.) connected. Innovation in technology has successfully integrated factory automation and enhanced communication devices. These technologies are applied to help supply chain planning, collaboration among customers, manufactures, and suppliers. With the use of web technology, customers may order more easily, manufacturers will forecast demand better given the instant customer feedbacks, upstream suppliers will also have relative correct date and reduce the bullwhip effect.

Some technologies used in supply chain are: Comprehensive connectivity, Real-time location systems (RTLS), Speech recognition, Digital imaging, Radio frequency identification (RFID),Bar coding, GPS communication, Enterprise resource planning (ERP), Cloud computing, Electronic data interchange (EDI)

With the use of wireless network to stay connected with Web Map Services (WMS) and ERP, companies may enhance their supply chain visibility. In addition, mission critical machine-to-machine communication based on wireless connectivity also helps the automation of the process in a reliable way. RTLS used in conjunction with the wireless network and RFID allows more efficiently asset tracking system .Especially use of RTLS in logistics will allow the track of assets and products in transportation more efficiently, reduce lead time of its delivering process. Using RTLS enhances the accuracy for stock tracking and avoids certain loss caused by theft (lost), transportation or checking mistakes.
Speech recognition technologies allow employees and customers to work more efficiently. In the case of voice directed warehouse applications, it saves 20 minutes or more in initial training per user. It also contributes to the warehouse distribution given that users may operate hands- and eyes- free.

Cloud computing further enhances the existing ERP systems in terms of inventory visibility, traceability and syncing material information with orders. To achieve the integration of the whole supple chain and cooperation, cloud services allow the companies to organize information more efficiently transformative. One change in the cloud, every related party will be updated immediately for the change. It assists supply chain in planning and forecasting, logistics, sourcing and procurement, and service and spare part management. EDI is a full featured business document broker designed to allow organizations to seamlessly receive and send business documents to/from its trading partners and update its internal systems automatically. With this technology, companies can exchange data seamlessly with least effort for integration.

These IT technologies enable companies to share the real-time visibility data within the enterprise as well as with supply chain partners which is crucial for enabling collaboration and ensuring an agile global supply chain network. However, this major advantage of technology also doubles up as its Achilles heel. For example, due to complex structures of the whole supply chain, the collaborations among departments inside an organization and the collaborations among different players complicate the whole system with possible errors in every single process. As a solution to this problem, SOA oriented system, cloud computing and EDI helps to integrate systems and information better while lowering the possibilities of making mistakes during transactions. Thus, when making decisions for IT technology investment, a company needs to think carefully about the pros and cons such as whether it is necessary to have all the latest technologies or certain relevant portions will be enough for the system to run efficiently. Bearing in mind the lean principles, any non-value adding activities may be considered as waste to the customers.

Dustin Mattison observed that “Technology has only changed supply chain management in so far as our mindsets and organizational cultures have changed,” arguing that, in fact, people and mindsets lead organizational change, and the technology needs to keep up. He goes on to add that supply chain collaboration technology has the potential to increase in value as the number of people using the technology increases. He draws a comparison to Google search where the more that people use Google, the better the search results get. And finally, companies also started to understand that they weren’t just competing on products and brands, they were competing with their supply chains.

To conclude, I would like to raise the pertinent question, ‘Does Supply Chain Management wholly depend on Technology or does it depend more on Organizational mindset and strategy’?

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