4 Replies Latest reply on May 1, 2012 5:32 PM by Jim Fulcher

    SCM30 Discussion Series: How has the evolution of technology changed supply chain management today?


      Welcome to the fourth discussion in the Supply Chain Expert Community's SCM30 series. To commemorate the 30th anniversary of the term "supply chain management," this year Kinaxis will explore the past, present, and future of supply chain management. Look for a variety of content with the SCM30 logo from Kinaxis throughout 2012.




      Our fourth discussion question is:


      How has the evolution of technology changed supply chain management today?


      Share your insights by clicking "reply" below.


      You'll see a blog post by John Westerveld on the same topic next Friday (May 4) on the 21st Century Supply Chain blog. Feedback from this discussion thread will be incorporated into the blog post, so weigh in, and your thoughts may be published!


      We look forward to seeing what you have to say!

        • Re: SCM30 Discussion Series: How has the evolution of technology changed supply chain management today?
          dustinmattison1974 Elite

          I think the evolution of technology has only changed supply chain management in so far as our mindsets and organizational cultures have changed.


          An example of how technology is molded according to culture can be seen with software that has forced us into silos and put  limits on the way we interact and collaborate. "From a shared  information perspective," Ed McKnab said, "we have to rethink how we  design software and what happens to that software once installed inside  an organization. So, not only do we need to see organizational change,  we need to see changes in the tools we use to manage those  organizations, particularly the software.”


          So it is not technology which leads the change, but people and mindsets. The mindsets of supply chain professionals need to bemore receptive to collaboration. Tracey De Leeuw says technology paired with true human  collaboration has allowed us to streamline processes. Vendors are not  having to wait 90 to 120-days to be paid for their work, which provides  the financial stability they need to survive and thrive. The pay-off for  larger corporations is the ability to buy from small businesses with  confidence, because the risk of financial failure has been greatly  reduced by removing the credit burden -- another positive spin on the  recession.



          Knowledge Multiplies with Collaboration


          Supply chain collaboration technology also has the potential to increase in value as the number of users increases. But this requires a change in mindset because most people still believe that if you share knowledge it loses value. Mary Adams says that companies with products like the Google search engine are great examples of knowledge multipliying with collaboration. The search engine gets better with the number  of users who participate. As more people use the Internet and Google  there is more data to drive searches on Google. The more users you have  for your software, the more valuable your software becomes. You learn  from the users. They find bugs, suggest improvements and help you think  of other uses for the software. Having a broad community means you have a  smarter network and much greater potential for innovation.


          This  is the really interesting thing about knowledge. If you share knowledge  you don’t lose it unless there is some magic to what you do (sometimes  knowledge has to be patented and protected). Most knowledge is better  off if you are willing to share part of it because it multiplies. If I  sell you a piece of software it doesn’t mean that I know less. It is not  like selling out of an inventory of shirts in my warehouse, for  example. If I sell you a shirt, the inventory will reduce from 100 to  99. However, if I sell you a piece of software, my software inventory  (the knowledge, which is the critical part) it doesn’t get reduced.  There is actually a potential for increased value because of the number  of users.


          Supply chain professionals and leading companies are using technology to drive innovation.


          Paul Van den Brande has been in freight forwarding for a long time and he has always had the newest business models and technology in mind. The need to address security issues along with collaboration is being addresed. Today, collaboration means that competition works together through a  neutral third party so that the data and confidential information is  segregated. There is no direct access to confidential information  between players in that field. This is a broad perspective because you  can have broad collaboration between different suppliers delivery their  products into one buyer, or buyers who have different suppliers and  bring them in one truck/aircraft/ship. Leading companies are doing some of the following, which technology has helped to enable:



          1. Sharing knowledge, experience and expertise
          2. Consolidating goods flows
          3. Sharing transport vehicles and network capacity
          4. Sharing logistics infrastructure
          5. Sustainability objective drive collaboration





          The evolution of technology has changed supply chain management most significantly in terms of the opportunities for collaboration. The only limiting factor is our own mindsets and organizational cultures which either help or hinder innovation.

          • Re: SCM30 Discussion Series: How has the evolution of technology changed supply chain management today?
            RDCushing Master

            Let's see... 30 years ago was 1982.


            In 1982, the IBM Personal Computer (PC) had been out about a year (introduced in August 1991). At that time, virtually all of the computers at use in business were essentially stand-alone devices. They generally were not connected in any way to the outside world.


