Information Technology in Logistics
Logistics is an integral function for every business organisation. The evolving business landscape and increasing competition has created the need for SMEs to adopt more efficient ways and technology to manage their operations.
This can be achieved by inculcating the best practices in the industry in terms of supply chain design, planning, execution and visibility. The above can be facilitated by having an integrated supply chain management system (SCMS).
Components of a SCMS
A typical supply chain management system is a combination of hardware, software and technology designed to manage the major functions of a distribution and transportation set-up. The system may vary in sophistication from simple inventory locator systems to complex, multi-functional systems utilizing cutting-edge technologies.
Cost savings can be achieved on multiple levels with the use of a supply chain management system (SCMS). Process improvements through automation of typically manual tasks such as shipment planning and carrier selection allows for productivity gains and potential redeployment of existing resources. Both inbound and outbound orders can be optimized and consolidated to take advantage of the lowest cost transportation available. Setting up standard carriers and integrating with various providers via EDI or web-based technologies allows for efficient allocation of resources, robust reporting and improved shipment execution and tracking.
The Visibility Factor
Visibility of the movement of material can be vastly increased through the implementation of SCMS. Up to date status information can be viewed for incoming, in process and outbound shipments on a real time basis. And with the advent of web-enabled applications, there is no longer a need to be connected to some sort of wide area network to access the information. Many of the SCMS packages are web-enabled to some degree, allowing vendors, customers and remote users to view information securely through a standard browser interface. Various alerts can also be put in place to inform select users via phone, fax, pager or e-mail of any relevant issues.
The Cost Factor
The cost of the basic SCMS package may vary based on functionality requirements and sophistication. There are more than just software and hardware costs to take into account when pricing a SCMS. Key components include:
Software and hardware – Typically 30 – 50% of the total cost. Includes license fees, database, servers, printers, PCs.
System integration – Consultants, process review
Software vendor assistance – Professional services, project management, pilot testing, interface programming and other custom coding. This number can be huge and risks can be increased if customizations are not managed properly
Internal costs – Special training, fill in for core team members, retention and promotion incentives
Maintenance agreement – Typically priced separately, cost can vary based on number of years and level of warranty service.
Pitfalls
The initial setup requirements of a SCMS are extensive and proper setup can make or break a system. Elements and characteristics of items, locations, users, roles, tasks, vehicles, processes, suppliers and customers need to be defined and configured for the system to control the supply chain successfully. There are many pitfalls to watch out for during a SCMS implementation.
The following is a list of 10 common pitfalls:
Emerging Technologies
1. Radio Frequency Identification (RFID)
Radio Frequency Identification (RFID) is not a new technology; it has actually been around for years. It is a method of storing and retrieving data through the use of an RF compatible circuit. These RF tags can be active (powered) or passive, and they require a reading device and interface computer to process the information.
While similar in concept to standard barcode technology, there are some very important differences. RFID tags do not require line-of-sight to be read, and the distances they can be read from range from a couple of feet up to 300 feet for powered designs. They are also capable of storing much more information – from 512 bytes for passive designs up to 32Kb for active designs. Because of the increase in memory, large amounts of information can be stored, and even dynamically captured, and programs can quickly access relevant data.
There have been several obstacles that have prevented RFID from gaining acceptance until recently. Some of the obstacles included transmission distances, tag reader sensitivity, and the high cost of implementation, especially the tags themselves.
Transmission distances have now increased to an acceptable level, far better than comparable barcode technology. Reader and antenna sensitivity is such that several hundred tags can be read at nearly the same time, allowing for an entire pallet of tags to be interrogated at once. And most importantly, the price has been steadily decreasing, both for overall system implementation and for the tags themselves. Passive tags can now cost as little as fifty cents, with active tags typically being more expensive and varying in cost based on the type of technology in use.
However, when looking at the overall cost of barcodes and the necessity for replacement and maintenance, the cost difference can be very minimal. RFID is not a replacement for standard bar-coding. But with improvements that have been made, the reductions in cost, and the continued definition and refinement of industry standards, RFID can provide an enhanced and automated solution.
