SCM and Logistics Technology.

In the conventional model of supply chains, each stage in the chain tends to be disconnected from the others. Even within the same organisation, the tendency is for disparate functions to seek to optimize their own performance. In other words each function or Strategic Business Unit tends to work in its own silo. To overcome these problems it is clear that the supply chain needs to act as a synchronized network and not as a series of separate silos, thus synergy is key. Synchronization implies that each stage in the chain is connected to the other and that they all pull in the same direction which is the basic tenet of synergy. This is the way in which entities in a supply chain become connected through shared information. This is where technology plays an enormous role. 

So each organization needs an information technology function to enable information to be shared between supply chain partners which includes demand data and forecasts, production schedules, new product launch details and details of material changes. To enable this degree of visibility and transparency, synchronization requires a high level of “process alignment”, which itself demands a high level of collaborative working.

 We are all cognizant that the nature of business today is changing rapidly due to technological innovations and the Fourth Industrial Revolution. So in fact today’s business becoming increasingly “boundaryless”, meaning that internal functional barriers are being eroded in favour of horizontal process management and externally the separation between vendors, distributors, customers and the organization is gradually lessoning. Particular in the Globalization Macro environment. So in terms of technological advances, this is the idea of the “extended enterprise”, which is transforming our thinking on how organizations compete and how value chains might be reformulated. Underpinning the concept of the extended enterprise is what is called a common information “highway”. It is the use of shared information created by information technology that enables cross-functional, horizontal management to become a reality, and with this available technology, informed decisions can be made. 

 In this relatively new world of electronic commerce, Internets and virtual supply chains have led to the term “market space”. In the market space, customer demand can be identified as it occurs and, through CAD (Computer Added Design), and flexible manufacturing, products are created in minimal batch sizes. Equally, networks of specialist suppliers can be joined together to create innovative yet cost-effective solutions for complex design and manufacturing problems. Within the business, Intranets are in place that enables information to be shared between stores/warehousing and to facilitate communication across the business. So in terms of Internet applications and the supply chain, technology can assist with public relations and advertising, market research and testing electronic mails and catalogues.   

 In terms of information retrieval the Internet can assist with online news:

Statistics, reports on databases;

Data mining and

Competitive analysis.

 From the supplier relationship side, technology assists with logistics;

Product search;

Electronic Data Interchange (EDI);

Ordering and payment and

Supply Chain Information.

There is a concept that is fairly recent and is called “Quick Response” (QR), and the basic idea behind QR is that in order to reap the advantages of time-based competition it is necessary to develop systems that are responsive and fast. This is where technology plays a critical role. So what has made QR possible? It is the development of information technology and in particular the rise of Internet-enabled data exchange, bar coding (UPS) – Universal Product Code, the use of electronic point-of-sale (EPOS) systems with laser scanners which also play a large role in inventory planning and ordering, and RFID - Radio Frequency Identification which is the wireless non-contact use of radio frequency waves to transfer data. Tagging items with RFID tags allows users to automatically and uniquely identify and track inventory and assets. Essentially the logic behind QR is that demand is captured in as close to real-time as possible, and close to the final consumer as soon as possible - geographical segmentation - Geographic segmentation is when an organisation divides its market on the basis of geography. You can geographically segment a market by area, such as cities, counties, regions, countries, and international regions. You can also break a market down into rural, suburban and urban areas. So examine these segments Situational Analyses and Needs Analyses and do environmental scanning (marketing function). This system will help in that the organization can carry fewer inventories and yet have fewer stock-outs and the organization benefits from better economies in production and logistics. Whilst the investment in the information technology system is considerable, so too is the payback. A further feature in favour of QR capital systems is that by speeding up processing time in the system, cumulative lead times are reduced. The importance of this is the fact that this can result in lower inventory and thus further reduce response times. Think of JIT (Just-in -time inventory management). The technological quick response system can in fact trigger a “virtuous circle” in logistics:

 The circle starts from quick response which leads to reduced lead times, reduced forecasting error (predictive analysis) less safety stock or buffer stock required (ERQ system), less inventory required leading to less pipeline inventory and reduced costs. The Japanese have used information technology to develop techniques for set-up time induction. “Single minute exchange or die”. So (SMED) is the goal in many Japanese plants. In other words, continuous attention by management and the workforce is focused upon the ways in which set-up times can be reduced. 

 Many organizations are now seeking to construct supply chains to enable them to support a marketing strategy of mass customization. The idea behind this, from a technological perspective is that today’s customers in many markets are increasingly demanding tailored solutions for their specific requirements. In some organizations high technology comes in the form, as mentioned before, of computer-aided design/computer-aided manufacturing (CAD/CAM) can provide the means for this mass customization. Six sigma is still a popular tool used in reducing waste, and KPIs and Business Intelligence Dashboards (see below) are useful tools to use in SCM.

From an HRM Perspective:

Talent Supply Chain Management is a proactive management approach to securing and optimizing talent supply and services through all input channels (supplier network) to meet the Human Capital (workforce) needs of organisations, enabling them to better produce, distribute and deliver their goods and services and meet their strategic objectives.

In practice, Talent Supply Chain Management integrates Managed Service Provider (MSP) expertise with workforce analytics, also referred to as supply chain intelligence (including talent supply/demand dynamics, insight on talent motivations, and applied principles of (Supply Chain Management), to deliver access to quality talent at competitive rates and with minimized risk. An effective public health supply chain for example, requires motivated and skilled staff with competency in various essential logistics functions; staff must be empowered to make decisions that positively impact health supplies supply chain system breakdown and poor performance, resulting in poorly maintained information and supply chains. In many countries, a lack of trained staff is a frequent cause of poor systems, ill-functioning product management, and, ultimately, product stock outs. 

SCOR

By describing supply chains using process modeling building blocks, the model can be used to describe supply chains that are very simple or very complex using a common set of definitions. As a result, disparate industries can be linked to describe the depth and breadth of virtually any supply chain. SCOR is based on five distinct management processes: Plan, Source, Make, Deliver, and Return.

• Plan – Processes that balance aggregate demand and supply to develop a course of action which best meets sourcing, production, and delivery requirements.
• Source – Processes that procure goods and services to meet planned or actual demand.
• Make – Processes that transform a product to a finished state to meet planned or actual demand.
• Deliver – Processes that provide finished goods and services to meet planned or actual demand, typically including order management, transportation management, and distribution management.
• Return – Processes associated with returning or receiving returned products for any reason. These processes extend into post-delivery customer support.
• Enable - New process since Version 11 (Dec 2012).

With all reference models, there is a specific scope that the model addresses. SCOR is no different and the model focuses on the following:

• All customer interactions, from order entry through to paid invoice.
• All product (physical material and service) transactions, from your supplier’s supplier to your customer’s customer, including equipment, supplies, spare parts, bulk product, software, etc.
• All market interactions, from the understanding of aggregate demand to the fulfillment of each order.

Utilize source data such as POS sales, as well social media information to identify trends and demand changes much earlier and enable your supply chain to respond faster to increase sales, improve service levels and reposition inventory to maximize true benefits. Multi-channel programs will change expectations from supply chain forecasting/planning paradigms to building responsive supply chains.

Prof Rory Dunn.