            Although the Internet had begun as ARPANET in 1969, BITNET (the "Because It's Time NETwork", started as a cooperative network at CUNY with its first connection with Yale University) had just been kicked-off in 1981. CSNET ("Computer Science NETwork" had also just been introduced to connect university scientists at various sites. It was even until 1982 that TCP (Transmission Control Protocol) and IP (Internet Protocol) had been firmly established as the common ground for "internet" communications. It would still be another seven years (1989) before the number of Internt hosts would break 100,000 and commercial email would be introduced.


            Why is this relevant?


            Because the introduction of the PC (computing power for the common man--and small business) and the growth of the commercial Internet empowered buyers in unanticipated ways. By allowing small businesses to market their products and services world-wide from the comfort of their offices in some small town in Iowa or the Ukraine, buyers gained increasing access to a plethora of goods and services from wide-ranging markets that--at the time--had not yet realized that they were even in competition.


            The Web empowered buyers across the whole supply chain--from Jane Doe shopping from her kitchen nook to the raw materials buyers at the Fortune 500 manufacturing facility. Global competition drove both costs and prices down as products became more available from more sources. It also gave rise to a new growth industy--global logistics.


            Small business's access to computing power tied to a global network (i.e., the Internet) also had other wide-ranging effects on what could now really be called "a supply chain"...


            1. Expanded division of labor -- A small "industrial revolution" phase two occurred as small to mid-sized manufacturers realized that they could increase profits by focusing on core products and core competencies while outsourcing components that did not fit their core. These additional layers of specialization also contributed to making products less expensive and more available.

            2. Data flow recognition -- As more and more trading partners become involved in the flow of product from manufacture to the consumer, it became increasingly apparent that, if the "supply chain" was going to work effectively, data could no longer be held within the four walls of each individual organization. The sharing of important data regarding supply and demand had to grow beyond purchase orders, shipments and invoices.

            3. Importance of logistics -- This increase in specialization and outsourcing not only increase the number of trading partners involved, it also expanded the geographic involvement of the trading partners. As more geography had to be covered, and as an increasing number of international boundaries and jurisdictions were involved, the movement of product became a science and an industry unto itself.

            4. Supply chain management -- Specialization, the recognition of need for increased and accelerated flows of data between trading partners, and the emergence of global logistics as a major contributor to the success of supply chains led, inevitably, to the growing recognition that it was no longer companies and products that were competing. The real and emerging competition was between the supply chains themselves.


            After 30 years of technology involvement in the supply chain, it is not the cheapest manufacturers, or the highest quality products, or even the best marketing that makes for industry leadership. More and more it can be said that it is the most effective supply chains--those supply chains that take the lead in meeting and exceeding customer expectations with speed and value--that win the day and will continue to make more profits tomorrow than they made today.

            • Re: SCM30 Discussion Series: How has the evolution of technology changed supply chain management today?
              tbrouill Elite

              I especially like Richard Cushing's response and agree with the importance he places with the personal computer and the birth of the Internet (funny, there's no mention of Al Gore!)  I remember back in the early 90's on a project to select a new Warehouse Management System, one of my colleagues described his firmly held belief of the value of the personal computer in the DC - 'there is no mouses in warehouses'!  From those humble times to now when the tablet and the smartphone technology is replacing much of the tethered and even untethered simple RF hardware.  I think that we are coming into an era where the gains in technology will be derived through software, collaborative networks and the explosive extensions of network connectivity themselves.  We are coming into a time where the network is becoming ubiquitous - it is coming to the point where I am surprised when I can't connect to a wireless network.


              So, here are some additional technological advances that I think brought significant change to the supply chain;


              The warehouse management system as a software package and then the dramatic evolution and expansion of capabilities.  The SCM software industry in the 1980's was comprised of companies that brought together a series of processes and routines that their consultants and engineers developed to support client requirements.  These capabilities started small and many companies engaged the initial SCM consulting organizations to deliver a base software environment that the customer would support and improve and own themselves.  In the beginning many of the larger retailers for instance would never consider purchasing the software because there was no canned software or pre-written functions that would suppor the needs of these larger retailers and now we have reached the point where no one would consider writing a custom, 'home grown' system to support their supply chain.


