The Smarter Supply Chain of the Future
I have come across this quite interesting IBM Global study today. And, boy, that's just the time! There has been so much already said about an urgent need to make Supply Chains responsive in these tough times we all are experiencing now, but not enough on how to proceed.
I found the article quite informative, interesting though probably exaggerating the role of technology a bit (that's right, you hear this from an IT graduate and Technology Consultant). The study focuses on using ability of Supply Chains to get Smart thanks to RFID, all kind of sensor and actuators. Exactly my piece of cake. That's why I decided to make a little reflection on a couple of interesting points I found.
The main topic of the study, to my belief, is bringing best practices from Top Supply Chains and prove their viability. Although, Lean is never mentioned in the document, many of the ideas seem quite familiar to me. And one of the brightest is, of course, need to react fast.
Gotcha! Smart Supply Chains do not need to predict. They need to respond. Isn't that lean? Isn't than Just-In-Time? Why does everybody spend so much time learning to predict (and later suffer from inequality of demand and supply), while they can learn to be responsive?
You have all instruments for that: networks, sensors, collaborative work technologies!
Why do companies have to cut costs and regret their overestimated budgets? Well, right, they did not care much about being flexible before. Flexibility is their antidote for cost volatility.
Speaking about collaborative technologies. Enterprise 2.0 has given us tools and techniques to share the knowledge quickly and efficiently. And in my life I have seen a good number of implemented Knowledge portals, CRM, Warehouse management systems, etc. Guess what? Most of them are used internally. Executives do not believe in (or probably too afraid of) revealing information to 3rd parties. My thought: survivals will be the ones who understand that real competition in 21st century is going to happen between Supply Chains, not individual companies. Time to bring all participants together.
More than half of all supply chain executives have implemented practices
aimed at improving visibility, such as continuous replenishment and inventory
management with customers. But less than 20 percent are pursuing
these practices extensively.
And here we come to the visibility discussions. Amazingly, how much data is being captured, stored but never used:
Visibility – Flooded with more information than ever, supply chain executives
still struggle to “see” and act on the right information.
Once I had to work on a proposal for a a new IT system. We did a good job, estimated the number of hours employees will save in waste-operations (search, movement, transportation), translated them into money and presented to the client. But at the final presentation we had to add a killer: you should hire someone to work with the application, analyse the data we are gathering and make sense of it. Not surprising, hiring that guy would cost way more than an operator looking for items in the field. (In fact the project would never work for another reason: it was not improving any Critical-To-Customer characteristic, nobody in fact cared about the time).
To be short: we should be cautious what we are trying to measure and have a clear visibility what opportunities this knowledge can bring. There's no sense storing another Gigabyte of irrelevant data on your servers.
An interesting point IBM brings to light is Internet of Things. The research promises us that Future Supply Chains are going to create global networks not only with customers and suppliers, but between items as well, give them "brains" and decision making capabilities (several weeks ago I was at a presentation of 3rd generation Active RFID technology - smart items are already reality today!).
I had a discussion on this topic with one of my University mates. He was quite amazed by these possibilities: "Look, that's opposite from ERP monsters enterprises have created. No more huge things, which try to take control over your company. Decisions are made locally, quickly and more reliably". Is that? Wow, wow, wow. I don't think so. Aren't we creating a new distributed and therefore less maintainable monster?
Dashboards on devices perhaps not yet invented will display the realtime
status of plans, commitments, sources of supply, pipeline inventories and
consumer requirements.
That's an interesting one. Whatever decision smart items are doing humans should be aware of that. This awareness will give them ability to understand decisions and re-think them appropriately. Imagine a forklift driver locating a pallet in a wrong place. Should he receive "RELOCATE ME" message, he might probably think "Those damn things are often malfunctioning". It will be quite different if the message says "Apples are stored in this area. Take me to Oranges section!". Don't use your people as tools, give them ability to be in charge.
To end this post, I believe everything goes to quite an old good Triple-A concept: to be successful Supply Chains have to be agile, aligned and adaptive.
My concern is that RFID, sensors, actuators, GPS are extremely powerful in strengthening one of those: Agility (ability to response quickly to short-term challenges, changing situations, circumstances). And that's what I am mostly working on during last year. But the effect of these technologies to Alignment and Adaptiveness is quite questionable at least for me (not in sense that it should be eliminated, but meaning it should be much more carefully designed and limited).
Do you agree?
P.S. I guess, I am going to write a post on purely RFID and its ability to influence 7 wastes (famous Tim Wood). Stay tuned!
Posts
