Technology & Supply Chain Relationships with Customers & Suppliers

Delivery & Logistics

Delivering what you promised, quickly, is the culmination of all your business processes. Having links between your order processing system and your warehouse will automatically help your delivery times, by speeding up the time from receiving an order to getting it ready to dispatch. Ask yourself the following questions:

  • Are your delivery times as good as they could be – and as good as your competitors?
  • Are your delivery times predictable?
  • Can your production and delivery processes ‘speak’ to each other?
  • Do you know where a delivery is at any point in the dispatch process?
  • Can you tell customers at every point of the dispatch process where their goods are?
  • Do you always deliver exactly the right goods at exactly the right time?

If the answer to any of these questions is ‘no’ then two rapidly developing technologies – Enterprise Resource Planning (ERP) software and Radio Frequency Identification (RFID), could provide the solution.

ERP – linking everything together

ERP software makes it possible for all your business processes to talk to each other. Product planning, parts purchasing, maintaining inventories and tracking orders, can all be integrated into one system. This allows central control and accurate prediction of production and delivery times. It could also improve delivery times.

A variety of ERP packages are now available from mainstream product providers such as SAP, Peoplesoft and J.D. Edwards. These companies also offer outsourcing possibilities if you’d rather not bring the technology in-house. The capabilities of ERP software are expanding, and prices are low enough to make ERP available to businesses of any size.

Be aware, however, that full deployment of these systems, while likely to prove beneficial in the long run, will involve close analysis of your business processes, drawing considerably upon your management resources. You may also need to think about employee training and new work procedures if you are going to get the most from ERP.

RFID – tracking goods all the way

RFID performs a very similar function to bar coding. Objects are tagged so that their whereabouts can be tracked, and so they can ‘speak’ to computers. RFID tags, unlike barcodes, can be read out of line of sight, at a range of up to 90 feet. They can also carry much more information than a simple barcode.

With RFID you always know where goods are – allowing you to give accurate delivery information to customers. Many large companies in the United States, such as Wallmart, are already requiring their suppliers to use RFID, and it is likely that many larger companies in the UK and Europe will follow suit. Deploying RFID inevitably has cost implications, but the prices are falling as demand increases.

Delivery & Logistics Best Practice Implementation Plan

1 Map your distribution needs

  • Look at the physical flow of your goods and add in your estimates of how demand will change in the next couple of years.
  • Ask yourself if you are likely to have more or fewer suppliers, where they will be, what volumes of materials will need to be moved, and how often this will need to happen.

2 Consider third-party distribution

  • Third-party distribution and logistics is worth considering if you don’t want to take on the burden yourself. As technology becomes more complex and sophisticated, outsourcing becomes more attractive. You can take advantage of third-party logistical and distributional muscle, networks and know-how – at a cost that will generally involve operational, rather than capital, expenditure.
  • Working out whether it makes sense to operate your own distribution or to buy in third-party services, is not a simple calculation. Apart from straightforward cost calculations, based on past and future expenditure, you must also assess the investment of management time in getting to grips with the technology, and the potential flexibility (or lack of it) of doing it yourself.

3 Take account of other location factors

  • Why are you where you are? You may need to be close to your suppliers, or need to be clustered close to firms like your own. Remember that large businesses are increasingly reducing the number of businesses in their supply chain – might you be cut out of the picture at some point?
  • Identify whether you are in the right place for your customers. If not, technology may be able to overcome inappropriate location by facilitating communicating and integrating your systems with those of your customers and suppliers.

4 Try to work electronically with your customers

  • Digital networks allow you to work more efficiently in-house, but they can also help you to link yourself to your customers’ systems too. Consider giving, and asking to be given, access to ERP activities via extranets or other lines of communication.
  • Your whole supply chain can now be subject to electronic collaboration. Get talking to suppliers and customers about how it might be done.
Technology & Supply Chain Relationships with Customers & Suppliers business advice – Crown Copyright © 2004-2011
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