Can you re-imagine IT for SCM?
Coming to the topic, it was tweaked to make it relevant to this forum and bring out their experiences & thoughts in re-imagining IT for Supply chain management. Recently one of our teams finished a demand sensing implementation project for a CPG global leader in food and beverages. As most of you must be aware, Demand sensing is application of algorithms to downstream data and recognize patterns in what is being sold, who is buying and which demand shaping programs are creating an impact. Demand sensing software's essentially sit on the top of demand management software's and ERP's to do this. Interestingly, over the period, you can notice that there is a clear trend in IT maturing from transactional based systems to something more analytical & predictive. In addition, there could be other potential avenues where IT can add value as well.
Hypothetically, imagine a situation when your tube of tooth paste is about to get empty. Is it feasible that the product company who manufactures the toothpaste knows and captures this firm demand? Can they ensure that the tube gets replenished at your doorstep at the right time?
Simplistically put, I think the answer to the above questions is a "yes" with a "but". For the smart homes that get built these days "but" for the additional costs, it may not be so difficult to have a RFID scanner, that could read a tag which is embedded in the tube, and converts the need into a purchase order, sends an sms or an e-mail to get an acknowledgement, and on acceptance places an order with the maufacturer. The manufacturer co-ordinates with the nearest retailer and ensures delivery to your house, swipes your debit card on a wireless card reader and gets a payment.
While the above solution may be a little imaginative for now, if made available, the solution holds good for most of the daily used branded products - groceries, apparel, soaps and detergents, cosmetics etc. This could also probably evolve as one more channel in the era of multi channel commerce.
So while this seems to be one way of making life a little simpler or easier for the consumer how does this help the Supply Chain of the product Company?
As defined in SCOR, Let us look at a couple of parameters that affect the performance of a supply chain.
1) Perfect Order Fulfillment is measured as a metric of Reliability and is measured and defined as the percentage of orders meeting delivery performance with complete and accurate documentation and no delivery damage.
2) The order fulfillment cycle time is another metric for measuring the Responsiveness of the Supply chain. It is measured and captured from the moment a customer places the order to the moment the order is fulfilled is considered to be a 'gross' cycle time. It represents all the time passed between these two events, regardless of whether this represented cycle time for the activities performed by the organization to fulfill the order (both value-add and non-value-add) or dwell time.
In the above example, since the documentation is more or less automated and the entry is essentially triggered at the consumer's end, the chances of errors in the associated documentation is limited leading to an improvement of the perfect order fulfillment metric. Secondly the chances of improving the Order fulfillment cycle time is higher as the dwell time (time at which the product sits in the retail stores before getting consumed) can be decreased. Both these measures together will surely have a positive impact on the Supply Chain performance of the product manufacturer.
Besides the improvement in the Supply Chain performance, I think another interesting aspect in the above example is, it moves the demand capture from the traditional point of sales to the point of consumption which if implemented well could bring in interesting turn of events in the area of demand forecasting and demand sensing. Am sure new technologies such as cloud based services, social media and virtualization all can add value to similar solutions as well as help in terms of bringing down the cost.
It would be interesting to know your thoughts and experiences on similar areas. Look forward to read your comments.
