Technology, A Key Tool for Your Supply Chain

“Four-who?…Oh FourSquare you say? What’s that – a new coffee shop?”

Go inside your supply chain department and start talking with the folks that make up your broader team and I suspect the above is the type of conversations you’ll end up having with many of your peers and leaders when it comes to new technologies.  I will say right off the bat – I don’t think anyone is a bad logistician or supply chain operator if they don’t know who FourSquare is or how to Tweet. The broader point to be made is that today’s supply chain organizations need to make sure they are keeping up with a broad spectrum of technologies that could mean big changes for their companies and their supply chains.

I think the supply chain, in particular, suffers more than most organizations when it comes to technology awareness because often times the supply chain leaders are those that got their start as operators. Whether they did their time in the supply chain fulfilling positions like warehouse managers, planners, or on the transport side, many of today’s supply chain execs are all people who have come up through the heavy-duty ranks of operations. As most of us operators known, I started on commercial vessels sailing the ocean-blue (see below pic), the operational setting is a spartan one where you often times make do with what you have. This make do with what you have is great for the income statement but not so great for ensuring you’re always one step ahead of your competitors. In the last twenty years, the supply chain has undergone a radical transformation. The advent of MRP and then WMS and TMS systems has created dramatic efficiency in just about every nook and cranny of the supply chain.

I believe the best has yet to be seen and the next ten years of innovation in the supply chain is really going to be incredible. We are just now starting to scratch the surface of various technologies that could all have a significant effect on supply chain costs. Some of these technologies include things such as:

• Mobile Technologies
• Analytics
• SaaS Platforms
• Alternative Fuels
• Vehicle Monitoring Systems

This is certainly good news for all of us. I think the rational majority is clear-headed about the inevitability of higher fuel prices and rising shipping costs associated with higher security standards and governmental regulation.

The message is a simple one for all of us supply chain operators.  Get comfortable with technology and be equally adept at innovating as you are at driving margins and making that operation hum.

About the Author, Douglas Ingram

That's me! This particular ship was a Trans-Atlantic vessel that carrier heated asphalt at 300 degrees.

Geolocation_in_the_Supply_Chain

As the old saying goes, “change is a coming”. These winds of change are multi-variant and are carrying a wonderfully potent mixture of geolocation, analytics, and SaaS to today’s businesses. In fact, the supply chain stands to be one of the biggest benefactors of this sweeping change.

For many years, supply chain practitioners have discussed and envisioned a future whereby geolocation data could be seamlessly linked with order execution, warehouse management systems (WMS) and or transporation management systems (TMS).  The benefits of being able to assemble this location data in real-time for the supply chain and effectively disseminate out to enterprise decision support systems and business users includes:

1. Better Planning – understanding inventory flows at a pallet or case level and being able to understand the velocity of movement, in transit product and the position of inventory could have significant impact for corporate planners trying to appropriately allocate manufacturing capability, purchasing decisions and procurement of input materials.
2. Optimization of Network - today the supply chain network of companies large and small is constantly in flux.  Things such as seasonality, promotions, rain fall, weather, fuel costs and other variables can significantly alter product flows from traditional patterns.  This constant flux makes it difficult for supply chain tacticians to understand their operating environment in real time.  What typically happens in today’s world is that supply chain leadership is always looking at a dated snapshot of the network and resulting product flows.  If supply chain tacticians had the ability to visually understand their environment in real time then the possibilities become quite endless and very interesting.
3. Audit Precision & Compliance Initiatives – Another benefit of maintaining geolocation data that may not be so obvious is the financial benefit that could be realized.  In transportation, a common variable used in calculation of costs for over the road type movements is mileage.  With geolocation capability tied to various gates in a shipment’s lifecycle such as order confirmed, pick confirmed, in-transit, and POD, a procurement team could use time stamp data correlated with latitutde and longitude information to deduce actual mileage transited, cost estimates, route traveled, and velocity at various checkpoints.  With the same geolocation information described companies could reference rules and ensure compliance with either internal policies or insurance mandates.  An example of this could be the idea that a tractor-trailer cannot exceed some average speed.i>
4. Green Initiatives – As green initiatives continue to take over old-school industries geolocation data can help  supply chain departments to gather the critical intelligence they need to undertake carbon footprint measurements and other green related initiatives.  Other capabilities provided by having precise location information
5. Customer Service – An excellent use for geolocation data could include the ability to more accurately measure transit times from frequented origins to destinations.  For example, consider the case where a large distribution facility in a metro area restocks materials to numerous homes, stores or smaller warehouses in the state.  By maintaining geolocation data the distribution facility could more accurately assess transit times to each end destination, by time, by day, etc.
6. New Service Offerings & Market Differentiation – The market for transportation services and third party logistics services continues to grow and become more competitive each year.  With geolocation capabilities transportation entities can offer new services to their customers and help differentiate their offerings from a sea of competitors and look-alikes.
7. Safety – As the recent bomb incidents on board UPS planes indicated, we live in an increasingly dangerous world where cargo operations are being used as a mask for potentially nefarious activities by terrorists and wrong-doers.  Geolocation and its integration into asset management systems, inventory control and transport management could help provide corporations with clear visibility into key personnel, assets and product flows at all times.

