People have been talking about the connected supply chain for a long time now. So long in fact, that you could be forgiven for thinking the practice is commonplace. After all, everyone agrees there are cost, productivity and efficiency benefits to be gained by connecting a manufacturer with their distributor and end customer, so they all know where product is up to at any point in time. And with all the stories in the media about the Internet of Things making it easier to capture information at every point from the factory to the warehouse and beyond, surely everyone must be taking full advantage of the opportunities?

In reality there’s a huge divide between the practices of the largest manufacturing or third party logistics (3PL) enterprises and their smaller peers. Many of the tools and technologies required to connect the supply chain have historically only been available in complex, tier one-style software solutions that cost millions of dollars to deploy. And that has left Australia’s small-to-medium sized manufacturers and 3PLs out in the cold.

Fortunately the situation is changing. Connecting to partners along the supply chain has become a practical possibility for any sized organisation, thanks to the automation afforded by combining modern warehousing and EDI systems along with scanning solutions capable of working with the growing range of mobile devices.

The idea that EDI could be a game changer often surprises people because it has been around for so many years. But in that time, it has become a mainstay of the industry. The breadth and duration of its uptake across small and large organisations has encouraged software vendors to build new tools and to give customers more control over their EDI experience. As a result these days, with the help of visual mapping functionality, it is possible for users to develop their own EDI schemas.
 

HOW THE CONNECTIONS MAKE FOR SMOOTH ORDERING

The benefits of using these technologies to connect supply chain partners can be seen in the automation of processes, the corresponding reduction in administrative work, minimised opportunities for manual errors and the improved flow of information across multiple organisations.

Take the example of a distributor who places an order with a 3PL via an EDI system. The EDI software automatically acknowledges receipt of the order and confirms the stock is there without any need for human intervention. Next, as 3PL staff pick, scan and pass the stock through despatch, more notifications are sent to advise the distributor – and perhaps their end customer – that the goods are now in transit.

In this fully automated process, acknowledgements connect all parties, from order to pick, from job generated to despatch to final delivery. The only manual process or human intervention required is the physical movement of stock.

Importantly, advanced functionality within the warehousing system enables the 3PL to build reports on critical topics such as stock levels on hand. They can also provide forecasting information by incorporating data regarding minimum and maximum required stock levels. All of these reports can be scheduled to run at stipulated intervals and automatically emailed to keep the manufacturer, distributor and customer up to date at all times.

What is clear in this process is that the warehouse, the EDI system and scanning are key to both the beneficial automation and to connecting all parties. Almost all the activities that need to be documented and all the work flow processes originate or pass through the warehouse management system at some point in time. This includes stock being received into the warehouse, receipt of orders, picking, despatch and manifesting onto the truck.

The only significant part of the flow that occurs outside the warehouse system is when the goods finally arrive at the distributor’s premises and the recipient signs on glass to acknowledge receipt of goods.
 

CHANGING THE COMPETITIVE ENVIRONMENT

The connectivity described in the above example is not unusual today. Among the organisations I regularly deal with are companies of just 50 employees who are using a connected supply chain to successfully compete with organisations of 2000 staff. The smaller company’s advantage comes from the agility of size, good warehousing practices, smart use of scanning and automation, proactive reporting and integration with a reliable EDI engine.

These organisations shine because their choice of technologies supports and connects all partners, improving communication, collaboration, forecasting and planning up and down the supply chain.