The power of technology in gearing up supply chain efficiency&effectiveness


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Frost & Sullivan analysis of the power of technology in gearing up supply chain efficiency and effectiveness.

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The power of technology in gearing up supply chain efficiency&effectiveness

  1. 1. The Power of Technology in Gearing UpSupply Chain Efficiency & Effectiveness Indonesia Supply Chain & Logistics Conference 2009 Nov 26, 2009 Eugene Van De Weerd Country Director, Indonesia
  2. 2. Agenda• Business and Supply Chain Dynamics Today• Supply Chain Technology Involvement in the Region• Enabling Silent Commerce in the Supply Chain• Silent Commerce in Retail Supply Chain• Outlook 2
  3. 3. Business Environment Today Lower Cost Rising Profitability Branding Demands Business Sourcing & Dynamics Higher Retaining Quality Human of Service Capital Dynamic Policies & Market Regulations 3
  4. 4. Competitive Trends in Global Supply Chain Raw Global Forces Material Globalization Cost Price How is Deflation Supply Integrity & Your Security Chain Company’s Today Supply Quality of Service Chain Visibility Coping? Environmental Regulations 4
  5. 5. Supply Chain Initiatives (Examples)Direction Brief Info • Create flow and eliminate waste (lean) + improve process capability and remove variation (6 Sigma) • Mostly manufacturing (lean) + all business processes (6 Sigma) • Strong enabler towards improving efficiency and driving cost down forLean 6 Sigma operations • To reach a common consensus to achieve overall goals in an increasingly distributed environment • All stakeholders in the supply chain • Enabler towards achieving greater visibility, time to market products,Collaboration higher security and integrity, new product development and lower costs • Using energy efficiently and reducing environmental waste to ensure greener environment al protection and sustainability • All stakeholders in the supply chain • Enabler towards achieving environmental protection and sustainability,Green Supply and complying with stricter environmental regulationsChain 5
  6. 6. Supply Chain Initiatives (Examples)Direction Brief Info • To ensure the authenticity, quality and efficient delivery of products as it passes through the entire supply chain • All stakeholders in the supply chainIntegrity & • Enabler towards data integrity with partners, and reducing risk ofSecurity diversion or counterfeiting of goods with better visibility • Outsourcing vs Insourcing – managing relationships, external risk management, redefining core competencies • All stakeholders in the supply chainLow Cost • Reducing overhead costs but ensuring Quality of Service is always highSourcing 6
  7. 7. Agenda• Business and Supply Chain Dynamics Today• Supply Chain Technology Involvement in the Region• Enabling Silent Commerce in the Supply Chain• Silent Commerce in Retail Supply Chain• Outlook 7
  8. 8. Evolution of Technologies in Supply Chain RFID Supply Chain Performance GPS Warehouse Management System Fleet Management System Vendor Management System Advance Planning and Scheduling Bar coding System Enterprise Resources Planning Material Resources Planning Manual tracking Fax 1970 2010 10 year milestone 8
  9. 9. Development of Supply Chain Technologies Technology Development Nascent Growth Mature Decline Procurement / Vendor Management System Manufacturing RFID Fleet Management System Transportation RFID GPS / Vehicle Tracking System Distribution RFID Remote Management Bar Coding System RFID Warehouse Warehouse / Inventory Management system Low Attractiveness High Attractiveness Low Attractiveness 9
  10. 10. Logistics Technologies Currently Being Used byEnd-Users (Overall ASEAN 4) Warehouse/ Inventory Management Systems 66.1 Bar Coding System 62.3 Transportation Planning/ Fleet Management Systems 43.1 GPS / Vehicle Tracking Systems 38.1 ERP Software 35.6 RFID / Smart Labelling System 20.9 Responses (in %) • Warehouse Management and Bar Coding System is the widely used technology in facilitating logistics process • More than half of the end-users are yet to adopt the Transportation Planning / Fleet Management System • Close to 80% of end-users are not using RFID technology, mainly due to the high initial costs for setting up the system • ERP software and GPS / Vehicle Tracking System are being used by about 35 - 40 % of the end-usersNote: ASEAN 4 consists of 4 countries which are Malaysia, Singapore, Indonesia and Thailand 10
  11. 11. Future Technology Investment Plans of End-Users (Next 12 Months, Overall ASEAN 4) Bar Coding System 27.8 RFID / Smart Labeling System 20.1 GPS / Vehicle Tracking Systems 18.2 Warehouse/ Inventory Management Systems 14.8 ERP Software 12.3 Transportation Planning/ Fleet Management Systems 11.0 Responses (in %)** Percentages compute based on the responses from end users who currently were not adopting such technology • Bar Coding System is the most sought after technology • Adoption of RFID / Smart Labeling System expected to increase at faster pace in near future • GPS / Vehicle Tracking Systems are beginning to gain acceptance among the end-users 11
