Globalization has made the world a single market place. This has resulted in demand for products worldwide, which augurs well for the business across industries. The opportunity to serve the wider market has brought along with it expectations from the customer in terms of quality of the product, on-time delivery and competitive prices.
These expectations have influenced the manufacturing and retail industries in a huge manner. In an attempt to deliver high-quality products at competitive prices, businesses are sourcing raw materials from across the globe. It is no longer enough to get the best material at the best price; the same needs to be procured within time constraints.
The complexity in the supply chain can only be managed with a robust information system technology. As there are multiple retailers to which a manufacturing unit caters, multiple manufacturers supplying any one retailer, and multiple SKUs - complexity increases and visibility across the supply chain becomes difficult to achieve.
Information technology is, thus, essential to achieve integration through information sharing across the business stakeholders. The major benefits perceived by the industry in such an implementation are access to information and quick response to address dynamic changes.
Current IT Systems
Most manufacturing organizations use technology for broadly three purposes:
1. Forecasting and Planning: This would mainly include integration of a planning system with vendor systems generating point-of-sale (POS) data. Planning systems include a system for MRP, etc.
2. Operational Productivity at Shop floor: Most manufacturing organization use CAD, CAE, ERP, Artificial Intelligence. In addition to this, the shop floor has systems for aiding JIT and other manufacturing principles.
3. Logistics Across the Supply Chain: Major IT tools used in this domain are RFID, GIS and GPS systems.
IT Systems for Warehouse and Retail Industry
The major IT systems in warehousing and retailing are focused on tracking and tracing. Some having widespread usage are:
Electronic Data Interchange, popularly known as EDI, is a computer-to-computer exchange of business documents in standard format. Thus it reduces data entry by individuals and also reduces cost through reduced mailing, printing and handling paper-based information.
RF or Radio Frequency is used for real-time communication between relatively short distances. Radio frequency is used for different operations, including receiving, put-away, replenishment, picking and shipping.
Bar Code / Scanning includes usage of bar codes to store product-related information while scanning involves reading the information from the bar-coded label. Scanners are used for material handling and tracking in warehouse. The same is also used at POS in retailing, which has multiple advantages, including tracking each SKU and faster replenishment since the supplier is informed in real time.
Challenges in Unifying the IT System:
IT systems for different operations have been implemented over a long period of time across the organization. These systems address the local problem but result in multiple disparate systems in a single organization. There is a huge number of systems to be integrated for end-to-end visibility across the supply chain. Thus, any integrated information system would have to address two major constraints: unifying IT systems developed for addressing local needs, and unifying IT Systems on multiple technologies.
The problem is further accentuated on account of a lack of technical understanding, and quantification of return on investment. The latter is linked to inventory cost ad the expense attached to delayed information.
Currently, businesses have numerous challenges, including an increased range of products, shortened product life cycles, competitiveness, etc. Changing business dynamics are evident where newer products are replacing the existing established market leaders.
On the other hand, technological changes are happening at a rapid pace. ERP and other related planning systems are rarely built to handle deviation from the planned. The business function served by a particular technology may become obsolete or better technologies to serve the same may come up very fast. Thus, a one-time lump-sum investment may not always be the best solution.
In such a scenario, business stakeholders have the following challenges at hand:
• understanding business as well as technological challenges
• investment of resources into core business functions and changing technology
Business stakeholders would rather focus their time and investment in addressing their core business challenges rather than investing resources into technology. Software as a Service (SaaS) addresses this dilemma of the businesses. It has the following advantages:
once organizations decide to move from a legacy application to a SaaS model, it is critical to determine which business functions to enable.
Currently, the customer relationship management (CRM) function gets the priority in implementation on a SaaS basis. The function to be enabled would need to be in line with standard industry practices. Software vendors would need to develop a SaaS solution with the following features:
• significant configuration options, and scope for templates for regional as well as industrial requirements
• plug-in options using standardized connectors
• a technology solution that would have a reasonable life cycle time frame
Thus, as with other business processes, usage of a SaaS model would require collaboration between software vendors and the business organizations to develop a sustainable solution.
Source: Four Soft
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