I get asked a fairly simple question by supply chain and logistics professionals all the time: what's are other companies doing to improve their operations? Where is the lowest hanging fruit?
The answer to that question depends on many factors, or course, and of course a company's own current situation and strategies, but nonetheless the questions have prompted us to develop our first annual list of the top 10 supply chain and logistics technologies and strategies for 2007.
The list is based primarily on an assessment of the relative “pain to gain” ratios that most companies seem to experience when pursuing each category.
We tried to focus as well on areas that still have a relatively low level of adoption. So, for example, while companies with no demand planning/forecasting tools can benefit greatly from new technology support, we deemed this category too mature for inclusion in our list.
You can find a more comprehensive report on this list here, which includes a list of resources available from SCDigest for most of the 10 categories - we are confident you will find it useful.
But here is our list in somewhat summary form:
Use of technology tools to drive on-line contract bidding for a growing array of both indirect and indirect materials. Pain: one band-aid. Gain: five dollar signs (both out of five - see the full report). As we write in the report, why wouldn't this work? It sure does for companies like Rubbermaid and Hallmark.
2. Labor Management Systems in Distribution:
A combination of software, engineering and mindset change to improve logistics productivity. Labor management systems are typically built on discrete, engineered standards for specific tasks in a distribution center, plus detailed reporting at the individual operator level against the resulting dynamic goal time calculations for the day’s work. Pain: two band-aids. Gain: four dollar signs. One of the first things we'd do in any decent size DC operation.
3. Spend Management Visibility:
Software that provides greatly improved visibility to what a company actually spends, where, and with what vendors. Pain: three band-aids. Gain: five dollar signs. It works at home, why not in companies?
4. Demand Management/S&OP: A process, generally supported by some level of technology tools, of aligning the sell side and the supply side of the company around a unified financial and operations plan. While many companies have nominal sales and operations planning processes in place, the consistent feedback is that most are far from optimally effective. In parallel with the growth of S&OP is the concept of demand management, in which sales, marketing, finance and the supply chain work together to drive demand and sales that maximize profitability, rather than simply reacting to forecast demand. Pain: four band-aids. Gain: five dollar signs. Faster reaction to opportunities and organizational alignment are essential today.
5. Supplier Portals:
The technology has existed for some time now to relatively easily integrate suppliers through increasingly functional web portals. The scope of activities is very broad, from purchase order management, to providing demand visibility, to advance ship notice and bar code label generation, to generating dynamic inbound shipment requirements. Pain: two band-aids. Gain: three dollar signs. We see know reason for companies not to be doing this.
6. Network Optimization: Use of network optimization software to find the optimal balance between costs and service in the configuration of a company’s supply chain network. Increasingly, these tools are being used more tactically than in the past, supporting global sourcing strategies, more short term inventory planning decisions, new product introductions, and even sales and operations planning. Pain: four band-aids. Gain: five dollar signs. A variety of factors is making this a hot category right now, and the use cases are changing.
7. Transportation Management Systems (TMS):
Software systems that enable shippers to automate planning and execution, connect electronically with carriers, and reduce freight costs though optimal mode selection, optimal carrier assignment, shipment consolidation, and use of continuous moves. Pain: two band-aids. Gain: three dollar signs, but can be larger for companies with big freight spend.
8. Strategic/Global Sourcing: Use of a more integrated, consolidated approach to supplier selection and procurement, including evaluating total supply chain costs, and consolidating purchasing power. Rapidly, strategic sourcing is also tightly tied to offshoring and global sourcing strategies. We probably could have moved this up on the list, but the opportunities vary dramatically company to company. Pain: three band-aids. Gain: four dollar signs. Obviously a hot strategy now, though many having early trouble getting the results they expect.
9. Wireless in the Warehouse: While use of radio frequency/wireless terminals in distribution centers is at one level a highly penetrated and mature market, we continue to be amazed at the number of even fairly large companies that are still using paper-based systems in their DCs. Pain: one band-aid. Gain: two dollar signs. This is becoming very easy to implement.
10. Yard Management Systems (YMS) and Dock Door Scheduling: Software tools, implemented either stand-alone or in conjunction with a WMS or TMS, that provide visibility into yard inventory and optimize appointment scheduling and execution on inbound and outbound dock doors. The category has enjoyed substantial growth in the past two years. Pain: one band-aid. Gain: two dollar signs. Environmental changes making these systems increasingly easy to justify.
So that's our list. We strongly considered a few other areas that just didn’t make this year’s list. These include:
- Voice picking in the warehouse
- Carrier bid optimization
- Technology that helps optimize trailer loading to decrease total transportation costs (see on-demand supply chain videocast “Optimizing Transportation and Distribution Performance” )
- Analyzing distribution data to better tune DC layout and performance
- Supply chain visibility
- Global trade/commerce management
As always, we'd welcome your thoughts.
How would you improve or change our top 10 list? What we we missing? Do you think we are off the mark on any of our pain to gain ratings? Let us know your thoughts.