SIX WAYS TO ENSURE YOUR COMPANY HAS TRUE SUPPLY CHAIN EXECUTION CONVERGENCE

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1 SIX WAYS TO ENSURE YOUR COMPANY HAS TRUE SUPPLY CHAIN EXECUTION CONVERGENCE 5605 N. MacArthur Blvd., #900 Irving, TX USA Main: Fax: Toll Free: R Copyright Apptricity. All rights reserved. Privacy Policy rev.v2,

2 6 Ways to Ensure Your Company Has True Supply Chain Execution Convergence Computer technology in the 1970s and 1980s made it possible for just-in-time production systems to shift the location of materials storage from the producer s factory to the vendor s warehouse. The cash tied up in such inventories shifted, in many cases, from the producer to the vendor, enforcing cost discipline all the way through the supply chain. Now advances in information technology are moving the location of inventoried materials and even of finished products once again. This time it s the explosion of mobile smart computing devices smartphones and tablet computers driving the big changes. And it is expanding the concept of the warehouse past the loading dock threshold to the streets and highways. Increasingly, the warehouse now has wheels. Transportation no longer is a distinct operation from the warehouse. Together, they are evolving into an integrated, or converged, logistical operation. Technology is available today that cuts through the various silos in organizations from those responsible for sourcing products to those who deliver to customers doors and binds them all together. And, critically, the technology is completely mobile. Everyone in the organization enjoys all the visibility they need, wherever they need it. Unfortunately, many organizations aren t quite up to speed just yet. They re scrambling for new IT capabilities, working to find ways to more effectively and more nimbly manage logistics and better manage their investments in materials and inventories far beyond the confines of their own warehouses. But danger lurks around every corner when companies have to scramble. Simply giving smartphones to delivery drivers and ipads to warehouse and loading dock managers and tying them all to an antiquated legacy IT system doesn t always work very well. And soon, logistics management practices tied to old IT systems simply won t work at all as mobile computing becomes even more sophisticated and ubiquitous. Indeed, while many managers are still pondering whether to equip their drivers with smartphones and their shipping managers with tablets, the future of mobile computing beyond smartphones and tablets already is peeking over the horizon. If the recent advertising and media teases from Google (Google Glass) and Apple (iwatch) and other technology companies and design houses are anywhere close to accurate, goods and materials in transit could be passively tracked by workers wearable technology before the current decade is even over. Companies need to get moving, and quickly. PAGE: 2

3 Technology Convergence & Supply Chain Management When technologies converge think of the mash-up of telephone and radio communications in the 1980s and 1990s that created today s mammoth mobile communications industry big, exciting, and often unexpected, things begin to happen in all sectors of society. For logistics-driven companies, advances in mobile computing and communications in the last decade now are leading us toward what some have called true Supply Chain Execution Convergence. The potential gains measured in lower costs, increased efficiency, less waste, reduced environmental impact, higher customer satisfaction, better employee engagement and morale, and, most importantly, improved profitability simply are too big to ignore. But, as is usually the case, corporate executives and planners need to be careful and wise in deciding how to put their companies in position to get the highest returns on their investments in converging supply chain execution technologies. To offer some guidance, we came up with six rules of thumb to use when considering various solutions on the market. 6 Keys to Achieving Supply Chain Execution Convergence 1. INVEST IN SYSTEMS BASED ON SERVICE-ORIENTED ARCHITECTURE. For non-technical managers that means your best bet for the future is to go with a modular systems approach that allows lots of separate programs (perhaps resident on different servers, and maybe even supplied by different vendors) to work together as a de-facto unit, or single silicon-based organism. Think of the way Windows is built. It s actually a big package of individual programs that each do specific actions and talk to each other only when required to do so as a result of the user s commands. But we tend to regard it as a single program, rather than as a complex operating system. That operating system approach is what has made Windows so expandable and flexible that it has remained the market-leading computer platform for going on two decades now with relatively few overhauls during that stretch. The alternative would be to invest in a single comprehensive program to which your company and its people must adapt (and which will be limited in service life by the arrival of the next big wave of mobile computing technology). Service-Oriented Architecture-based systems, on the other hand, give companies the ability to design their interface (or interfaces) with the system to meet the company s existing operational terminology and practices, and to mesh with the varying abilities and technology comfort levels of employees in various departments. It also should allow companies to bolt on new applications (and, if necessary, change user interfaces) to address evolving needs as mobile IT and communications technology continue to advance at a breakneck pace. PAGE: 3

4 2. KEEP IT SIMPLE BY AIMING FOR A ZERO MODIFICATION IMPLEMENTATION. Traditionally, logistics companies bought off-the-shelf management systems and then modified the daylights out of the underlying programming codes to accommodate their peculiar terminologies, business practices, and even the physical constraints of their warehouses and vehicles. That s expensive on the frontend of the installation process. It s expensive to maintain. And it s expensive and sometimes even impossible to modify the system to work with new technologies or meet changing consumer demands (which leads to an early and expensive need to replace the whole system). You can avoid much of that cost by investing in systems that require little or no underlying code modifications when you install, and relatively small code modifications when you upgrade them. Various pieces of hardware may need to be replaced or updated along the way, but the system itself should remain useful and economic over a longer period. 3. KEEP THE FOCUS ON THE USERS (AT ALL LEVELS). The conventional view of logistics systems has been that they re a necessary evil semi-automated paperwork, really required to make sure products and materials get to where they re supposed to go, and bills get sent to the customers. The only people who interacted with those systems were warehouse managers and the billing department. But no more. The team up in marketing increasingly is monitoring all sorts of data parameters in the warehouse to learn whether they need to move price points up or down, or make other, perhaps more drastic changes in the marketing approach. The production people are tracking warehouse data to determine when to order raw materials and parts even before new orders come in. And more and more, CFOs these days are paying attention to the cost of inventory not only in the warehouse but also in transit. They re even monitoring the routes that drivers take to make their deliveries in hopes of saving valuable time and shaving off even small amounts of fuel wastage. Even customers are in on the visibility because mobile supply chain solutions enable drivers to easily communicate by SMS, or phone. So it is critical that a logistics system user interface be easy enough for hard-working drivers and warehouse person to input critical data from the field with ease while also packing the analytical capacity needed for managers in marketing, finance and production who need to draw out critical data in real time. PAGE: 4

