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E-Guide

SUPPLY CHAIN MANAGEMENT STRATEGIES

SUPPLY CHAIN MANAGEMENT STRATEGIES

Home Building a supply chain integration strategy New technologies have flash but brawn still in SCM hardware

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ewer technologies like mobile platforms

and radio frequency identification (RFID) are changing the very face of SCM applications, while tried-and-true devices like barcode readers, wireless sensors and retail point-of-sale systems remain essential elements of any successful SCM hardware mix, according to several experts. For many, the overall benefit of SCM is not difficult to understand. However, considering all the business processes that comprise the supply chain and the numerous tools available, it can be difficult to know where to start. In this E-Guide, learn strategies for creating a supply chain plan. PA G E 2 O F 1 1

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SUPPLY CHAIN MANAGEMENT STRATEGIES

BUILDING A SUPPLY CHAIN INTEGRATION STRATEGY Home Building a supply chain integration strategy New technologies have flash but brawn still in SCM hardware

Whether you are a manufacturer, distributor or service provider, every organization has a supply chain that needs to be managed. For many, the overall benefit of supply chain management software (SCM) is not difficult to understand. However, considering all the business processes that comprise the supply chain and the numerous SCM tools available, the basic question is where to start. The following are the critical first steps that manufacturers should take to create a supply chain integration plan and avoid wasting time and money along the way. LAY A SOLID IT FOUNDATION FOR SUPPLY CHAIN INTEGRATION

A prerequisite for managing the supply chain is having a core ERP system that provides functionality for demand management, sales order processing, production planning, procurement, shop floor execution and shipping. ERP systems can provide the integration and software capabilities to address these internal supply chain processes. If there are currently many islands of automation within your business or PA G E 3 O F 1 1

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Home Building a supply chain integration strategy New technologies have flash but brawn still in SCM hardware

your ERP system lacks important capabilities in these areas, consider implementing a new integrated ERP solution or acquiring additional functionality to fill the gaps. For example, if the sales forecast is currently performed in a spreadsheet, most ERP vendors offer a forecasting module that is integrated with their order promising and planning systems. Also, if the existing production scheduling or distribution software is inadequate, consider more advanced supply chain capabilities offered by your ERP vendor or a third-party bolt-on application. The answers for multi-site manufacturers may include advanced planning systems (APS), more robust warehouse management systems (WMS) or distribution requirements planning (DRP). Again, the key is to shore up internal systems and processes first. UNDERSTANDING CUSTOMER AND SUPPLIER DISCONNECTS

Perhaps the most difficult part of developing a supply chain integration strategy is understanding the information disconnects and inefficiencies within processes that directly interact the customers and suppliers. Typically, these touch points must be better understood in order to identify the hidden costs and opportunities and to prioritize supply chain initiatives. At times, this PA G E 4 O F 1 1

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Home Building a supply chain integration strategy New technologies have flash but brawn still in SCM hardware

requires working with customers and suppliers to address their needs and to understand their technology capabilities. The software solutions in this area may or may not be available within your particular ERP system or from your ERP vendor. However, there are many third-party providers that focus exclusively on ecommerce or other SCM solutions. This list includes electronic data interchange (EDI), with dozens of transaction sets available; transportation management packages; third-party logistics support; customer or supplier portals; data base services for standardization and sharing of item information and online tools for partner collaboration during product design. Clearly, there are many potential SCM software tools. Without a proactive and more holistic approach, many companies find themselves simply reacting to customer and supplier supply chain demands. This can result in sub-optimization within the business and necessitate the development of many complex system interfaces prior to supply chain integration.

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NEW TECHNOLOGIES HAVE FLASH BUT BRAWN STILL IN SCM HARDWARE Home Building a supply chain integration strategy New technologies have flash but brawn still in SCM hardware

A plethora of long-established and emerging hardware technologies collects and dispenses the data needed to fuel next-generation supply chain management (SCM). Though predictive analytics and demand sensing software might garner more attention , they couldn’t exist without the right SCM hardware to capture inventory data and other information critical to global supply chains. Newer technologies like mobile platforms and radio frequency identification (RFID) are changing the very face of SCM applications, while tried-andtrue devices like barcode readers, wireless sensors and retail point-of-sale systems remain essential elements of any successful SCM hardware mix, according to several experts. There are trade-offs to each technology, and they all have a role to play. Nevertheless, the primary function of SCM hardware is pretty universal: To collect critical data and provide real-time visibility into a product and its components as they travel through checkpoints in the supply chain -- from the earliest production stages through, perhaps, crossing the ocean on a shipping pallet to PA G E 6 O F 1 1

