Unlocking Supply Chain Efficiency: The Role of Technology in SCM 2.0

In today’s fast-paced world of business, owners and managers are looking for ways to streamline the supply chain process, reduce costs and increase efficiency. When looking to implement the most effective supply chain, many would note that technology plays a pivotal role.

Thanks to advanced breakthroughs in high-tech labor management systems, wireless devices, apps and cloud technology, great strides have been made to enhance supply chain performance. It is important to note two key factors that come into play to create a smooth, agile and aligned supply chain.

Technology Boost

The first is the use of well-integrated information systems to assist in SCM. By having the right software and procedures in place, movement and productivity in the supply chain are vastly increased, while the need for inventory is simultaneously decreased. The software is helpful because it employs a complex mathematical algorithm that anticipates customer demand and helps with accurate forecasting predictions.

When the software is coupled with an Enterprise Resource Planning (ERP) system, everything is able to come together as one unified network where everyone in the supply chain, including the consumer, is connected simultaneously. The use of ERP is ultimately a fundamental reason why the estimated B2B sales in 2013 reached $559 billion in U.S. markets alone and continue to escalate.

The second factor adding to the increased productivity of the supply chain process is utilizing Radio Frequency Identification (RFID). The RFID system consists of three primary components: tags, readers, and a computer system.

Used in conjunction with a Warehouse Management System (WMS), RFID helps companies to ensure that the desired products are available in the appropriate locations with no inconsistencies.

The system makes the supply chain substantially more accurate, while at the same time improving the efficiency and dependability of the chain as a whole. Since information is received in real-time, the most accurate data is available the very moment it’s needed. One of the first corporations to implement the RFID system into its daily operations is retail mega giant Walmart.

Small businesses just starting out would benefit from the timely implementation of RFID technology in order to simplify their supply chain and inventory management systems. This would enable them to gain better control and insight of their business transactions and inventory needs, in addition to optimizing their overall efficiency.

Optimizing the Chain

Technology is helping companies reduce costs and significantly increase productivity at every step of the supply chain, but in this day and age of SCM 2.0, improvements can be, and are always being made.

While a new concept for some, many companies have already integrated cloud-based management platforms into their SCM systems. Cloud based technologies have allowed companies to get closer to the ever-important – and often elusive – concept of supply chain visibility.

This visibility enables shippers to connect with multiple (even hundreds or thousands of) trading partners, versus a one-to-many connectivity approach. This solution closes communication gaps in the supply chain, where smaller companies often were left out, lacking the capabilities or technology to be more readily connected.

The concept is akin to a common social media platform, but for shippers, receivers and service providers, where the user updates or publishes information just once, and all trading partners are updated. This hub eliminates the need for the same update to be made multiple times across multiple trading partners.

An additional key tactic that is becoming more readily embraced, but still has yet to be widely adopted is triangulation, sometimes referred to as match-back or street-turn optimization. Eliminating two of the typically six movements that shipping containers make in an average journey, this model of transportation reduction noticeably increases time management, lessens expenses and elevates productivity in the supply chain process.

Triangulation allows the container, which is typically unpacked from an importer, to be handed directly to an exporter for re-packing, eliminating the need for the empty container to be transported to and then stored at an empty container park. There are technological advancements and programs currently being implemented around the world to help companies utilize the benefits of triangulation.

Some of the latest systems being adopted by many global supply chain and logistics companies promise to decrease supply chain costs between 20 and 30 percent. They are also designed to reduce the need for additional drivers, increase trucker-loaded ratio, diminish empty moves and even help businesses protect the environment by reducing emissions by an average of 30 percent.

Together, the use of triangulation and cloud-based technologies will undoubtedly play a huge role in continuing to streamline the connectivity process throughout the supply chain of the future.

Technology is helping companies reduce costs and significantly increase productivity at every step of the supply chain, but in this day and age of SCM 2.0, improvements can be, and are always being made.

John Smith is IntelliQuick’s senior VP of sales.