  12. 12. Advanced Technologies + Initiatives =Lower Operational Costs Average Logistics Cost 14.4% Increase supply Currently incurred in chain efficiency Reengineer ASEAN 4 countries: supply Logistics Costs chain Consultation 14.4% from LSPs Engage new LSPs ERP, MRP & APS System Advanced Fleet/Warehouse MS Logistic Technologies Barcode, RFID & GPS Used of advance technologies Initiatives to reduce logistic costs** LSP refers to Logistics Service Providers 12
  13. 13. Agenda• Business and Supply Chain Dynamics Today• Supply Chain Technology Involvement in the Region• Enabling Silent Commerce in the Supply Chain• Silent Commerce in Retail Supply Chain• Outlook 13
  14. 14. Just two and a half squarecentimeters will decisivelyalter the futureof supply chainmanagement(EPCglobal) 14
  15. 15. RFID Technical Benefits Barcode • Line of sight RFID • Short read range • No line of sight • Singe reads • Long read range • 1 time write • Multiple reads • Limited memory • Rewritable • Human labor needed • Large memory storage • Non-sensor capable • Automated • Sensor capable 15
  16. 16. RFID Business Benefits• Capabilities • Benefits • Real-time, dynamic track and trace • Increased efficiency • Complete and real-time visibility • Reduced cost • Complete and real-time accuracy • Increased productivity • Improved quality of life • Increased resource utilization • Greener environment • Increased flexibility and efffectiveness • Streamlined logistics network • Avoiding or reducing delays and latency •Reduced (elimination) of manual • Timely project execution and delivery handling, processes and activities • Improved government delivery system • Reduced inventory holding, storage • Improved safety and handling cost • Efficient reverse logistics 16
  17. 17. Value of Real Time Information What is the value of WSJ dated 1 month ago? What is the value of WSJ dated yesterday? What is the value of WSJ dated today? What is the value of WSJ dated tomorrow? 17
  18. 18. Agenda• Business and Supply Chain Dynamics Today• Supply Chain Technology Involvement in the Region• Enabling Silent Commerce in the Supply Chain• Silent Commerce in Retail Supply Chain• Outlook 18
  19. 19. Example: Retail Supply Chain – Core Segments • Involves several segments along the supply chain before product reaches the consumer • Susceptible to various internal and external challenges that could jeopardize a proficient operational paradigm Warehouse & Transportation Store + Retail Supplier Manufacturer Distribution Operations RFID has potential to Optimize and Streamline Entire Operations … 19
  20. 20. Retail Supply Network – Reality• Complex SCM due to multi-faceted relationships• So, what is RFID’s role here?Design Partner Transportation Store + Large Retail Manufacturer Warehouse & Operations CustomerComponent Distribution Supplier Right Right Right Right Right + Product Place Time Condition Customer + Small Retail Warehouse & Store Raw Material Manufacturer Transportation Operations Customer Distribution Supplier Contract Warehouse & Store + Large Retail Manufacturer Transportation Manufacturer Distribution Operations Customer Cross Supply Network Activities 20
  21. 21. Holistic Benefits of RFID in the Retail Supply Chain • Achieving significant inventory reductions and more efficient distribution • Leveraging improved demand visibility to become more responsive to changing customer wants and needs • Lowering inventory and distribution costs across the value chain through better supply chain visibility and demand planning • Decreasing theft and counterfeiting for high-value items • Reduced labor requirements with more automated based processes • Efficiently managed supply chain can reduce green house emissions 21
  22. 22. RFID Applications – Cross Functional Activities Security & Collaboration The unique ID of the EPC in the RFID tag ensures Batch/Item Tracking Unique authenticity of products EPC number enables productsSupply/Demand Planning & moving along the supply to be tracked as an individualReplenishment Forecasting chain is not compromised. product. Counterfeit or divertedReal time visibility enables Shrinkage can be detected products can be easily side to have accurate immediately based on pro- Products can be monitored toinformation on what is actually active alerts leveraging on ensure it is eventually deliveredavailable for more precise business intelligence in the to the right customer.replenishment of products. The RFID system. The EPCISdemand side able to monitor network enablesentire movement of goods such stakeholders to securelyas sales, damage, theft making share private data of taggedprojection of demand more goods.accurate. 22
  23. 23. RFID Applications – Manufacturers and Suppliers Production Tracking of goods as it flows through the manufacturing floor can aid in pin-pointing and resolving bottlenecks. Procurement & Materials Storage As goods in work-in-progress inventory Manufacturers are able to better becomes finished goods, RFID manage the raw materials received applications can automatically trigger from the suppliers thus improving downstream transportation. Real time operational efficiency with RFID. Case connectivity can ensure planners and or pallet level tagging of raw materials schedulers can respond instantaneously from supplier can ensure required to demand conditions from the consumer materials are received on time, and at end thus reducing the need for safety the same time ensure storing and stocks. retrieving it at the plant is done rapidly. 24
