Consumers today have more information about the things they buy than ever before. A great example is a shopper’s ability to track an online order as it travels through the supply chain from fulfillment center to a doorstep. This isn’t exactly new. Dell provided customers with similar information, albeit with less granular detail, 20 years ago. But now we see more and more retailers offering real-time order updates as part of a relentless drive to deliver better customer experiences.
The technology that enables online tracking services has begun moving further upstream in the supply chain, where it also helps distributors better understand their businesses and, in turn, provide real-time data to the retailers and manufacturers they serve. A business that knows precisely where its inventory is runs more efficiently, operates with better margins, and has a competitive advantage that can translate into real money.
A business that knows precisely where its inventory is runs more efficiently, operates with better margins, and has a competitive advantage that can translate into real money.
When a distributor can connect its own technology into the systems of the retailer and manufacturer, it’s a win for everybody. This information enables seamless supply chain planning and a continuity of visibility, which allow for more “just-in-time” deliveries. Companies without that level of visibility will find forward planning more difficult—having to rely on larger and less targeted shipments of inventory to manage their business. These companies are likely holding the wrong items, which leads to increased costs and reduced margins when discounts are applied due to supply overruns.
For many years, supply chain managers relied on bulk-order processing, driven by steady run-rate demand. This model has worked well for the traditional “lean” management strategy, which focuses on repeatable processes and methodologies that eliminate waste through mass production and distribution. This strategy works best for a business that sees very little change. Change is a major challenge for lean strategists.
We see more and more merchants offering real-time order updates as part of a relentless drive to deliver better customer experiences.
But the last few years have brought profound change for retailers, which increasingly need to serve omnichannel shoppers and reconfigure their stores to act as mini distribution centers. It’s not enough to only be efficient at scale. Businesses also need flexibility to respond to change, and a supply chain that can handle unpredictability and a constant stream of new, innovative products. That is the essence of “agile” methodologies—driving the exact product to the consumer as early in the supply chain as possible without compromising the lean operational methods to maximize margins.
The emergence of real-time item tracking enables the combination of lean and agile, “leagile,” and the delivery of the right product, with speed and personal service, even in very small quantities. Leagile requires the use of sensing technologies like RAIN RFID and a connected network of applications such as enterprise resource planning (ERP) systems, warehouse management systems (WMS), and transportation management systems (TMS). Connecting physical items to these applications is also essential to build a true supply chain Internet of Things (IoT). By giving the goods that flow through the supply chain a digital life that includes the item’s identity, location, and authenticity, the resulting accuracy enables automation and visibility—key to pulling off both lean and agile methods in the omnichannel supply chain.
Major manufacturers and retailers have noticed the advances in sensing technologies and supply chain systems of record. But some companies have been slow to abandon the traditional business model in which they’ve invested heavily. The supply chain still has plenty of efficiency challenges, including excessive paper records and outdated technology, that often require time-consuming human interaction. A leading technology being adopted in the supply chain is RAIN RFID, which utilizes wireless connectivity. RAIN RFID doesn’t require line of sight reading, and can automatically track and monitor goods in real-time. Automated systems that rely on RAIN RFID data will replace legacy supply chain tracking systems, like barcodes, and pave the way for more efficiencies.
In the not-too-distant future, we will have real-time location data at the goods-level on every item sold, enabling not only better consumer experiences but also vast efficiency gains throughout the supply chain. Eventually, each product’s “digital life” will begin as soon as it is made, and its components and raw materials will be tracked even before “finished good” production.
Eventually, each product’s “digital life” will begin as soon as it is made, and its components and raw materials will be tracked even before “finished good” production.
Some of that is happening today. For example, a “smart” refrigerator can alert you when it needs a new water filter, automatically order one, charge your credit card, and ship the new one to your home precisely when it’s scheduled to arrive. Similarly, technology will enable us to order goods directly from a factory—bypassing distributors and retailers entirely in a kind of one-stop personalized supply chain. To some that may sound too futuristic. We’re still waiting for George Jetson’s flying car, after all. But given all the incredible changes we have seen in just the last few years, I wouldn’t bet against it.