Using Technology That Can Make Your Supply Chain More Efficient

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Technology has almost revolutionised the management and execution of supply chain functions within business today. With vast amounts of innovative hardware and software solutions (either stand alone systems or those that are built into existing modular MRP/ERP systems) available businesses are increasingly looking at how these can be applied to deliver benefit and leverage their position in the marketplace.

Successful utilization of technology can be a critical. For supply chain teams successfully applying technology can deliver:

• Simplification and Improved efficiency
• Improved management information
• Improved compliancy
• Improved forecasting
• Improved accuracy

Technology can be applied to almost every facet of the modern supply chain supporting both tactical and strategic objectives. Whilst simply throwing money at software vendors and consultants in the vain hope that some might stick and deliver benefits is never a good idea. Businesses must consider a targeted, goal orientated approach closely reviewing its operations, understanding specific weaknesses and considering what improvements would deliver strategic value.

One approach is to review the various elements of the supply chain and consider where and how technology could be applied to solve either specific problems or to deliver processes that improve competitiveness. For example:

Planning and Management: With increased visibility and controls inventory controllers can better manage company assets. With software based management reporting forecasting can be simplified and usage rates closely monitored which can deliver clearer buy signals and drive improvements in restocking practices (EOQ’s, Lot sizes etc) driving down costs whilst retaining service levels.

Integration: Delivering closer ties between trading partners facilitating efficiency and accuracy allows organizations to change their emphasis from tactical processes to strategic processes (SCM for example) that can deliver true value.

Warehouse Management: Introducing technology into the warehouse can ensure that the material handling controls are integrated, warehouse space is utilized the best effect and that the inventory overall is managed efficiently.

There is a wide range of technology available from Warehouse management systems through to vastly efficient hand held scanners through to product tags such as RFID which cal all deliver benefit when applied correctly.
Planning: Whilst many MRP systems have dedicated planning tools organizations must ensure they leverage this functionality. Robust planning ensures that resources (labor and material) come together at the same time and that the business maximises it’s own “engine room” a planning system that is not delivering means a business that doesn’t deliver either.

Finance: Whilst almost every finance system will manage the key tasks (bought ledger, sales ledger etc) to truly control costs organizations must get smart at looking under the hood of their business ascertaining key cost drivers and opportunities. For the supply chain this is centred around two areas – firstly by ensuring that the systems that manage product “bill of materials” and costs are closely integrated and secondly by having a robust supplier spend analysis system.

Asset management: Technology can help to manage assets and help mitigate risk within the supply chain. Asset management can be labour intensive and is often linked with meeting key service levels (i.e. repair turnaround times). With technological systems, asset management (including the control of rotable stock pools) can be simplified with improved management information and controls.

Purchase to Pay (P2P) Through applying workflow and flexible controls implementing a software based purchase to pay solution can deliver many benefits from integration, efficiency, control and savings. Purchase to Pay is a huge area and deployments can be small (focus on a key part of the process) or significant (focus on many or all of the purchasing process).

Technology will always be a moving feast. There will continue to be innovation in terms of functionality and its application we have only seen the start of the technological revolution and businesses must continue to be tuned into software/hardware lifecycles to avoid being caught in the “legacy application” trap. A failure to consider an appropriate supply chain technology strategy can not only impact efficiency but can also impact competiveness as other businesses use new tools to better serve the market.

Why Innovation And Technology In The Supply Chain Can Help Boost Competitiveness

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Sometimes people treat the supply chain in a manner that is not wholly appropriate. They think of the R&D team as being the innovators, the tech guys as being those who implement all the technical items and the supply chain? Well that is the bottom of the pile, they only supply the widgets and the components that we turn into something special. So why should there be any need for either innovation or technology in the supply chain?

Well this kind of ignorance could cost a company dear. If the supply chain can be both innovative and apply technology appropriately, then there is a whole wealth of savings that could be made! In turn this keeps a company with an innovative and technologically advanced supply chain in a position where it is Lean, mean and competitive

Here are some examples of typical supply chain innovation and technology use:

Innovation and Technology Combined

If innovation can be combined with technology then effectively the limit for bringing in new developments is in a sense limitless! For example, the use of Radio Frequency ID tags, often referred to as RFID is both using technology and it is indeed an innovation because it helps the supply chain become more cost effective. The levels of stock can be almost instantly monitored by using a pretty straightforward merchandise monitoring and management system, so gone are the days when you had to worry about counting each individual item.

Now you have the tags attached to pallets and this feeds the information to the system and the results are almost instantaneous and this results in the stock levels being kept to a minimum whilst ensuring that stock outs do not occur. These RFID tags do really rock and will change the way that warehouses work and keep costs down; so that is why innovation and technology need to be implemented within the supply chain. Only through keeping costs down can you increase competitiveness and so the supply chain has to have innovation and use technology. After all, if one company doesn’t do that, then here are others who most certainly will!

Innovation To Beat Obsolescence

Obsolescence is a real threat to businesses. You spend years developing a product, you bring it to market, then within a couple of years component parts become increasingly obsolete, costs rise and your competitiveness suffers. So what do you do?

Well, if there is a good deal of innovation within the supply chain, then the instance of obsolescence can be reduced. Items can be updated, reviewed and changed within a supply chain that is innovative, flexible and stable. If on the other hand, the supply chain is intransigent and can only provide x number of widgets, created to the specification that they have had for the last 10 years and no changes can be accommodated, then obsolescence can be a real threat. Companies simply cannot remain competitive if they have high levels of obsolescence, so it is vital that this is kept to a minimum.

Global Sourcing

Increasingly the supply chains that are in operation are becoming global and there is little doubt that only supply chains that are innovative and use the latest technology will be able to survive into the future. Those who simply react retrospectively will be unable to cope with the demands of a global supply chain: but those which manage to embrace both innovation and the use of technology will be able to survive. This will be the logical extension of competitiveness, so innovation and technology are inherent requirements of the supply chain, not luxurious options to be addressed as and when; they are needed now!

Sustainability

With Corporate responsibility garnering such interest the impact of the procurement team on the environmental footprint of the business is significant. Through innovation and changes in policies and processes change can come. With appropriate strategies and goals – procurement teams can take a close look at requirements and incorporate sustainability criteria on supplier and product selection helping to save both the environment and cost.

Purchase to payment

Perhaps the most significant innovation through the utilization of technology can come from streamlining the Purchase to Payment (P2P) process. Technology driven Purchase to payment can challenge and mitigate typical operational issues (compliance, authorization, visibility) through process simplification and bringing together the procurement team, requisition, suppliers and finance teams within the value chain.