Visibility through Supply Chains is more than IT

Roger OakdenLogistics Management, Procurement, Supply Chains & Supply NetworksLeave a Comment

Innovation in networks

What is Visibility?

Visibility has been a supply chain buzzword over the past twelve months. The better a Logistician can view what is happening through their supply chains, then responses when activities go ‘off plan’ should improve.

But what does visibility mean for Logisticians? There are two aspects; one is to ‘see’ the physical movement and storage of goods and the second is to produce the map of ‘end to end’ supply chains of the organisation. Both approaches require IT assistance to provide a better understanding of supply chains; however, the two practices should be differentiated for clarity about objectives.

Supply Markets Intelligence (SMI) addresses any activity (including mapping) that assists in gaining an improved knowledge about an organisation’s supply network and suppliers across each of its supply chains. The options for action when an increased risk from a supplier’s supplier is identified will be influenced by the power or dependency the organisation has in the supply chain.

SMI could have value for your organisation, but working through a SMI project takes time and uses people resources that Procurement rarely has. Additionally, there appears to be a limited choice of SMI IT apps; maybe because organisations are unwilling to pay for a product or service that does not have a quantifiable and short ROI?

Tracking the physical movements for goods and the associated uptime performance of logistics and production equipment is part of a more expansive concept, identified under two terms – Digital Supply Chains (DSC) and Logistics 4.0.

As usual in supply chains, there is not an agreed definition for these terms. Learn About Logistics definition for Digital Supply Chains (DSC) is: ‘the bi-directional integration of asset data and information for physical goods and equipment between nodes and links through an organisation’s supply network, as an input to plan production and distribution’.

A definition for Logistics 4.0 is (from a Goggle search and slightly modified) ‘the networking and integration of logistics processes within and between trading companies and production facilities, to the decentralized real-time control of logistics networks’. Logistics 4.0 is aligned with the Industry 4.0 movement and uses a similar timeline approach of three previous changes in Logistics/Supply Chain thinking.

DSC/Logistics 4.0 contain a range of transport technologies that are ‘Smart’, including vehicles equipped with telematics, automated guided vehicles (AGV), robotic equipment, drones, shipping containers and pallets. These can communicate through a supply chain with data collectors:

  • Augmented and virtual reality units
  • Global Positioning Systems (GPS)
  • Industrial Internet of Things (IIoT) units including:
    • Automatic identification and data capture (AIDC), including barcode scanners, optical character recognition (OCR), graphical user interface (GUI) and radio frequency identification devices (RFID)
    • Instruments and programmable logic controllers (PLC)
    • Materials handling equipment (MHE)
    • Sensors
    • Wearable and mobile technology

With communication is via internal and ‘cloud based’ software.

Visibility – necessary or ‘nice to have’

SMI and DSC require investment, so identify if having visibility through supply chains is necessary or a ‘nice to have’ and evaluating the risks of not doing. While both can be done concurrently, their implementation timelines and people resources are different.

SMI is mainly a data collection project that requires supply chain people’s time and preferably a SMI IT application. The initial project can be quick, but, dependent on the complexity, will take up to three years to be comprehensive, with ongoing updates thereafter.

DSC is not a single project, but many projects over a multi-year timeframe. It therefore requires the vision and roadmap for achieving a digitised supply network, driven by a visionary CEO and a group of like-minded executives.

DSC will be expected to satisfy at least three objectives – item tracking, data analysis and inputs to operations planning;

  1. Tracking and reporting the movement of items that must adhere to planning priorities through core and extended supply chains
  2. Analysis of data from internal and external operations digital hubs that provide connectivity and data collection/analytics:
    • MES (manufacturing execution system)
    • WES (warehouse execution system) and
    • TMS (transport management systems) telematics
  3. Analysis of Equipment and Facilities through sensor based data collection and consolidation technology (Industrial Internet of Things or IIOT), providing input to:
    • Maintenance Management Systems with Predictive Maintenance analysis
    • Building management systems – energy management and efficiency
  4. Input to the Operations Planning of materials and products from the flow of bi-directional data and information between nodes and links in the supply chains. Operations Planning is not a real-time activity, although data and information will be received in real-time,

Enabling DSC projects in SME companies is becoming more achievable, as packaged solutions for their type of business become available. In larger organisation, people resources and time must be available to assess methodologies, processes, technologies and techniques to develop and implement the DSC strategy.

Challenges

Before attempting integration in your supply network, internal co-operation and co-ordination is required between the silos of your organisation. At the process level, it requires implementing Sales and Operations Planning (S&OP), driven by the CEO and division managers that believe in the value of the process.

The next step will be either a visit from one or more of your customers to discuss implementing DSC, or your business discussing DSC with (at least), critical Tier 1 suppliers and customers. This will only be seen as successful through an approach of co-operation and co-ordination (that is trust) between the parties – not ‘cost down’. Until these steps are achieved, integration of your supply chains will be more hope than a reality.

Interoperability of IT through supply chains is a major challenge. As each DSC project will be a part of your Supply Network, they must be connected, which requires adherence to standards (preferably GS1).

A challenge for supply chain professionals is the potential scope of DSC past achieving visibility through supply chains. DSC in its full scope is not about digitising the current processes, but a fundamental change in approach to business relationships and structures, utilising digital technologies. 

Logisticians may bemoan the lack of visibility in supply chains; however, the design, selection, approval and implementation of DSC must be ‘fit for purpose’, which takes time. Evidence of past IT hype and actual achievements indicate that it will be some years to implement ‘new’ DSC software applications, data collection equipment and analysis capability.

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About the Author

Roger Oakden

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With my background as a practitioner, consultant and educator, I am uniquely qualified to provide practical learning in supply chains and logistics. I have co-authored a book on these subjects, published by McGraw-Hill. As the program Manager at RMIT University in Melbourne, Australia, I developed and presented the largest supply chain post-graduate program in the Asia Pacific region, with centres in Melbourne, Singapore and Hong Kong. Read More...

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