Monday, March 4, 2013

How technology powers supply chain?

Scott and Westbrook and New and Payne describe supply chain management as the chain linking each element of the manufacturing and supply process from raw materials through to the end user, including several organizational boundaries.[1, 2] 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, and etc.) connected.

What technology did to help supply chain is majored in factory automation, enhanced communication devices, data recognition equipment to other types of automated hardware and services.[3] 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, manufactures 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:
1.        Comprehensive connectivity
2.        Real-time location systems (RTLS)
3.        Speech recognition
4.        Digital imaging
5.        Radio frequency identification (RFID)
6.        Bar coding
7.        GPS communication
8.        Enterprise resource planning (ERP)
9.        Cloud computing
10.    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.[4] 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. In a word, it increases the visibility of real-time supply chain.

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.[5] 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.[6] 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.[7]

EDI also plays an important role in the information sharing revolution. 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.

The major advantage and drawback of technology in supply chain management is collaboration. The 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 the transformation to a more responsible and agile global supply chain for the future – the supply chain network. For example, using of Internet will allow the supplier or product linked with its distributor, so that supplier does not need to keep high inventory and distributor are not likely to run out of stock.

However, in the other hand, 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. To solve 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.

Despite the advantages of all the technology, the bottom line is whether these technologies will make your company more profitable in the long run. Given some technologies do require a lot investment in the early stage and the outcome may not be so fast response. 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 portion will be enough for the system to run efficiently. Bear in mind the lean principles, any non-value adding activities may be considered as waste to the customers. The questions remains to be how much to you want to adopt for mutually benefits.

Another issue regarding of this huge integration on global scope may be how much you can trust the relevant parties? There is always moral hazardous around the world. Finding the right one for the company may also be a huge task to implement the technologies upgrade.

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