              The Internet, communication proticals and the expansion of the personal computer have dramatically impacted the supply chain also.  Again, if you go back to the 1980's with the introduction of the EDI standards protocols there was a strong belief that the technology would provide dramatic advantages to the organizations that could afford to utilize this new technology.  There was, however, a great deal of cost involved in utilizing this new technology.  There was network and transmission costs because your company, and anyone you traded EDI transactions with had to subscribe to a Value Added Network to provide the communication protocol and the guaranteed delivery of the transacitons.  These were costs that could be overwhelming for smaller companies and were definitely a growth inhibiter.  With the growth and expansion of the Internet and the ensuing communication protocol simplification and expansion that was a natural outgrowth of the Internet, the personal computer and the expansion of non-mainframe hardware and technology.  These capabilities continued to expand and grow and now we are at the point where the network is almost ubiquitous in nature and we don't think twice about the background complexity that was overcome to provide the communication and network availability to support these services.  We have now reached the point where the cost to engage in these practices has been reduced the hundreds of dollars rather than the tens of thousands or hundreds of thousands!


              I think the third advance has been the expansion and acceptance of the RF technology, not only in the business applications but also the consumer and personal applications.  Way back in the 1980's the newest technology was the RF unit that was simply another type of dumb terminal that provided data entry capabilities that took advantage of barcode and scanning technologies.  This has expanded and progressed into every corner of people's lives.  Now I can use the camera on my Droid to scan a barcode and look up pricing in the store I'm shopping and in addtion, I can also search all retailers and even ecommerce sites to find the same product and compare the costs.  In the DC I can use this technology now to provide extended services and capabilities to every person on the floor to allow them to perform their work in the most efficient manner possible, including the extended information availability of RFID and 3D barcodes.


              For my last point in this thread I will extend my outlook from the supply chain, but there is no doubt that it does impact, and will continue an evolution in the supply chain and your partners in the extended supply chain.  My final point, and technology impact, is the pervasive nature of technology and hardware in everyone's lives.  I walk around today with more computing power and connectivity in my pants pocket than was used in the first expedition to the moon!  This hardware coupled with the social network software and Internet capabilities has been increasing the velocity of change and also in many ways the impact of change on the people and the business community.  These capabilities will continue to change, expand and morph into new and greater means to both simplify and complicate our lives at the same time.  For a great example take a look at the Red Box model which has been one of the final nails in the coffin of the video store outlet.  I can look up a movie I want to see, find the Red Box location nearest to me that has that movie in stock and reserve that movie all in 5 minutes.  When I get the the Red Box I swipe the card I used to reserve the movie and the machine spits out the DVD.  Then when I'm done with the movie I can return it to any Red Box location, even in another state.  So take this model and then think about the complexity involved in the network, inventory management and inventory fulfillment to ensure that the optimum copies of DVDs are avaiable in each machine.  All of this complexity is available for a price of $1.20 a day to rent a movie! 

              • Re: SCM30 Discussion Series: How has the evolution of technology changed supply chain management today?
                Jim Fulcher Master

                Thanks, Lauren, for another topic that’s generating some interesting responses.


                As Richard Cushing and Tom Brouillette previously noted, the impact the evolution of technology has had on supply chain management begins with the personal computer and the creation of the Internet, and then moves on to the development of software solutions that leverage the technology. That led to companies using enterprise solutions—or, for some, a collection of sometimes integrated systems—to first, gain control over, and then secondly, synchronize enterprise operations. Sure, it often led to silos, but it also offered a way to ultimately integrate operations across the enterprise. In turn, that led to myriad benefits, such as reducing order fulfillment times, slashing inventories, and improving profitability. In short, companies were able to maximize profits while continuing to satisfy customer requirements.


                At the same time, we saw that approach also applied to the supply chain. So rather than focusing on how to synchronize manufacturing and the warehouse, for example, the efforts instead concentrated on the flow of goods through the supply chain—ensuring, for example, not only that goods were arriving on time, but also that the correct quantities were arriving as they were needed. By coordinating those operations and improving communications using evolving technology, companies were further able to improve profitability while continuing to successfully meet customers’ ever-growing demands.


                So both inside a company’s four walls and across its supply chain, what we really have seen is a growing use of collaboration enabled by technology. Knowing and understanding both your own goals (as an individual, a department, or member of the supply chain) and how your performance affects others is central to improve overall performance. That’s not to imply that collaboration is either easy to achieve, or that all participants are exactly willing. Look, for example, at some S&OP activities where it’s clear everybody has their own goals and agenda, or at the antagonistic nature of supplier management at some companies, and it’s readily apparent that there isn’t really much collaboration taking place at all within some organizations.


                However, some companies have achieved a measure of collaboration both within and across the extended supply chain—and many others are working toward that goal. I believe that supply chain collaboration plays a critical role in creating an agile supply chain. The combination of changing mindset and application of evolving technology will be the driving force behind truly achieving supply chain collaboration, which then leads to that agile supply chain.