Most businesses find themselves with a diverse set of suppliers providing a range of commodities and services. As more and more companies seek efficiencies to leverage sales and improve competitiveness the supply chain is typically put under focus to contribute. Fuelled by improved communication methods, transportation and technology, the last 20 years has seen a significant shift in sourcing with more and more companies, often to the detriment of localised clusters of supply, employing a global supplier network.
Whilst cost is an obvious facilitator in sourcing from emerging economies, other rationale shouldn’t be overlooked. This includes opportunities to tap into a previously unavailable skills market and/or as part of a wider business strategy in building the business footprint in a key strategic area. Its important that whatever the rationale, and as with all sourcing decisions, the business case behind the decision is reviewed periodically to ensure that the reasons for global sourcing remain in the business interest (costs can change overtime!)
Whilst typical sourcing best practice goes someway into reducing the risk and complexity of selecting and co-ordinating a globalized supplier network it is still not without its challenges. Whilst from a simplistic perspective these include the obvious problems associated with different geographies, time-zones and languages other challenges with more serious business consequences should not be overlooked. Different views on Quality and performance are significant constraints and can turn what on paper looks to be a simple sourcing decision into a situation that requires significant management overhead and focus in order to deliver the same standard and performance as a more localised supply chain.
As with any other sourcing initative:
1. Run your sourcing programs thoroughly – don’t make cost your sole lever – consider your other business drivers (and your plan B if things go wrong)
2. Communicate your expectations – ensure your supplier understands your requirements on performance, quality and service
3. Don’t just assume that everything will be ok. Create a suitable risk and issues log and try and mitigate where possible – above all else – PLAN!
4. Consider how you will manage the supplier – Depending on the criticality of supply – consider whether you’ll employ local experts to assist with establishing consistent supply, or a local procurement professional who has the knowledge of the market your preparing to procure from.
5. Always ensure that you do not simply ‘gloss over’ any incidents that do arise. If there has been an issue that has arisen – deal with it as you would a local supplier.
6. Be sensitive to the market your procuring from – understanding issues around the labour force, their skills and the tools/technology available to them.
7. There is no reason not to learn from your new suppliers – different cultures can breed different innovations that might help your own business..
8. Finally the last way of bridging cultural gaps is simply to ensure that you recognise that there may be times when cultural gaps do crop up, but simply being aware, trying to minimise them and preventing them from disrupting the supply chain is a good starting basis.
RFID is it living up to its promise?
Filed Under Blog
A decade ago the hype around RFID was palpable – RFID vendors were unanimous – the technology was a game changer – RFID would be commonplace in businesses across the globe in every market delivering significant cost savings and process efficiencies. Ten years on commentators suggests that while RFID growth has been steady, demand is still low. So with the benefit of hindsight why hasn’t the market exploded as previously predicted?
What is RFID?
RFID is a tracking system that is used to monitor and report on inventory both within the confines of a factory/warehouse and in some cases externally. Contrary to many an executives thoughts on the matter – RFID is not just a tag – a typical RFID system will comprise three parts
• Tags
• Readers
• A server based solution that interprets the returning data.
Benefits of RFID
The key purpose of RFID is too meet the data capture and tracking needs of inventory and assets for the operating company. Like any other piece of technology RFID was designed to solve specific challenges that couldn’t be met through traditional methods. The primary advantage to RFID over legacy methods is that unlike traditional barcodes there is no line of sight required to the object, multiple items can be read in one instance, considered deployment and selection over the type of tag and location of the readers used can bring significant improvements in inventory management data.
Multiple tags can be used within a single product family enabling individual components within a family/palette to be tracked providing greater accuracy. With the resultant data reporting opportunities can be leveraged to support real time tracking and facilitate decision making and problem solving.
Barriers to RFID deployment
So given these benefits why haven’t we seen the rapid growth of RFID that was expected? Whilst RFID does have the potential to turn supply chains on their head – as with any initiative the usual business rules apply – how much will it cost, do we need it, what will it do for us when we have it. These careful considerations need to be undertaken to weigh up the pro’s and con’s of deployment – for example:
1/ Is there a robust business case to deploy RFID
2/ How will RFID fit into your processes? Will substantial process re-engineering be required when migrating from legacy systems
3/ What is the optimum technology mix and will you retain any legacy technology such as bar-coding to work alongside RFID?
3/ How will RFID “fit in” with your suppliers – will there be barriers to roll out.
Whilst undoubtedly RFID offers many benefits – lots of businesses remain to be convinced on how it could be applied with fears over the resultant process re-engineering that is undoubtedly required.
Many businesses have wrongly assumed that RFID becomes the sole provider of inventory management data. Clearly RFID can happily co-exist – it doesn’t have to be the barcode killer.
The key challenge for RFID (as with any other innovation) is that it requires capital expenditure to deploy – and to obtain the budget you need to be able to convey the benefits effectively – this has been a clear challenge for many executives – resellers must deliver examples of similar, and successful, deployments. Low cost high return systems will always gain respect and whilst the humble barcode has been around for sometime, ROI needs to be tangible for decision makers to risk the expenditure.
The key issue is that businesses have to look beyond the clever technology and understand the problem which they are trying to solve.
Tracking the growth of RFID
Luckily then – in some markets, where this problem solving ethos has been utilized, take up of RFID solutions has been positive – specifically in the medical and pharmaceutical arena – RFID has been deployed to solve real business problems such as asset and patient, pharmaceutical companies are using RFID to help combat counterfeit drugs. Parco Merged Media (www.parcomergedmedia.com), a RFID seller, claim that improved asset tracking can greatly reduce the number of assets required by a given hospital and lead to significant equipment savings.
For other businesses – large firms and market leaders (such as Wal Mart) are now beginning to mandate the use of RFID within its supply chain to facilitate palette tracking – growth in these areas has been led by companies that have the leverage to dictate to their supplier base and have Inventory sizes large enough in order that RFID equals efficiency bringing suitable benefits and returns on investment.
Benchmarking RFID usage
Whilst we haven’t exactly seen the explosion promised we have seen a steady growth in RFID deployment and some really clever uses – as resellers seek to capitalize on the marketing opportunities these bring, senior executives should begin to see and understand what challenges RFID can help solve and how it can be applied to their business – perhaps then growth in RFID will match the original expectation.