2. Voice
Much like RFID technology, voice technology has been around for a number of years, but until recently was cost prohibitive for all but the largest companies. There are primarily two types of speech technology, speaker-independent and speaker-dependent. Independent technology recognizes words spoken by a wide variety of people, requires little training, and usually has a relatively small number of pre-defined words. All voice recognition processing is performed on a central computer. With dependent technology, each operator is required to go through a training process where the computer is taught to recognize their specific voice profile.
While this method requires more up front training and the use of a portable device, it is much more accurate, and is a necessity in the high noise environments typically found in high-volume distribution and manufacturing plants.
Voice technology is typically utilized in each and case picking applications due to the high volumes and the ability to operate in “hands free” mode, but it can also be utilized in receiving, put away, replenishment, and cycle counting operations.
Globally, the grocery and food service industries have been early adopters of this technology for several reasons. Key improvements in shipment accuracy and labor productivity are critical in the low margin, high volume environment. Using voice operations in cold storage areas where gloves are necessary eliminates the need to handle paper lists or labels and cumbersome RF equipment. Capturing variable data such as weight information is also easier when done verbally versus keypunching the information.
The main barrier for implementation of this technology is cost. Costs are incurred through the purchase of terminal and RF network components, software packages, integration fees, and training. Companies with large workforces (over 100 people) and high-volume operations with an emphasis on order and shipment speed and accuracy should consider the technology.
The author of the article is Senior Director, Deloitte Touche Tohmatsu India Pvt. Ltd.
Internet and Communication tools enable the growth for SMEs. To gather more information on various other IT Solutions, get in touch with the experts at IndiaMART Knowledge Services. Do drop in a comment to this post to let us know what else would you want us to share about!
Logistics is an integral function for every business organisation. The evolving business landscape and increasing competition has created the need for SMEs to adopt more efficient ways and technology to manage their operations.
This can be achieved by inculcating the best practices in the industry in terms of supply chain design, planning, execution and visibility. The above can be facilitated by having an integrated supply chain management system (SCMS).
Components of a SCMS
A typical supply chain management system is a combination of hardware, software and technology designed to manage the major functions of a distribution and transportation set-up. The system may vary in sophistication from simple inventory locator systems to complex, multi-functional systems utilizing cutting-edge technologies.
Cost savings can be achieved on multiple levels with the use of a supply chain management system (SCMS). Process improvements through automation of typically manual tasks such as shipment planning and carrier selection allows for productivity gains and potential redeployment of existing resources. Both inbound and outbound orders can be optimized and consolidated to take advantage of the lowest cost transportation available. Setting up standard carriers and integrating with various providers via EDI or web-based technologies allows for efficient allocation of resources, robust reporting and improved shipment execution and tracking.
The Visibility Factor
Visibility of the movement of material can be vastly increased through the implementation of SCMS. Up to date status information can be viewed for incoming, in process and outbound shipments on a real time basis. And with the advent of web-enabled applications, there is no longer a need to be connected to some sort of wide area network to access the information. Many of the SCMS packages are web-enabled to some degree, allowing vendors, customers and remote users to view information securely through a standard browser interface. Various alerts can also be put in place to inform select users via phone, fax, pager or e-mail of any relevant issues.
The Cost Factor
The cost of the basic SCMS package may vary based on functionality requirements and sophistication. There are more than just software and hardware costs to take into account when pricing a SCMS. Key components include:
Software and hardware – Typically 30 – 50% of the total cost. Includes license fees, database, servers, printers, PCs.
System integration – Consultants, process review
Software vendor assistance – Professional services, project management, pilot testing, interface programming and other custom coding. This number can be huge and risks can be increased if customizations are not managed properly
Internal costs – Special training, fill in for core team members, retention and promotion incentives
Maintenance agreement – Typically priced separately, cost can vary based on number of years and level of warranty service.