  24. 24. RFID Applications – Warehouse and Distribution Put-away & Replenishment Personnel manning forklifts or other vehicles will beReceiving & Check-In Inventory Order Selection Once item level tagging directed to the correct pick-up location tois automatically updated for tagged is implemented, distribution centers’ pick-up and drop loads without stoppingpallets and cases as it reaches the order-fill rates can be done more to scan with a barcode reader. Oncedistribution center. All tagged goods precisely by authenticating orders and dropped at a specific location, thereceived will be cross-checked with items ensuring better in-stock positions. inventory will updated to report the quantitythe purchase order to ensure any Once facilities are fully interconnected, at the new location. Workers will not needpotential discrepancies is swiftly misplaced items can be identified to look for specific goods unless it isidentified. Labor intensive manual immediately, thus further improving order- already available at a specific location. Allbased quantity checks can be fill rates. goods can be automatically updated withouteventually eliminated. the need of a worker manually scanning and updating the necessary information into the system. Similarly, products stored in the wrong location will trigger an automatic alert notification. 25
  25. 25. RFID Applications – Transportation Yard Management Overall operational efficiency of the Electronic Seal Specially yard can be improved by designed seals embedded attaching RFID tags to trucks with RFID to be used to lock and trailers. Accurate Contract Compliance RFID containers. The e-seal will information on the containers can be used to ensure service cease to operate once it has location can be retrieved when levels with outsourced been tampered with. This necessary. Overall utilization transportation providers will effectively make any form rate of the yard space can be meets the desired requirements of tampering, theft or increased for better management of both the outsourcer and sabotage on the goods inside to prevent late deliveries with retailer. Accurate status on the container known early on. better visibility. Labor usage how a given shipment is being Security checks at customs can be reduced and data mining processed can be retrieved checkpoints can also be in RFID software can make work when necessary. Data retrieved decreased with swifter site safer by providing intricate can be crossed referenced with processing. details as to the number of times vendor invoices to ensure it meets a potential collision happened with the appropriate service level in the yard. agreements 27
  26. 26. RFID Applications – Store Operations and Retail Security Handling The RFID system can be designed to alert Point of Sale Products tagged security personnel immediatelyReceiving Pallet and case level with RFID can enable a swifter when a product is removed fromtagging will be able to update the Exception Handling Any products checkout as total bill is the store without appropriateinventory system accurately during requiring special or immediate automatically calculated at POS approval.the receiving process. Data can attention such as goods nearing as no line of sight is required.also be relayed to other parties in expiry date or recalled lots can be The use of RFID at item level canthe supply chain on exact status of tracked and necessary information heighten the overall customerthe batches received. Overall store can be relayed to the correct satisfaction level.labor productivity can be improved personnel so appropriate action canbesides increasing inventory be taken.accuracy. 29
  27. 27. Agenda• Business and Supply Chain Dynamics Today• Supply Chain Technology Involvement in the Region• Enabling Silent Commerce in the Supply Chain• Silent Commerce in Retail Supply Chain• Outlook 31
  28. 28. RFID in the Supply Chain Today – Asia Pacific 25-30% Phase 5 20-25% 10-18% Phase 4 Growth 8-15% Phase 3 4-7% Phase 2 Phase 1 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Refers to the present state in July 2008 Driven by mandates Proof of Pilot concepts activities Large scale Deployments continue implementations to increase consistently begin 32
  29. 29. Conclusion Managing the supply chain will continue to become more challenging …• Technology to play an even more significant role in the supply chain of the future• Stakeholders will need to identify all forces before implementing the relevant strategies• Thorough understanding of technology needed to fully capitalize and transform it into meaningful business strategies• Top-down management approach needed to transform supply chain IT into a ‘Business Technology’• All parties (technology providers + SCM stakeholders) need to be prepared for a long term commitment at enterprise level initiatives to ensure final goal is achieved 33
  30. 30. Thank You 34
  31. 31. For Additional Information Dewi Nuraini Corporate Communications Indonesia Phone : (021) 571.0838 / 571.3246 Email : 35