Technology boosting supply chain efficiencies

The decision to invest in supply chain management systems has got a whole lot easier for the manufacturing industry following recent technology advances According to Phil Danner, Intermec’s US-based VP of Global Product Development, companies can now expect real ROIs in 6 months or less.

"Top supply chain companies are realising that technology, and more importantly the information generated by their activities, is growing in importance.

"We have said for several years that the information about a shipment is as valuable to a company as the shipment itself. Think logistics, but it could be inside your four walls as well," Danner told Manufacturers’ Monthly on his recent trip to Australia.

"Historically we based this position on the fact that many transportation companies are realising while they may do a good job at transporting goods it does not matter if they are not good at collecting information about that transportation activity and supplying the same back to the shipper and end customer in a clean and efficient manner.

"This position is as true today as it has ever been. The difference however is that today the same transportation companies are now discovering the very same information mentioned above as equally as valuable as an intellectual property and asset generating opportunity to create value added services and incremental revenue streams for their organisation," Danner said. In fact, according to Intermec Australia’s MD,

Tony Repaci, the trend of manufacturers outsourcing transport maybe about to turn.

"If you go back five or more years it might have been prohibitive for a biscuit manufacturer with a direct store delivery model, for example, to run a fleet of 50 or 60 trucks. But today it’s very doable.

"You don’t have to contract that out, it’s something you can do in-house and have a lot of control of the quality of service you provide to your retail customers," Repaci told Manufacturers’ Monthly.

He says there is a perceived cost barrier. "Less than three years ago it might have been cost prohibitive, it might not have given them the flexibility, maybe because it was a batch application that relied on a lot of back end software to manage data to and from the trucks on a daily basis.

"However, today the software is very dynamic, it’s a lot cheaper and quicker to get a truck and an operation up and running. Plus it doesn’t take a lot of training.

"I advise MM readers to have another look, they might be pleasantly surprised. Danner’s advice on adopting technology for manufacturers is to make sure that the needs of the company are leading the solution selection.

"Manufacturers should find good technologies that can handle the demands of your current solution and are flexible enough to enable the advancements of tomorrow and look to my end customers to understand the future of their demands. Danner advises companies to look to their own experiences in their own private life.

"What are the things you are demanding of your vendors? If you think a retailer should provide a service to you the end shopper customer. Think up stream to understand if your personal vendor (the retailer) was to provide such a service, who of their suppliers would need to participate and how would they do it?

"The likelihood is that you will find supply chain innovations in the exercise. The end consumer in every supply chain drives the future of the activity for every player up stream," Danner said.

Repaci points out that many manufacturers are now outsourcing their logistics operations, however many don’t get involved with the technology selection process that the 3PL company undertakes.

"If these companies got a little more involved, they could drive a lot of service level agreements (SLAs) out of the system.

"For example, back to the biscuit manufacturer. If the company wants to make sure its product is always on the retailers’ shelves, it’s possible to put a metric in place through a 3PL to deliver those particular biscuits to all the retail outlets time stamped. The system would prove that the biscuits are delivered at a certain time at the locations plus they provide that information back to the manufacturer.

"This way, you are keeping two people happy there, the retailer who is feeling very comfortable about not having to monitor you as a brand because your stock is always available, and the manufacturer is very happy because he knows his product is always meeting his retailers’ SLA," Repaci said.

Danner doesn’t expect to see the 3PL trend reversing, "however that doesn’t stop companies gathering more data on transactions".

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