5 4. KNOW THAT SMARTPHONES AND TABLETS AREN T THE FINAL ANSWER (AND PLAN ACCORDINGLY). Rapid advances in the means and quality of mobile information and communications systems already have changed logistics management more in the last 15 years than it changed in the previous 1,000 years. But the pace of change is, if anything, accelerating. So while your wirelessly connected drivers and warehouse managers might still occasionally wax nostalgic for the days of clipboards and pens, you should be looking ahead toward what will replace smartphones and tablets. Gartner analyist Dwight Klappich has predicted that voice-driven IT interface will be the next big thing to hit the logistics management world. The most notable and mature alternative WMS UI is voice. Voice is a mature method for interacting with WMS and competition, and partial commoditization of voice has brought down costs. Although voice is not yet ubiquitous, it is wellestablished in certain industries, such as grocery, as well as certain process areas, such as picking, but with lower costs. The maturity of voice and the need for more flexibility is expanding the demand for voice into new areas. Other forms of alternative UI would be tablet PCs for supervisory users or specific types of automation like pick to light or other forms of real-time material handling integration said Klappich in Gartner s Research Note 10 Technology Best Practices When Evaluating Warehouse Management Systems (Klappich, 2013). 1 And if not by smartphone, tablet computer or voice, who knows what other ways logistics businesses, their workers, and even their customers will be interfacing with logistics management systems in the years ahead? Maybe smart gloves one day will tell managers exactly how many boxes or items a warehouseman loaded onto a truck or that a driver off-loaded on a customer s dock. Whatever it turns out to be, corporate logistics, IT and financial managers and planners need to understand the value of current and future alternative user interfaces when acquiring their new logistics management systems. 5. CONSIDER THE CLOUD SERIOUSLY. Conventional server-driven IT systems dramatically changed the world by bringing the cost savings, ease and flexibility of personal computing to the business world. That effectively ended the dominance of expensive, heavy mainframe computing. But now cloud-based computing, together with Software as a Service (or SaaS) applications are revolutionizing the business world again. They are reducing the up-front capital costs associated with big IT system purchases. Their operating costs are predictable and manageable. And they retain or expand upon the computing power and flexibility of serverdriven systems. For some companies with significant logistical operations, server-driven systems may still provide a good and affordable answer to their needs. But increasingly logistics companies are being driven to consider the cloud and SaaS solutions because the lower capital commitments and predictable operating costs fit better with evolving business models that are focusing ever more attention on ways to reduce inventory costs while simultaneously increasing logistical flexibility. PAGE: 5

6 6. KEEP SUPPLY CHAIN EXECUTION CONVERGENCE IN THE FOREFRONT OF YOUR PLANNING. We started off by noting that the location of the warehouse is changing to include the truck (and/or the rail car), and that increasingly the transportation department and the warehouse department are being seen as part of a unified logistics service operation rather than as individual departments that merely execute product handoffs. Thus, corporate managers logisticians, IT pros, marketing and production people, financial planners, and ultimately C-level officers would be wise to view their logistics management systems of the future as comprehensive, converged platforms that support the entire supply chain from planning and sales all the way to the customer s door. Comprehensive, converged logistics IT platforms will eliminate the need for separate systems along the supply chain as well as the need for expensive and awkward patches to make them talk, if only haltingly, to one another. Converged logistics systems can set a company up not only to reduce and control costs much better but also to provide faster, more accurate service to customers while reducing logistics workers headaches and improving their morale. For too long, technical considerations related to system architecture, and to IT managers various bias for or against certain platforms drove companies investment decisions regarding the IT systems used to move materials and products from source to customer. The needs and wants of these systems users, from senior managers throughout the company all the way down to delivery people and even the customers themselves, were rarely considered, if at all. But that approach, as most companies have come to recognize, put a cap on both how efficiently and cost effectively they can produce, store and transport goods and materials and on how well they serve their ultimate customers. But things are changing, and quickly. Computing and communications technologies are rapidly converging. There are new system architectures, new and more reliable means of communication and evolving ways that workers throughout the supply chain gain real-time visibility. And, there are new IT system approaches, like the cloud and SaaS applications, that lower capital costs while keeping operating costs more manageable. All these things are presenting companies an opportunity for fantastic, long-term investments in comprehensive and highly flexible IT systems. Today s comprehensive, converged systems can dramatically improve supply chain execution. They represent an opportunity most companies would be wise not to pass up because of the enormous and wide-ranging benefits that can help all involved, including customers. And that s what really matters in the end, because happier customers mean bigger sales. 1 Gartner Research Note, 10 Technology Best Practices When Evaluating Warehouse Management Systems, C. Dwight Klappich, 26 March 2013 PAGE: 6