Having the right connectivity and integration capabilities in place for mobile devices may be more important for consumer packaged goods (CPG) than any other industry. Why? Because of the diverse set of channels they sell through - retail, online, distribution, wholesale and direct-to-consumer - CPG organizations are doing more business via mobile than ever before. It's no longer just direct-to-consumer and retail organizations using mobile technology. And now that all these channels are increasingly interacting with mobile devices, it has become critical that they find a surefire way to control and secure the data being exchanged.
Today the mobile impact on the CPG supply chain can be seen most in emerging markets such as Asia and South America. Here, wired infrastructure is not as prevalent as it is in North America and Europe putting more emphasis on the wireless capabilities of mobile devices. However, while the trend is shifting toward mobile, a recent global study by the Vanson Bourne IT research firm found that many companies worldwide continue to manually process high percentages of business-to-business transactions via phone, fax, email and even postal mail. This creates high human labor costs, results in blind spots in operational and performance visibility and can lead to compliance challenges due to lack of governance and control. As companies move away from some of these antiquated systems and begin relying more on mobile devices, both opportunities and challenges have emerged.
In CPG, mobile technology presents the greatest opportunities for inventory control, with benefits including significant time and cost savings. Distributors and wholesalers now use smartphones and tablets within their warehouses to get the most up-to-date information. Instead of updating a long list of inventory by hand, employees can scan items as they walk down stacks and have the most up-to-date information instantly at their fingertips and put into the system. Similarly, employees managing inventory for retail stores who travel from site to site can update data immediately via mobile device instead of having to wait to input data upon returning to the office.
Another key benefit of utilizing mobile devices is the visibility it can provide into activities taking place across the supply chain. Visibility enables all levels of the supply chain - from small distributors to large wholesalers - to have insight into where any product is at any given time. Increased visibility helps keep costs down and improves efficiency. For example, by updating inventory via a mobile device, gathering and distributing the latest information on products and goods can be reduced from five to just three days, which can help prevent over-ordering or premature shipping of products.
Additionally, the time to deploy significantly decreases with mobile devices. Using mobile applications, distributors are able to put orders in for products and move them forward immediately, improving time-to-market and overall supply chain processes.
However, in order for this immediate-results business model to be effective, it is imperative that the data viewed on mobile devices is both secure and accurate. This can be challenging, particularly if an organization's legacy systems are not interoperable and able to fully interact with mobile devices. In this case the value of the data, and therefore the value of mobile devices to the supply chain, essentially diminishes. Secure access to data for the right people is just as important because without that, the ability to view supply chain activities and make business decisions in real time is futile.
If not addressed, both security and interoperability challenges will impact the bottom line. Companies can face long lead times for order placements, increased stock-outs, and excessive inventory when data is not displayed in real time. For example, with a stock-out a store might have plenty of shirts in a size small, but none in a size medium. With excessive inventory, a store might have so many shirts that aren't selling that they need to put the item on special to help sales. Both of these scenarios result in lost revenue for the business, and both can be reduced or eliminated with real-time inventory capabilities. Because more and more consumer packaged goods are being sold online, it makes it even more important that distributors, wholesalers and online supply chain channels are able to effectively use mobile devices to meet business needs.
In order for businesses to improve supply chain efficiency and avoid the challenges brought by the proliferation of cloud and mobile applications, companies need to have an API management strategy. This provides a secure and reliable way to control and govern the gap between on-premise applications and the world of cloud and mobile where their customers, suppliers and employees reside. By enabling mobile connections through APIs, organizations are able to connect employees and allow them to access data on their tablets anywhere at any time. By deploying an API strategy, all levels of the supply chain are able to exchange information at high speed, with security and broad information access.
The CPG industry has a tremendous amount of legacy data that needs to be available and accessible across the supply chain. Because much of this information is stored on legacy systems that are both costly and risky to replace, finding a way to manage access to data without reinventing the entire back office system is critical. Through API deployment in CPG, companies can use the internet to extend their reach to places they've never been.
The opportunities presented by mobile technology, enabled by API management, are only beginning to impact the supply chain. As applications become more and more prevalent and easy to develop, mobile deployments will grow as a viable option for CPG. Key to the success of mobile is building awareness among supply chain executives and providing them the answer to one question: How can we make our supply chain more efficient, effective and profitable? Today there is cellular infrastructure across the globe. With this connectivity, infrastructure becomes less of a road block as mobile opens the door to more opportunities allowing the supply chain to make more, sell more and ship more.
Keywords: supply chain, supply chain management, supply chain management IT, value chain, value chain IT, supply chain solutions, enterprise mobility, mobility in supply chain operations
Timely, incisive articles delivered directly to your inbox.