Sept/Oct 2005

An article about mobile computing with no mobile content until the end? Stay with us and you'll see why, as Chris Wright unfolds his tale of misplaced priorities - and how to rectify the situation

To achieve nirvana, or 'spiritual bliss', within the supply chain is impossible, isn't it? Stock always available, nothing going missing, deliveries always arriving on time, inexpensive operations (free is unlikely), customers paying for the product before it's made... These can seem little more than daydreams, yet failure to achieve them keeps many a logistics managers awake at night shaking with fear. Daydreams? Nightmares, more like.

But hold on. Take a look at the list again. Quite a bit is available today isn't it? So perhaps nirvana is nearer than we think. Yet if it's achievable, why do we still hear about stock-outs? Why are there so many high street sales? And why haven't we solved home delivery?

The answer is that that although supply-chain synergy (my own view on nirvana) could be available, too few logisticians focus on the customer. In fact it appears the majority would rather focus on the warehouse instead.

 

Look at the whole story

An example, with names removed to protect the source, consider a (failed) company that had a number of retail outlets selling home furnishings. Home deliveries were fulfilled from a large central warehouse, the company outsourced distribution, and it was the logistics manager's responsibility to drive down costs.

The logistics manager therefore focused on a project to 'pick by voice'. Meanwhile, customers were deserting the business, and the cost of the third-party logistics operation escalated.

The reason for failure was that more than 40 per cent of all stock that left the warehouse was returned. Yes, it was picked efficiently; but no-one checked that the loading process was right; no-one checked that the customer was in; no-one dealt with the ensuing problems; so there was no controlled customer care.

If the logistics manager had focused on cost per customer fulfilment and customer care rather than cost of pick, then the business might still be alive today. The lesson is to focus on customer fulfilment across the complete supply chain rather than optimising segments.

Ask your customers

The challenge is how to get visibility of the efficiency of your supply chain: not easy if it's a complex one, perhaps stretching half-way across the world, with multiple hubs and carriers. But the answer remains the same: focus on customer service. Do you deliver on time, first time and in full? And if not, why not start with your customer, and ask them if you're meeting your delivery promise?

If the answer is yes, 100 per cent of the time, the chances are you're losing money through over-resourcing your supply chain. Therefore check the utilisation of your delivery fleet, check the hours your drivers are on the road and so forth.

If it sounds as though I'm advocating failure every now and then, I agree - as long it's a result of running a lean efficient organisation that occasionally gets stretched. In these circumstances it's absolutely essential to have real-time visibility of the issues, and communicate with your customer. We as customers don't mind problems happening as long as we get told in advance.

Check your processes

If the answer to the question 'Are you meeting your delivery promise?' is no, simply look back along the delivery/supply chain from the customers' view and see where the challenges are. A good measure is the percentage of first-time in-full deliveries that you make. If you are able to determine the cost per drop, do so; determine what are the factors that make up these costs.

If necessary trace the path back to the original manufacturer. Stock-outs can be caused through production issues or by sudden demand, but mostly they are caused by bottlenecks in the supply chain. Where are they, and how do you eliminate them? It might even be that the picking is inefficient and a 'pick by light' solution might help. In every case, determine what effect a new solution has on the cost per drop.

Track as much as possible

So how can you determine the cost per drop, have total visibility and measure the percentage of successful deliveries? And having got these, how do you go about holistically improving your supply chain? Total visibility is relatively easy to achieve, and with it comes visibility of the cost per drop.

Every item that moves within your supply chain should have a unique identifier, a mark, a barcode or an RFID tag. Selecting which one is important, and generally the answer is to use all three. Every time an item is moved from A to B it should be recorded. For every item that moves you should have a movement plan. Actual movements should be compared with the plan and discrepancies acted on, bottlenecks identified and performance measured. Once you measure you can improve.

Rugged mobile technology can streamline processes

The answer therefore is to use techniques such as RFID to trace products automatically through the supply chain. Start at case/pallet level to begin with; in time it definitely will be affordable and for most retailers a requirement. Use mobile computers in your supply chain operations, both within the warehouse and outside it, on the delivery vehicle. The benefits are enormous: adherence to process, accountability, reduction of errors, reduced paperwork, improved customer care and once again, visibility of the cost per drop.

To summarise, nirvana in the supply chain could be with us sooner than we think. Supply chains that focus on customer satisfaction have correctly identified the only priority that businesses should have.

Affordable solutions are available today. Track every item, using mobile computing techniques; integrate RFID techniques to record automatically; and increase your percentage of successful first time deliveries.

Chris Wright is managing director of Skillweb Ltd, which specialises in mobile computing solutions, with a focus on the supply chain. Tel 08700 70 70 77 email chris.wright@skillweb.co.uk.