When logistics systems run well, they're like the umpire at a cricket match. We all know that they're around but we don't really notice them. But if they make a mistake then the spotlight shines brightly on their every move.
Today's supply chain is far less forgiving and demands greater efficiency and bang for buck than it ever has. A number of technologies allow businesses to wring out every dollar of value from the supply chain.
And it's two older technologies that we're seeing as the main enablers of this change: RFID and business intelligence.
With many years of experience in warehousing and logistics, Stuart Jones, national transport manager of McKey Distribution, says that the last few years have been about data convergence.
Distribution companies can pull data from several sources and combine it into a single system that can predict or explain problems.
"It's the meeting of different types of source data such as telematics, route management into a visible and usable system that can enhance operations, especially in day to day activities. That would be the key thing."
McKey Distribution delivers food products to over 800 hundred delivery points right across the country. It boasts two of the longest delivery routes in the world, running 2800 and 3200 kilometres. The distributor delivers food that needs temperature control and can have a short shelf life. When the supply chain is working at its optimal, McKey knows food can arrive to its customers on time and in good condition.
McKey Distribution uses software from Infor. Route Pro is used to manage the complexity of a supply chain that is time-critical. It manages stock picking from the warehouse based on expiration dates and takes into account delivery times so that the customer gets a product that is fit for consumption.
David Fenner, manager of the industry development group at Motorola Enterprise Mobility Solutions, agrees that the assimilation of more data sources has been the most important trend of recent years. His group is tasked with bringing solutions to the global market.
"The point of activity has been a movement from data capture within the four walls to data capture outside the four walls. There are more solutions using a wide variety of remote communications," he says.
Despite the trend to collect data throughout the supply chain, the technology that was meant to deliver data from manufacture to disposal - radio frequency identification (RFID) - hasn't been universally taken up.
Chris Stephenson, Australian managing director for Manhattan Associates, says there hasn't been a significant uptake of this technology.
"Things like the Walmart initiative, which received a lot of play a few years ago, now is not being actively pursued. Although that's not been publicly announced, there's not a lot of pressure [from Walmart] on suppliers." Manhattan Associates sells supply chain software and it has hundreds of customers in Australia; not one is using RFID, even though the software supports it. RFID is "a nascent technology purely because it's a technology trying to find a solution. It's turned into a closed solution benefit," says Fenner.
RFID has been around for quite some time. Modern systems were patented about 40 years ago and are found all over the place. One of the most common applications is in the e-tags used by toll road operators to collect revenue and track traffic movements.
Active RFID tags contain a battery and transmit data to a receiver without any external stimulus. Passive tags don't have a battery and react to an external signal to provide data. However, there are battery assisted passive tags that lay dormant until they receive an external signal.
As well as providing a tracking mechanism, RFID tags can store data as product information. For example, beef exporters provide information about the source of a cut of meat as the path it has taken through the supply chain. The RFID tag can be on the actual product, on the packaging or on the pallet.
Australian RFID provider Ramp delivers tracking solutions to many different industries. In one project the company assisted Optus with asset tracking. While many companies use barcodes to label equipment, the codes can only be read when you can see the asset. With an RFID tag, the reader can read the tag without it being in line of sight.
Ramp deployed its OnRamp Asset Tracker program at Optus to track the movement not just of tagged items but which member of staff (who carried their own tags) had moved them.
Similar systems can be used for document tracking as well. RFID document trays can be used to find lost documents, but they also offer huge security benefits. Where a document can only be viewed by a limited group of people or can't be removed from the office, an RFID system can be used to track possession and set off an alarm if someone tries to take a document past a secure perimeter.
RFID was touted as an open solution that would deliver a whole of supply chain view. However, it's ended up being used within specific parts of the supply chain. "If you look at a container trucking solution, RFID could be ideal because you're in control of every asset and know all the bits of information you're providing," says Fenner.
"When you take this to an open system you're not able to define all of the information that could be collected or the quality of it. That's why RFID has struggled in the mainstream."
"RFID will deliver an explosion of data" that will lead to "telco styles level of data", predicts Glen Rabie, CEO of Yellowfin, a business Intelligence solution provider. Whereas in the past the measurement of the supply chain was quite coarse, RFID will allow collection of highly detailed, nearly real-time data every fifteen minutes.