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Home Building a supply chain integration strategy New technologies have flash but brawn still in SCM hardware

delivery at a retail destination somewhere across the globe. Barcodes and barcode scanners have long been and will remain staples in SCM initiatives, despite the onset of newer technologies, according to SCM observers. Thanks to a high level of industry standardization and extensive use throughout the global supply chain, barcode technology continues to be an effective way to identify packages and pallets for inventory control, accounting, shipping verification, billing -- even the way goods and materials are handled in manufacturing and distribution facilities. "Barcoding is pretty ubiquitous; the question is really who's not using barcoding in some ways versus who is using the technology," said C. Dwight Klappich, research vice president at Gartner Inc., based in Stamford, Conn. "RFID definitely has a role, but it's not replacing barcodes because barcodes are cheap." UNDERSTANDING SCM HARDWARE TRENDS

RFID, which uses radio frequency waves to communicate information from RF tags on items or pallets to RF readers, was viewed several years back as the successor to barcode technology. Unlike barcodes, which require line of sight to barcode scanners, RFID tags can be read from farther distances and more PA G E 7 O F 1 1

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Home Building a supply chain integration strategy New technologies have flash but brawn still in SCM hardware

angles. RFID also has greater capacity to store more information about the product, allowing suppliers and manufacturers to achieve more unique identification and tracking for real-time visibility. Finally, when properly integrated with enterprise systems, RFID can tap into other relevant information such as expiration dates and recall information which can, for example, aid in supply chain planning and execution. Despite some specific advantages and high-profile adoptions -- in particular, among retailers like Wal-Mart -- RFID technology didn't quite live up to its promise and make the inroads originally expected, mainly because of standardization and cost hurdles, according to industry observers. "The impact of RFID was definitively overestimated, even though we are starting to see some traction from it," said Tom Singer, principal with Tompkins International, a supply chain consultancy based in Raleigh, N.C. RFID is a good fit for tracking high-value items like fashion apparel or electronics equipment, Singer explained, or to manage some types of retail inventory. Moving beyond the RFID and barcode technology debate, a number of newer technologies have huge potential to transform the SCM landscape, industry watchers say. Remote sensors build on the power of RFID and barcodes to collect data and feed it back to enterprise systems, becoming an intelligent PA G E 8 O F 1 1

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Home Building a supply chain integration strategy New technologies have flash but brawn still in SCM hardware

gathering component of the supply chain. While this technology is still in the nascent stages, its proponents envision having remote sensors on train cars to keep manufacturers in the loop about where a particular rail car is, the speed it's traveling and its temperature and humidity -- all factors that can help them make better supply chain decisions. For example, if a rail car gets waylaid in a desert for a sustained period, a supplier of heat-sensitive pharmaceuticals might make a specific decision about that particular set of inventory. "This is enormously important information for managing a just-in-time supply chain and the risks involved," said Joshua Greenbaum, president of Enterprise Application Consulting, based in Berkeley, Calif. Mobility is of huge interest to suppliers, with companies looking to trade in older, ruggedized handheld devices for systems that leverage smartphones or tablet devices like iPads, which have built-in access to communication infrastructure. "If you think in the context of a warehouse or a delivery truck route where an operator had an RF terminal or the like, it was in essence, batch communications," Singer said. "In the new world of mobile phones and 3G and 4G networks, everyone has a handset and has coverage all the time. We are going to start seeing the trend of using that device to drive supply chain processes going forward." PA G E 9 O F 1 1

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Home Building a supply chain integration strategy

Voice-enabled applications that work on these mobile devices will push the envelope even further, allowing operators to deliver hands-free commands  and tap into warehouse management system or ERP software, for example, to help automate picking orders  or initiate replenishment orders. "Mobile devices are truly multi-modal," Singer said, which means operators can communicate with them using keyboards, barcodes, RFID and voice.

New technologies have flash but brawn still in SCM hardware

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