IBM had an ad long time ago where a truck driver gets a call from a dispatch person that he is lost. Driver asks, “How did you know?” Dispatch person goes, “the boxes told me”. The ad was an instant hit. That was the time when RFID was gaining traction and supply chain visibility was a new concept.
However the technology was cost prohibitive and even though many large companies like Walmart mandated use of RFID, they had to back down as the industry wasn’t ready. RFID has been fairly successful since then but still remains capital intensive, and not everyone can afford it.
At the same time, supply chain landscape has drastically changed in the last 5-6 years. China has been on the rise but other manufacturing economies like Africa, Brazil, Mexico, SE Asia have emerged. McKinsey Global Institute analysis shows that by 2025, there will be more companies in emerging markets such that global business landscape will be balanced between developed and emerging nations.
On the onshore side of things, supplier base has expanded with the emergence of small to mid-sized companies. Once your company was dealing with large corporate suppliers but you now probably have small/medium ones who cannot afford expensive technology like your company does. And, imagine what 3D printing is going to do in the next ten years. Consumer may become the supplier itself!
Similarly on the front end, era of consumers is back and customer has more power than ever before, thanks to mobile commerce and social. With so many choices, you are being squeezed both on price and margin.
Imagine you are sitting in your S&OP meeting and everyone is looking at price, demand and supply, and talking about the next quarter. Then they all look at you, Supply Chain Executive, and ask a question “How can we cut cost?” Your immediate reaction is, “we are already running so lean. Do you want to drain my blood now?” They all look at you with greedy eyes because you own 40-50% of total cost.
You come back to the office, frustrated, call a meeting with your direct reports and ask them to look into every corner to cut cost. At the end of the meeting, the whiteboard in your office has weird drawings and things you have seen in the past – reduce inventory, adjust labor, cut supplier price, reduce transportation cost, re-source material, improve machine turns, and list is so long that it is almost falling off the whiteboard.
Continuous improvement, optimization etc. are all best practices and must be done on day-to-day basis. It’s time to go beyond the traditional methods and leverage what the new mobile supply chain has to offer.
Mobility, on the road
What if that driver was never lost? You gave him an app that downloads the route you had pre-determined for him, optimized already. You don’t have to invest in GPS or other tracking devices but a simple smartphone. And by the way, driver can notify you if there were any issues so that you can manage customer expectations accordingly. Lastly, you can track actual delivery time to your customers thereby using data to apply analytics to track delivery performance, equipment utilization and customer satisfaction. All begins with one mobile device. An industrial client expects to save $3m in savings over next 3 years with increase in number of trips and freight visibility.
Mobility, extended to partners
Let’s go back to your smaller suppliers who can’t afford expensive supply chain systems but they do have a smartphone today. You have an app for suppliers that allows electronic ordering, forecast sharing, shares production status (or delays), shows delivery scheduling (arrival at your DC). Cool, but one may argue where are the savings? With real time supply and demand sharing, suppliers don’t have to hedge inventory, lower their investment giving them ability to offer better prices. Your DC can correspondingly lower safety stocks. Your DC can plan labor better with visibility of inbound freight and real time updates. The series can go on as you start peeling the onion. A CPG client expects to gain 2 hours of time in daily operations with advanced notification of arrival times, leading to better labor and dock utilization. Client has hundreds of facilities so the savings multiply quickly.
Mobility, within the four walls
Let’s take this within your own network. How much do you spend on industrial devices, their maintenance and corresponding productivity? Take your warehouse, manufacturing and transportation operations and give your people touchscreen devices. In a prototype with a client, we created an app for warehouse operations and tested it with 10 operators. After several field tests and comparing results with traditional devices, almost all operators were 10-12% more efficient. One of the biggest factors was user experience as the operators told us. Industrial engineers had doubts about life of equipment and increase in total cost of ownership over a period of time. Same engineers developed an industrial casing that protects the device and for almost half the cost, and the client got productivity improvement with happier employees.
I do have to stop here as there are hundreds of use cases live or in inception stages whereby Mobility is becoming a backbone of supply chain and a new way of managing operating cost.