Pitfalls
The initial setup requirements of a SCMS are extensive and proper setup can make or break a system. Elements and characteristics of items, locations, users, roles, tasks, vehicles, processes, suppliers and customers need to be defined and configured for the system to control the supply chain successfully. There are many pitfalls to watch out for during a SCMS implementation.
The following is a list of 10 common pitfalls:
- Not fully understanding the benefits and costs of a SCMS
- Setting an unrealistic budget or schedule, rushing the implementation
- Failure to identify all system requirements
- Not willing to change current operational procedures
- Automating poor operating procedures
- Not looking at the “big picture” – impacts to operations, supply chain design & layout and Company
- Making too many customizations to the software
- Insufficient time in the schedule for system testing and debugging
- Poor management and staff training
- Low budget for post go-live system support
Emerging Technologies
1. Radio Frequency Identification (RFID)
Radio Frequency Identification (RFID) is not a new technology; it has actually been around for years. It is a method of storing and retrieving data through the use of an RF compatible circuit. These RF tags can be active (powered) or passive, and they require a reading device and interface computer to process the information.
While similar in concept to standard barcode technology, there are some very important differences. RFID tags do not require line-of-sight to be read, and the distances they can be read from range from a couple of feet up to 300 feet for powered designs. They are also capable of storing much more information – from 512 bytes for passive designs up to 32Kb for active designs. Because of the increase in memory, large amounts of information can be stored, and even dynamically captured, and programs can quickly access relevant data.
There have been several obstacles that have prevented RFID from gaining acceptance until recently. Some of the obstacles included transmission distances, tag reader sensitivity, and the high cost of implementation, especially the tags themselves.
Transmission distances have now increased to an acceptable level, far better than comparable barcode technology. Reader and antenna sensitivity is such that several hundred tags can be read at nearly the same time, allowing for an entire pallet of tags to be interrogated at once. And most importantly, the price has been steadily decreasing, both for overall system implementation and for the tags themselves. Passive tags can now cost as little as fifty cents, with active tags typically being more expensive and varying in cost based on the type of technology in use.
However, when looking at the overall cost of barcodes and the necessity for replacement and maintenance, the cost difference can be very minimal. RFID is not a replacement for standard bar-coding. But with improvements that have been made, the reductions in cost, and the continued definition and refinement of industry standards, RFID can provide an enhanced and automated solution.
2. Voice
Much like RFID technology, voice technology has been around for a number of years, but until recently was cost prohibitive for all but the largest companies. There are primarily two types of speech technology, speaker-independent and speaker-dependent. Independent technology recognizes words spoken by a wide variety of people, requires little training, and usually has a relatively small number of pre-defined words. All voice recognition processing is performed on a central computer. With dependent technology, each operator is required to go through a training process where the computer is taught to recognize their specific voice profile.
While this method requires more up front training and the use of a portable device, it is much more accurate, and is a necessity in the high noise environments typically found in high-volume distribution and manufacturing plants.
Voice technology is typically utilized in each and case picking applications due to the high volumes and the ability to operate in “hands free” mode, but it can also be utilized in receiving, put away, replenishment, and cycle counting operations.
Globally, the grocery and food service industries have been early adopters of this technology for several reasons. Key improvements in shipment accuracy and labor productivity are critical in the low margin, high volume environment. Using voice operations in cold storage areas where gloves are necessary eliminates the need to handle paper lists or labels and cumbersome RF equipment. Capturing variable data such as weight information is also easier when done verbally versus keypunching the information.
The main barrier for implementation of this technology is cost. Costs are incurred through the purchase of terminal and RF network components, software packages, integration fees, and training. Companies with large workforces (over 100 people) and high-volume operations with an emphasis on order and shipment speed and accuracy should consider the technology.
The author of the article is Senior Director, Deloitte Touche Tohmatsu India Pvt. Ltd.
Internet and Communication tools enable the growth for SMEs. To gather more information on various other IT Solutions, get in touch with the experts at IndiaMART Knowledge Services. Do drop in a comment to this post to let us know what else would you want us to share about!
very explanatory!
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