Technology has Transformed Supply Chain Management

Supply chain management before the internet became virtually universal was difficult at best. Perhaps the best example of inefficiency was the system utilized by the US Army. Two methods of supply chain management were utilized, “push” and “pull.” Though very different from one another, characteristics they both shared was that neither was very efficient, and neither worked well at all.

The “push” system entailed the inventory control points, located at various Army depots, picking and pulling all of the parts, assemblies and items that might be needed by a unit or maintenance unit anywhere in the world, and then “pushing” the items without any indication of need. The guesswork was typically based on usage data kept by hand for each piece of equipment, and tabulated using periodic, written reports. Needless to say, the result was often mountains of parts which were not needed; just as often, and more serious, was a shortage of needed replacement parts for those which had been destroyed or had failed.

The “pull” system consisted of unit mechanics or maintenance personnel recognizing the need for a specific part or item, typically because it had failed or broken, and ordering it by hand-written requisition. That process was slow, time-consuming, and often resulted in the wrong part being identified or shipped in error, or, more often, in an item being inoperable for long periods of time, awaiting parts on order.

The three biggest problems could be summed up like this:

• Wastage of resources – too much “touch labor”, too much inventory on hand.
• Wrong parts at wrong times – misidentification of part numbers; shipped to wrong unit
• Long waits for parts, often adversely affecting mission accomplishment

The introduction of technology into the process has improved supply chain management in several ways, primarily through the availability and use of barcode scanning systems, which enable:

1. Improved accuracy in inventory management and in order fulfilment. Items no longer must be counted by hand, part numbers read off and matched from part to invoice by hand. Before technology introduced barcode scanners, it was not unusual for parts to end up in the wrong bin, particularly when many small items that are similar in size are stocked together. This resulted in the wrong items being picked and packed by hand. Common errors which cost time and money to correct included:

• transposing numbers, resulting in the wrong items being shipped
• misidentification of parts of similar size and shape, causing data sheet confusion and errors
• inaccurate count when verifying numbers of items in stock

Elimination of these types of errors permits companies to estimate precisely when they will run out of stock and proactively place orders with suppliers to replenish stockage levels, thus reducing the dependence on huge buffer stocks.

2. Package tracking. More accurate tracking and management as packages move through the supply chain enables retail outlets to let their customers know when specific parts will be available for pickup, or can be used for verification of delivery to the customers, as with companies who deliver directly to the retail purchaser. Service departments can schedule maintenance and repair activities in a more efficient manner, saving down-time and maximizing use of equipment and available personnel, and eliminate long waits for service by customers. With automating shipping processes made possible, businesses can better meet deadlines, shorten their cash cycle and trim operational costs.

3. Quality Control. Barcodes assure the quality of the products manufactured by maintaining such vital information as identification, location, and tracking products’ movement until they are dispatched. They also can be used to capture information such as timelines, serial numbers and other critical information for the lifetime of a product. If a defect is found in a product of a particular batch, barcodes enable quick identification of the affected units (e.g., recalls of specific items). Manufacturers can also use barcodes to record information regarding destination to ensure supply quality is maintained properly.

 

By: Dennis Hung

Tags: article, business, Chain Management, technology

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