Look beyond the obvious

Posted on 12 Jul 2012 by Malcolm Wheatley

The supply chain can have a surprising impact on productivity, finds Malcolm Wheatley.

Think of productivity in the supply chain, and it’s easy to be misled. The reality is that real gains aren’t those to be had from using auto-ID technologies such as 2D barcodes, RFID tags, or even fancy new materials handling sortation equipment.

That isn’t to say that the contribution of advances such as these is minimal. It isn’t.

Look no further than specialist fresh fish provider Seachill, for instance, which recently looked for an auto-ID solution that would enable it to automate its dispatch area and speed up its shipping and dispatching processes to customers such as Tesco.

Thanks to 2D barcode labels from auto-ID specialist Zetes, “per-pallet scan times have effectively gone down from seven minutes to under a minute, as well as providing us with absolute accuracy, while essentially eliminating all shipping errors,” says Steve Wallace, Seachill’s IT manager.

But impressive though such figures are, the productivity-boosting capabilities of supply chain technologies such as these are far from the representing the whole picture.

Peter Thorne, Managing Director, Cambashi

Other options
Experts say it isn’t necessary to adopt such ‘point’ solutions at all, in order to experience heightened levels of productivity. Even a simple step such as establishing a sound supply chain plan can deliver ‘ripple down’ productivity gains that easily outstrip what might be attainable with – say – auto-ID technologies.

“Plan the supply chain correctly, and you’ll have the right resources in the right place at the right time,” says Patrick Crampton-Thomas, European vice-president for extended supply chain at business software giant SAP. “The result? A much higher proportion of orders delivered on-time and in full, more materials being available where they are required and when they are required, and with less lost time, and far less expediting.”

And if planning alone delivers productivity benefits, communicating that plan to other links in the supply chain amplifies the effect even further.

“We have one client – a sportswear manufacturer – for whom we developed a portal which allowed data to be shared, all the way from design through to distributors and outlets,” says Sally Waterston, director of business and IT consultancy Waterstons. “This helped to remove errors, and ensured that everyone was able to see changes as they occurred – before the product was produced, and before it went into the ERP system – thereby enabling the classic ‘one version of the truth’ to be shared throughout the supply chain.”

Peter Thorne, managing director of analyst firm Cambashi, concurs. Even in aspects of the business such as Product Lifecycle Management (PLM), he notes, the supply chain can make a surprising difference when it comes to productivity.

“Supply chain people see PLM as an engineering issue, but the reality is that PLM can be a supply chain management team’s best friend,” he says. “PLM can support supply chain initiatives in new product development, such as part re use, and the use of standard materials, tools and processes. Properly managed, the productivity dimension can be enormous.”

Auto-ID technologies, in short, are one aspect of productivity in the supply chain – but far from the only one.