The barriers between market players are coming down as traditional tier one vendor tools become more accessible to all types and sizes of logistics businesses.
Several technology trends are impacting the way logistics companies manage their business. Mobile devices such as PDAs, smartphones and tablets have become more affordable, making the hardware accessible to all sizes of organisations. With developers building ever-more mobile functionality into their software, the gap between tier one and tier two software has narrowed down to such an extent that leading functionality has become available to all at an affordable price.
A third trend noticed is the push for efficiency. Given productivity, competitive and financial pressures, it’s not surprising that logistics companies are particularly focusing on software tools that will help achieve efficiencies by streamlining workflows and reducing operational costs.
These three trends have combined over the last 12 months to encourage a more holistic approach to mobility. Logistics companies are moving well beyond simple bar code scanning and are introducing a wide range of mobile-based processes and systems across the business, from electronic manifesting, sign-on-glass delivery systems, and item level inter-company traceability to depot audits, pallet management and fatigue management. The idea of capturing data at the source of activity is extremely appealing, especially as a way to speed up processes by reducing the need to re-enter data, and removing time lags affecting the flow of information.
Recently, the mobility focus has shifted slightly to concentrate on the value of mobility as part of an integrated whole-of-business or ERP system. When all software works together as an integrated whole, data only needs to be captured once for it to become immediately available to all users, across all systems as required. This is where the real ROI of mobility lies and is likely to be the subject of continuing investment in 2015.
One good example is the flow of data from logistics to in-cabin telematics and GPS systems with the three systems working together to automatically optimise delivery routes while also accounting for fatigue management.
Mobility is also changing the logistics business by redesigning processes. Mobilisation is forcing companies to rethink their process flows, review how things are done and find ways to use technology to make improvements. Traditional backend tasks such as building the manifest, for example, are being shifted to the warehouse floor to reduce costs and improve timeliness.
EDI has been around for so long that it has effectively become commoditised. Once only feasible for large operators, it is now a commonplace tool among businesses of all sizes. However, this gives rise to a new set of expectations, especially from smaller organisations that seek more from their software investments but can’t afford to rely on a consultant every time they need to make a change. This has encouraged software vendors to introduce new tools that give customers more control over their EDI experience.
In comparison with EDI, the market for cloud ERP systems appears to be slowing. The potential of the cloud was a much-discussed subject in 2010 and 2011; however, concerns over data integrity, data security and data ownership have proven to be major hurdles, resulting in resurgence in demand for on-premise systems. Business conservatism around the cloud is unlikely to dissipate until these issues are fully resolved.
Changes in technology are helping to create a far more level playing field for logistics organisations. With the same technologies and functionalities becoming available to all, and the same opportunities for efficiency through automation, competition within the industry is about to heat up even more.
Given the level playing field when it comes to technology, it wouldn’t be surprising if smaller operators begin to successfully bid for contracts with large retailers. In some instances, their greater agility may prove to be a decisive advantage.
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.
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.
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.