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Companies have gone global with customer service operations in different countries. Operating multiple facilities globally however, brings along challenges in supply chain management. The accelerated pace of globalization, improved business conditions, shorter product life cycles, outsourcing of manufacturing activities, and such others force manufacturers to take numerous ad-hoc decisions. Lack of visibility across the various processes, chiefly in the supply chain management sphere has resulted in deriving results grossly deviating from desired objectives.
Business processes are fragmented, and companies have to innovate ways to manage numerous disparate sources of information. In the turbulent environment fewer and fewer companies manage the entire manufacturing process from raw material to finished product. Instead, the manufacturing process is distributed across the supply chain with different manufacturers owning the raw material, component, assembly and finished product aspects of the process. As a result, an increasing number of business processes are becoming cross-enterprise, including product design, development, manufacturing, and post-sales service and support. The challenges presented by macro-industry forces are driving the need for new visibility and supply chain management tools.
Visibility can be defined as "the real time monitoring and management of the lifecycle of an order (order to cash cycle), inventory, documentation and logistics across the supply chain". Visibility therefore, is not limited to transportation and warehousing alone, but engulfs aspects, such as planning, order handling, scheduling, outsourcing, manufacturing, logistics & warehousing, and services across corporate boundaries.
The focus on globalization has certainly had a profound impact on logistics per se of supply chain. Products no longer come from local, national, or regional suppliers. Today, cheaper stocks are being imported from China, Europe and South America. If stock ends up being stored for months due to over-forecasting, it may not really be cost-effective. Also inability to track execution status on a timely basis and respond to variations from plan to unplanned events across the supply chain will lead to poor customer service and increased distribution and inventory cost. Every element of the supply chain must be coordinated to gain the biggest advantage.
Logistics, including transportation and warehousing between the manufacturer and customer delivery points are crucial areas of visibility focus. This is particularly true when ocean freight carriers come into play with long transit times. A transportation company managing cargo fleets would find it beneficial to deploy GPS because it lets them monitor the whereabouts of vehicles along their routes. This translates into significant savings and boosts on-time deliveries. Those cost savings come from several factors, and high on the list is fuel. Galloping high fuel prices provide a powerful incentive to conserve fuel for any business that operates a fleet of vehicles.
Harnessing information is an important first step in logistics management, but it is more pertinent to ensure that the information gathered is effectively used. Key feedback on the success of deployment of visibility tools is reflected in the satisfaction derived by the customer. For example, improving the visibility would enhance monitoring the sales success and optimizing the replenishment cycles after the launch. Tracking and tracing all inbound materials through the procure-to-pay cycle, provide both buyers and suppliers a real-time view of order fulfillment, shipment location and payment status.
Tracing and tracking involves use of technology related to RFID and GPS that enable detecting critical supply chain pain points, such as shipment or manufacturing delays, and demand signals, such as a sudden increase in sales, out of stock situations or a shortage of in-store inventory. Track and trace capabilities enable you to determine whether an order has been acknowledged, shipped, received, invoiced or paid. Inventory monitoring services detect out-of-stock situations and then provide updated details on goods in-transit or on-order. Monitoring for critical events enables companies to proactively respond to changes in supply chain avoiding costly out-of-stocks and excess inventories.
The 3PL players are providing comprehensive logistics solutions by leveraging information technology to enhance the quality of services rendered by them. However, they must scale up operations and become a value added partner in the supply chain link between manufacturers and supplier partners on one side, and manufactures and end users on the other side. This could be either directly or through dealers. They have to ensure visibility across the supply chain partners. Through the automation of an entire value chain, companies are streamlining cross-enterprise processes, such as global logistics and electronic payments, resulting in greater agility, response, and profitability.
Integrated solutions need not be privy to matured markets, and countries such as India could leapfrog in technology adoption and enhance revenues, particularly in movement of goods from the hinterland into cities and towns, and also from industrial hubs to ports and beyond. Integrating diverse businesses is key to building a successful extended enterprise, although the complexities are daunting. The myriad communication protocols and standards continue to proliferate. Transferring information across the supply chain is crucial for ensuring the viability of the very process. Information from sensor-equipped RFID planted in the goods transported (bins or units included) during the entire chain have to be assimilated real-time. The challenge lies in integration with backroom ERP packages running in monitoring centers of logistics management. The benefits are substantial as real time information ensures cost reductions across the supply chain.
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