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.