How Ever-Evolving Technology is Transforming the Supply Chain Function
There is no question the Digital Age has had a profound impact on the way manufacturers do business. Shop floors have been transformed into high-tech production centers; product designers have cutting-edge design technology at their fingertips; and operations are leaner and more streamlined. But perhaps no manufacturing department has felt the impact of the Digital Age quite like supply chain.
The introduction of online shopping as a fulfillment method has created a lucrative revenue stream for manufacturers of consumer products, but has also transformed today’s consumer into a highly demanding shopper who expects high-quality products on their doorstep in record time.
“Twenty years ago, supply chain was relegated to a corner of the business,” said Abe Eshkenazi, chief executive officer for APICS—the premier professional association for supply chain, operations and logistics management. “Now, supply chain touches every element of a business and supply chain managers have to understand how all the different functions—marketing, sales, finance—of the business work together and navigate those waters.”
A supply chain operation in the ‘90s looked nothing like it does today. Then, parts of warehouses and product distribution centers were focused on mechanization and material handling equipment—getting parts and products from point A to point B and storing them effectively utilizing equipment and human labor. The phrase “warehouse management system,” or WMS, was not yet in the supply chain vernacular, and the efficiency of a supply chain was largely based on human innovation and productivity.
Today, manufacturers and their distribution centers rely heavily on integrated information systems to move parts and products through the supply chain. Innovations like global positioning systems give companies a quick and easy way to view inventory in real time—where it is and how it’s moving through the supply chain. And that is a tremendous benefit in being able to make commitments to customers, according to Sedlak Management Consultants’ Lou Cerny.
“Real-time data was not that prevalent in the past,” said Cerny, who is vice president of Sedlak, a leading supply chain management consulting firm. “The more I know about everything that my product is going through, the better able I am to react to things happening in the marketplace. And that carries all the way through to the final interface with the consumer.”
Today’s consumer product manufacturers have the distinct advantage of tracking the sale of a product, including the buying habits of individual consumers. This knowledge means that product manufacturers can better anticipate the wants and needs of their customers, and create new products accordingly. The result: a more satisfied, but highly demanding customer.
“As the needs of the consumer continue to evolve and become more demanding, manufacturers can’t help but change how things are done,” said Cerny.
Cerny says there has been significant investment in what is called “omni-channel fulfillment”— an approach to product sales aimed at providing customers with seamless shopping experiences via a variety of channels like brick-and-mortar stores, catalogs and online stores. And while consumers are experiencing a whole new level of customer service, the demands of this type of order fulfillment are keeping supply chain departments on their toes.
“The technology and methodology is ever-evolving,” said Cerny. “People are learning on the fly because it’s really only started to evolve over the last handful of years, and the supply chain model’s continually changing. Everyone in supply chain is experimenting to some degree.”
One example, Cerny says, is the evolution of WMS systems from those that strictly provide information on what’s going on in the warehouse—from the inventory through the order flow in the warehouse—to systems that track information throughout all aspects of supply chain management.
“What we’ve seen is that there’s more specialization in WMS software,” said Cerny. “Conveyor suppliers in the past basically got all of their information from the warehouse management system. But, now, they’ve taken it to the next level with warehouse control systems. These are taking much of the overhead workload—all of the data manipulation and how things flow on the floor of the warehouse—and controlling it with the warehouse control system, allowing the warehouse management system to concentrate basically on order control and inventory oversight for what’s in the facility.”
And when demand is high for products during peak seasons like holidays, Cerny says it’s vitally important for supply chain departments to have information systems that are multi-lingual and easy to learn in order for seasonal workers to become productive as quickly as possible.
“We’re seeing a lot more opportunities for voice systems to be able to work with multiple dialects and languages and are very easy to train people on,” he said.
Due to the rapidly changing needs and demands of the marketplace, Cerny says it’s tough to predict what the next best thing in supply chain management will be, but says technology like radio frequency identification (RFID)—a tracking system that uses intelligent bar codes to track items—has potential.
He is also confident that supply chain and distribution centers will continue to see greater integration of information systems— enterprise resource planning, distributed order management, warehouse management, warehouse control, warehouse execution, labor management—with emphasis on mechanization and how it interfaces with fulfillment center operations teams to assure the consumer can have the item they want, when and where they want it.
Amazon.com continues to create new and innovative ways to deliver product to customers in record time. The company recently announced its plans to utilize branded tractor-trailers for shipping packages between fulfillment centers and delivery trucks for distribution of products directly to customers. The move is an effort to own its shipping and distribution services previously contracted out to trucking companies and couriers like FedEX, UPS and the U.S. Postal Service. The result: same-day package delivery to customers instead of days.
APICS’s Eshkenazi says supply chain management can be expected to grow significantly in importance for not just manufacturers of consumer products, but all manufacturing and distribution sectors.
“The focus in supply chain management today is squarely on the application of e-business and its impact on manufacturers and distributors,” he said. “Omni-channel and multi-channel distribution will be the focus as companies seek to provide goods and services from anywhere within the supply chain. Continued automation and rudimentary artificial intelligence has the potential to reduce both time and cost in the supply chain. In addition, 3-D printing will eventually become ubiquitous; this technology has the potential to reduce overall inventory and inventory costs in the supply chain.”