Supply chain is about managing a network of several interconnected businesses that are involved in the process of delivering the product to the end customer. Throughout this process, flow of information from one stage to another plays a crucial role as it ensures effective decision-making at the planning and execution stages.
When it comes to the flow of information, no other tool or resource can do it as quickly and accurately as technology. This is true when it comes to supply chain as well.
Today, technology in supply chain is much more than just computers. It includes varied aspects, right from factory automation, enhanced communication devices, data recognition equipments to other types of automated hardware and services.
Companies have also started using technologies like advanced versions of speech recognition, digital imaging , radio frequency identification (RFID), real-time location systems (RTLS), bar coding, GPS communication , Enterprise resource planning (ERP), Electronic Data Interchange (EDI), etc to improve their processes.
These IT enabled capabilities not only help organisations achieve higher efficiency, but also reduce cycle time, ensure delivery of goods and services in timely manner and improve overall supply chain agility.
Use of technology in three arenas
Organisations use technology in three broad areas namely transaction processing, supply chain planning and collaboration, and order tracking and delivery coordination. In transaction processing, companies employ technology to increase efficiency of information exchanged regularly between various supply chain partners. Typically, in this area, technology enables easy order processing, sending dispatch advice, tracking delivery status , billing, generating order quotes, etc.
Technology also helps in supply chain planning and collaboration, thereby improving the overall effectiveness of the process. Here, technology is used to share planning-related information like customer feedback, demand forecasting, inventory level, production capacity and other data. This helps in managing waste and inconsistency arising out of unpredictable and logistically demanding markets. According to Mr Prashant Potnis, GM – IT and Systems at Spykar Lifestyle Pvt Ltd, “Statistical capabilities enabled by technology like importing historical sales data, creating statistical forecasts, importing customer forecasts, collaborating with customers, managing and building forecasts, etc. bring accuracy to a company’s demand plans.”
Lastly, technology is also useful for order tracking and delivery coordination, as it monitors and coordinates individual shipments, ensuring delivery of the product to the consumer without errors.
Employing technology at all these levels no doubt comes at a cost. However, apart from reducing physical work, technology improves the quality of information, expedites information transfer, and increases and smoothly manages the volume of transactions. Yogesh Shroff, Finance & Supply Chain Director at Nivea India Pvt Ltd, agrees. “A combination of process changes and use of advanced technology can help companies gain better returns on marketing and sales investments, reduce cost, strengthen relationships across the value chain and retain customers,” he says.
While most companies have employed technology to manage their supply chain today, they have realised that conventional methods have to be pushed beyond their peripheries to sustain in highly competitive environments and fields. If applied correctly, technology holds the potential to turn supply chain into a major differentiating factor for any company.