So the question beyond what benefits will geolocation bring is one of how does it become a reality, what are the steps and what may be some of the most present obstacles today.

To usher in the type of benefits that can be realized from geolocation organizations need to have a few basic building blocks in place.

• Centralized Data w/ Well Defined Schemas
• Integration with Key Order Management, Inventory Management and Transportation Systems
• Modern Applications Frameworks  (SOAP, REST, etc.)
• Deployment of Applications to Diverse Devices (Web, SmartPhones, iPads)
• Capability to Assimilate and Make Sense of Data (i.e. Business Intelligence Platforms)

The last point may be one of the more important points to make.  The premise of geolocation by default also means a literal avalanche of data.  In the example that was given above imagine a distribution facility normally has 100 orders a day to local destination points. With geolocation enabled these 100 orders could potentially produce tens of thousands of records with juicy tidbits like latitude, longitude, time, vehicle ID, driver ID, temperature, etc.  Without proper business intelligence platforms this data is somewhat useless.

Geolocation has some awesome capabilities for the supply chain and I am hopeful that with recent announcements and initiatives from government entities and startups alike that the promise of geolocation will soon be supplanted by a more widespread reality and many real-life implementations.

Supply Chain SaaS

Anyone who has been involved in business for any length of time knows that today’s winning formula can quickly turn sour. Certainly, the job of a leader of any organization is to closely monitor the environment in which they compete to “read the tea leaves”.  Reading the tea leaves involves picking up on nearly imperceptible movements in the market, monitoring casual organizational chatter, watching competitors activities, and in general staying plugged in.  Part art and part science, these combined activities require “Sherlock-Holmes-esque” investigative abilities combined with a knack for piecing it all together.

I’ve been pulling the pieces together for a bit in the broader supply chain industry and have been observing some very interesting trends that appear to be converging in a more rapid fashion that most in our industry are accustomed to.  This convergence centers on the adoption of cloud-based solutions (aka Software as a Service (SaaS)) within the supply chain industry to facilitate challenges to common problems.  The reasons for SaaS adoption are numerous and I will spell them out further in the post.  However, let me first point to some of the anecdotal data which starts to draw the first brush strokes of this very interesting picture:

NOTE: In case you have been living under a rock for a few years follow this link to get a better understanding of SaaS.

Anecdotal Data Relating to SaaS & Supply Chain Adoption

• Trade publications & industry followers, leaders and authors are commenting and talking more frequently about impact of SaaS specifically in the supply chain
• Major consulting shops are augmenting and setting up departments devoted to advising & helping to roll-out SaaS solutions
• Major supply chain oriented publications begin displaying larger & more frequent advertisements for SaaS solutions in WMS (Warehouse Management Systems) and TMS (Transportation Management Systems) areas.
• Traditional software vendors are beginning to release “cloud-based” versions of their standard offerings
• Emergence of more case studies focused on SaaS type deployments and the resulting efficiencies gained by coalescing processes, data, and analytics

Technologists would look at the above points and most likely reply with a giant…”Duh”…or, “Your point is what exactly?”.  To them I would say this.  For supply chain operators and hard-core logistics guys the migration to the cloud and impact of SaaS is just now starting to be more broadly discussed.  These discussions are being driven because of the economics associated with Saas, economics that I have seen first hard in my business dealings.  Ultimately, some of the big advantages of SaaS for the supply chain industry are:

• Ease of Roll Out: Instead of getting bogged down with install disks, scripts, instructions for loading, etc. – many of the SaaS tools are as easy as a web link, a user name & password and you’re up and running.  For highly diverse environments like the supply chain this is a definite advantage.
• Immediate Upgrades: Worried about the latest patches and the most recent version? With SaaS solutions the versioning, patches, etc. becomes transparent to the user.
• Right-Sized Infrastructure: Another benefit of the SaaS model is that companies can start enjoying the benefits of a system that might otherwise require too much up front capital to deploy.  For example, if the fixed cost of deploying a traditional software package is $100,000, a company might choose to not deploy because the fixed cost hurdle is too extreme to warrant a payback in a reasonable period of time.  However, in the SaaS environment, a company is generally able to get started for a considerably lower fixed fee and then pay a more manageable subscription or transaction fees.
• Centralization of Data: In today’s environment, data and the resulting insights for an enterprise are critical.  Through SaaS related deployments enterprises are able to start moving their organizations towards a common environment.  In the supply chain world that is full of sub-contractors and third-parties that are located in different geographies with different technical backgrounds the SaaS model becomes a unique tool to help enterprises coalesce operations, processes and data.
• Process Compliance: In the supply chain adherence to process is critical.  This process adherence becomes very difficult as product moves across the globe and is shuttled from warehouse to carrier to customs entities and back again.  With SaaS oriented modalities, large 3PLs and others can start to orchestrate systems and applications that facilitate compliance to standardized organizational processes.

In the complex business environment that is supply chain, the benefits of SaaS are very compelling.  A few of the areas / functions where I believe we will start to see increased adoption in the supply chain around SaaS include:

• Analytics
• Warehouse Management
• Rate Audit / Spend Management
• Transportation Management
• Order Management
• Inventory Control

The next 12 months promises to be a wonderful and exciting time as more and more companies migrate key functions to the cloud.  For supply chain entities looking to stay competitive this is one emerging trend that cannot be discounted.