The supply chain is the system that involves how materials and products get from supplier to producer to consumer. Managing a company's supply chain is very important because supplies need to be present at the right time for producers, and retailers need to have enough inventories present for the customers to buy. A truly successful supply chain should be invisible to those outside the company, as a successful supply chain has all materials where they need to be at all times. However, before the rapid expansion of technology that our society has seen in recent years, sometimes it was difficult to achieve that level of efficiency.Technology has had its place in the supply chain from very early on.
Supply chain management is a relatively new concept, with the term only being created in the mid-1980s. At the advent of the new management system, technology was already starting to expand with the internet in its early form. Supply chain managers realized that it would be beneficial if the senders of the materials as well as the receivers were in communication in regards to how much of the product was being sent as well as an estimated time of arrival. However, with the unpredictability of transportation, sometimes the estimated time of arrival was not perfect. When asked how the technological system worked when he was in the supply chain field, Supply chain management Professor Hugh Turner, who ran the transportation operations at Toys 'R' Us, says that he would be aware of what was on its way but was unaware when it would arrive.
This could be very frustrating for the supply chain employees at certain companies, because a lot goes into planning which materials or products will be used at certain times, and without knowing if they would even be present at a certain time, many times there would have to be impromptu meetings to decide how to handle the situation. It was clear, though, that technological advances that were coming would be a great way to improve the supply chain.
Computers and tracking devices made the supply chain immensely more efficient.
In the 1990s, computers were becoming a larger part of every day society and the supply chain management sector took advantage. By using computers, companies were able to input when something was sent or procured, and then the company on the receiving end had a better idea of when it would arrive. Also at this time, transportation was becoming more regular, and truck and shipping arrivals were able to be predicted much easier. Eventually, the ERP (enterprise resource management) systems began to be the new standards in supply chain management. Each company had their own ERP system, which would place a tracking device in each product or shipment of products, which allowed for precise location of materials by companies, which made forecasting the future infinitely easier. When asked how technological advances improved the supply chain during his tenure at Toys 'R' Us, Professor Turner said that scanning and tracking boxes of products allowed for greater visibility.
While Toys 'R' Us did not specifically call their new system an ERP system, it was very clear that they were using the new technology to improve how they managed their incoming products that they would then put into their inventories.
ERP systems have become much more comprehensive in recent years, allowing for even more efficiency in the supply chain.
Originally, the ERP systems were as simple as the one that Professor Turner described, with truckloads of materials being scanned and tracked for better forecasting of when they would arrive. While this was able to get the job done, ERP systems now have far more capabilities. For instance, not only can the systems now track inbound and outbound products, but they can instantly link them to the company's inventory or which employee will be responsible for them. This can help with accounting operations, human resources, and other aspects of running a successful business. In fact, the new ERP systems have made it easier for employees outside of supply chain management, because many need to know when materials arrive and the system allows for instant notification or arrival or departure.
It is very evident that managing a company's supply chain is a highly unpredictable process that has been moderately stabilized by technology. With the ability to know where all supplies a company is responsible for are at all times, supply chain managers are able to forecast much better and the rest of the company can plan their operations around that forecast. As technology continues to improve, the forecasts will continue to improve until we approach an almost perfectly efficient supply chain worldwide.
No comments:
Post a Comment