SCM : Supply Chained Melody – How to sing all the way to the bank

Such is the strategic advantage of an efficient supply chain, that technologies and business processes designed to improve its management are today discussed at board level. Companies relying solely on IT or logistics managers are tethering their resources too low. In the process, they’re also missing out on significant strategic oomph.
Business analysts worldwide report that organisations are clicking on to today’s reality that the efficiency, or otherwise, of the supply chain has significant positive or negative bearing on business. That’s on everything from customer satisfaction to the cost of inventory; from launching new products, to saving on human resources and procurement costs.
IBM New Zealand consultant Andrew Tubb identifies rocketing transport costs, rising congestion on roads, and the need to meet customer service requirements as three drivers of change right now. Lump these together, he says, and savvy organisations are taking another hard look at supply chain elements such as network optimisation and the trade-off from holding inventories in multiple locations.
So when in November last year, IBM Business Consulting teamed up with Logistics Magazine to survey nearly 350 supply chain executives throughout Australia and New Zealand, their aim was clear.
Together they wanted to capture key operational trends and performance benchmarks among supply chain leaders in four key areas: planning, order fulfilment, new product development and procurement.
When the results came in they sketched clear outline of the local picture. The study found, for example, that topping the wishlist for New Zealand and Australian respondents are improved customer responsiveness, reduced costs and increased profitability: in that order. (Interestingly, northern hemisphere respondents cited reduced costs as their first priority.)
Most respondents saw the supply chain as the primary driver of customer and supplier responsiveness – or lack thereof. The study also revealed that the most successful organisations had on-demand customer-driven supply chain systems whose owners had invested in new technologies and supplier collaboration models.
Many respondents used continuous replenishment programmes to maintain customer-specified levels of products on the shelf. Moreover, third of the respondents said they shared real-time electronic data to gain picture of customer demand. This also places them firmly in better position to collaborate with both customers and business partners.
Fast forward to May this year when at conference held by the New Zealand Chartered Institute of Logistics and Transport (CILT), Pas Tomasiello, manager for former Siemens subsidiary Dematic, told 130 attendees from around the world that new technologies could ease supply chain pressure points.
How? By countering the increased cost of transport and logistics, labour, land and buildings, and health and safety compliance. Technologies that support on-demand supply chains, he said, result in minimised stock-on-hand and better manage the frequent, smaller orders typical of today’s customer.
In Tomasiello’s mind, the most significant supply chain technology breakthroughs are invisible. While conveyors, sorters, palletisers, automatic storage retrieval and robots have changed little, sophisticated new software and network technologies delivering diagnostic and decision support tools are revolutionising supply chain areas.
These include materials handling; warehouse control (the systems responsible for receiving, storing, picking and replenishment); warehouse management; and enterprise resource planning (ERP) systems that deliver holistic view of the supply chain and help managers with future planning and forecasting.
And without modern software systems, supply chain information can not be gathered, shared, extracted or readily understood.
Switch now to Greg Woolley, managing director for supply chain software and implementation specialist Certus, who argues the logical point that there is little benefit in having goods pass through an RFID (radio frequency identification) loop if the data doesn’t then go back to the warehouse and out to distribution systems.
The good news, he says, is that with today’s software most organisations can connect up their older legacy supply chain systems. Most legacy ERP and SCM management software vendors realise the need for integration and are ironing out difficulties in their products accordingly, he notes.
As if in support of this observation, ERP and middleware provider Oracle had earlier this year announced that its ‘Oracle Fusion’ middleware now offered ‘out-of-the-box’ integration with variety of RFID devices and device management for RFID tag readers, antenna, tag printers and response systems. Oracle has also purchased G-Log; logistics and transportation management software company with products designed to bring together logistics processes, data, knowledge and analysis in single business engine.
Besides business software, Tomasiello says there is an increasing trend towards using dashboard-style decision support tools. These let supply chain workers see what they need to know at glance. Then there are the RFID tags that encapsulate information on individuals, items or pallets: data that is read electronically and passed to back office systems.
“There are still debates over the compliance and success of RFID,” Tomasiello admits, “but the speculated savings [for businesses] will end up being in the hundreds of millions [of dollars].”
IBM’s Tubb reckons that while RFID adoption “on reasonable scale” may still be three years away, his company also sees evidence that RFID better enables real-time tracking of product through the supply chain and reduces cycle times.
“Uptake so far is focused on businesses in primary processing and agriculture/export-led sectors, but this will spread to retail and consumer product firms as the technology matures and RFID hardware prices fall,” he predicts.
Tomasiello says emerging technologies will dramatically change the face of the supply chain. Count in this list stuff such as RFID, predictive modelling and simulation tools. Also include augmented reality technologies: instructional visors, for example, which are worn by supply chain staff so the steps they need to follow can be seen and heard from inside the visor.
However, while supply chain procedural operations and even training can be supported by these new technologies, the cost of change management may rise proportionate to the average age of the labour force required to upskill.
At the CILT conference, delegates were amused by an interchange between an unidentified conference delegate and Vodafone CEO Russell Stanners.
When Stanners stood to outline the benefits of emerging mobile technologies and wireless devices in the supply chain, his examples included order updates via remote connection to supply chain systems, and online training delivered to remote devices.
A conference attendee with experience in training and people management challenged Stanners, saying instructions or information delivered over mobile technologies would never effectively replace human-to-human interaction.
Stanners countered with the observation that generation Y and Z employees – the chatroom specialists and internet gamers of the world – would be more likely to value new technologies more highly than older workplace counterparts and would probably learn faster and more enjoyably via augmented reality and mobile technologies.
The argument, valid on both sides, is food for thought for businesses wanting their new supply chain technologies to be used by staff to full effect.
Meanwhile, Woolley argues that while the cost and complexity of SCM technologies is coming down, New Zealand organisations can be “quite slack” when it comes to equipping supply chain to be more technologically efficient.
“Although to be fair, New Zealand businesses don’t always

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