Technology and Communications as Enablers Chapter 14 Technology and Communications as Enablers PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-1

Introduction Learning Outcomes After this lesson, you should be able to: Understand the role of technology in supply chains and logistics Recognise the distinctions between data, information and knowledge Follow the steps required to obtain cooperation, coordination and collaboration through supply chains Comprehend the scope of global standards Consider the requirements for applications in supply chains and the implementation challenges Recognise the distinction between e-business and e-commerce. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-2

Technology in Supply Chains Technology – collective term refers to range of computing and communications hardware, operating systems and software applications. Justification for the purchase of technology is to reduce costs in the supply chains. Internet-based software applications have begun to change the way business is conducted. Technology selection and implementation must be approached as a ‘change management’ process. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-3

Technology in Supply Chains Major benefits that consumer product companies should be seeking from technology in supply chains are: closer alignment of marketing and product development with logistics, providing a reduced ‘time to market’ visibility of product movement in real time increased velocity of material flow and the reduction of inventory along each supply chain reduction in the ‘cost to serve’ the consequential reduction in working capital required to operate the business. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-4

Technology in Supply Chains Using technology in supply chains does have some challenges. In developed countries, relationship power in consumer-linked supply chains is moving towards major retailers. Suppliers may not be in a financial position to implement technology demanded by larger customers. Cost and time for specification, purchase and implementation of technology is too often underestimated by companies. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-5

Data and Information Data – the words and numbers in a technology environment. Information – data that is structured into something meaningful. Knowledge – information from a variety of sources that is assembled in a manner that enables people to make judgments about the past and the future. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-6

Data and Information Using data and information Pipeline visibility through all links in a company’s supply chains enables a company to: view customers’ use of the company’s products track the delivery performance of logistics service providers (LSP) know the suppliers’ schedules see when orders at suppliers will be completed know the performance of the supplier’s suppliers in delivering materials and components against orders. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-7

Data and Information Using data and information Data collection points occur when we: connect to shipping schedules and book space on a vessel or aircraft book a road transport vehicle or space on a vehicle pay freight invoices arrange financing of shipments, if import or export track goods on transport (ships, aircraft, trains and road transport) link to customs and insurance companies register delivery and receipt of shipments notify non-conformance of shipment. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-8

Data and Information Towards collaboration For organisations to progressively work more closely together, technology can provide the underpinning of the required three ‘Cs’: Cooperation of the people involved Coordination through standardisation of data Collaboration through access to the same information. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-9

Data and Information Towards collaboration Logistics is concerned with coordinating the internal and external processes. Supply chains are the vehicle for collaboration between the internal and external systems. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-10

Global Standards for Collection and Transmission of Item Data Need for standards To be effective and efficient in the collection, collation and use of data requires that global standards are used, so that clear and understandable exchanges can occur within and between organisations. Example: no global standard for shoe sizes. Use of barcode – recognised as the standard identification system for a product. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-11

Global Standards for Collection and Transmission of Item Data GS1 numbering system GS1 has developed an internationally recognised and accepted standard of identification and communication for products, services, assets, shipments and locations. It is global, open and can be applied to multi-sector industries. Global Trade Item Number (GTIN) - basic identifier of an item, a 14-digit identifier that denotes a family of data structures. GTIN used for retail and non-retail items and provides capability for raw materials, components and finished products to be tracked through a supply chain. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-12

Global Standards for Collection and Transmission of Item Data Non-retail items GS1-128 barcode is the standard for labelling objects used in logistics activities – at the case level and other items that do not cross a point of sale. Serial Shipping Container Code (SSCC) – for the identification of transport and/or storage units and may be required for receipt of the order into customers’ facilities. A company should provide barcodes for all incoming and outgoing items to enable internal controls. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-13

Implementing Data Standards in Business Achieving the higher levels of cooperation and collaboration required through the supply chains requires six phases in order to implement all global standards: Phase 1 – Improve internal performance Phase 2 – Communicate using the standard Phase 3 – Synchronise the master data Phase 4 – Use data carriers Phase 5 – Know the location Phase 6 – Ensure traceability of product and materials. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-14

Applications for Supply Chains There are three levels of complexity for applications: strategic, tactical and operational. Examples of the levels are: integrating data in the organisation is across all three levels (enterprise resources planning or ERP) coordinating global product movements is tactical and operational (global trade management or GTM) operating a warehouse is tactical and operational (warehouse management system or WMS) cooperating with colleagues and externally is operational (office application such as MS Word). PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-15

Applications for Supply Chains ERP systems ERP system – contains a range of application modules designed to integrate management plans, resources, people and money. ERP represents an approach to data and information management rather than a specific system. Manufacturing Resources Planning (MRP2) – main product planning application within ERP systems which addresses either discrete or process production methods. Discrete ERP systems – designed for products that are in a solid form and can be disassembled into their discrete components, such as electronics, motor vehicles and furniture. A process ERP system – suited for organisations that manufacture products which are in a liquid, semisolid or powder form—such as foods and beverages, pharmaceuticals. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-16

Applications for Supply Chains Interfacing and integrating applications Companies started to interface their ERP system with specialist supply network analysis and planning (SNAP). The adoption by companies of SNAP applications has prompted suppliers of ERP systems to integrate the most popular applications into their ERP products. The essential difference between the two types of application is: interfaced applications maintain their own data structure and synchronise with the ERP database integrated applications use the ERP database; therefore, synchronisation is not required. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-17

Applications for Supply Chains Distribution systems LSP companies that provide distribution services are more likely to implement a warehouse management system (WMS) as the core application. The primary role of a WMS is to plan the operational requirements (that is, movement and storage) and resources of the warehouse (or distribution centre). The distribution plan is generated from customer orders and inventory data. To justify a WMS, the warehouse or DC should be a substantial size, handling a volume of orders, with multiple SKU per order and operating with extensive material handling equipment. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-18

Applications for Supply Chains Developments in applications Software as a Service (SaaS) – a service provider removes many of the technology risks, with the customer paying for usage, although it is not an entirely risk-free process. Service provider is responsible for the hardware, communication, applications, specialised content and data storage. Cloud computing – for a company that wishes to establish and manage its own applications network on the web, although their network operations may be maintained by an external contractor. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-19

E-business and e-commerce E-business – describes an enterprise that operates only online and enables ‘web-based self-service’ to reduce the necessity for human customer service and support, although they may have warehouses or use LSPs. E-commerce – enhancement of key business processes within an organisation’s structure, using the internet and other communication technologies. PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-20

E-business and e-commerce Examples of e-commerce implementations: On the selling side: Transaction site Services site Brand building site On the buying side: Portal site PPTs t/a A Framework for Supply Chains by Oakden and Leonaite © 2011 McGraw-Hill Australia Pty Ltd 14-21