Rabie says RFID was a technology ahead of its time. "The use will be customer rather than supplier driven when customers want to know the entire life of a product. It's currently a non-event but when large logistics companies start to use it, it will become expected," he says.
"There was an awful amount of hype, more than was justifiable but the technology will mature. It was held back by the ability to manage the data volume that was being created [and analysed]. We ended up collecting all this data but couldn't process it so it was useless."
The technologies around RFID have caught up and have really matured over the last three or four years, especially with the invention of Google Maps, which companies can use to plot information collected by RFID tags.
"Now we're able to deal with the billions of rows of data and we can use GIS [geographic information systems] to map data. We used to have GIS gurus in the backrooms but we can now expose it to management," says Rabie.
The issue of dealing with all that data might be OK for a large company with a big IT department and a generous budget, but what about SMEs? Rabie's view is that the providers of RFID gear will offer a full service where they supply the hardware, collect the data and process it for you as part of a subscription service.
So, when should SMEs look at dedicated logistics solutions? "Typically we see there are three reasons why businesses start to look at a dedicated solution," says Stephenson. "They've used their accounting system or spreadsheets or a combination to run their warehousing and transportation. Eventually, they either want to improve their customer service, improve their inventory accuracy or improve their own efficiency."
Many companies on a growth trajectory need systems that can scale. They want to know that their systems will work when they add staff and move into a larger distribution centre. They're also looking for flexibility so that can be more reactive to their customer's demands and more nimble with their product offerings.
All of this has driven another significant change in modern logistics technology. It's all getting a lot more user-friendly. Customisation and configuration is now more available to staff on the floor rather than needing the IT department, if they have one, to make system changes.
Web-based programs becoming popular let customers access systems to find out what inventory is available and determine the status of their order.
One of the challenges many companies face is the seasonality of their work. For example, in the fruit picking industry, more staff are required during certain times of year. Manhattan's solutions for SMEs have an interesting take on this.
Rather than making the customer invest in bar code scanners or RFID readers for a work force that might only be in place for a few weeks of each year, they use a paper-based system that can be scaled up as needed without significant capital investment.
The role of business intelligence tools has come to the fore. Jones, from McKey Distribution, houses all information in a data warehouse and uses business intelligence for "total visibility".
"I have a dashboard running that tells me what my loaders are doing. I can see what my assets are doing and how we are in lead times and other customer satisfaction measures," says Jones.
There are many BI tools to choose from. One of the challenges is to find a tool that integrates with your ERP or logistics platform.
In the SME space, Yellowfin has worked with Australian company Translogix to develop solutions to optimise warehouse, fleet and routes. Yellowfin deploys services to customers who need logistics systems but don't want to live with the hassle of installation and maintenance.
Translogix now uses a reporting system that lets it monitor key performance indicators so customers can identify and track issues as they arise. It helps the company make better strategic decisions for the long term improvement of the supply chain. This solution is delivered to Translogix clients who require the reporting.
Supply chain reporting includes alerts when problems arise, longitudinal reporting to uncover trends, and comparative and operational reporting.
However, Rabie thinks that we're on the cusp of a change.
"I recently downloaded a book on reporting from 1939 and not much has changed other than the volumes of data. But one big difference with today is real-time predictive analytics. That's what Yellowfin will be changing to - the ability to mine the data on the fly and start churning out models.
"We'll be able to see in the middle of the day that a truck won't be able to complete its run by 3:00 pm so we can get another truck onto the route to do the next run. This will make logistics more like financial markets in the way they manage and react to incoming data more rapidly."
It's likely that other data sources outside the direct control of the supply chain manager will become part of the equation. For example, real time traffic and weather forecasts, factors that can have significant impact on supply chain efficiency, can be pulled in to provide a fuller picture and to make more accurate predictions.
The great challenge for SMEs is to remove inefficiency so less time is wasted and fewer tasks need repeating. The most expensive problem to rectify is a missed delivery that has to be done again. When those issues are solved, not only are costs optimised but service to the client is improved.
To avoid those issues, businesses need to move beyond home-grown spreadsheets and inflexible accounting software with a logistics "bolt on" and find a solution that offers flexibility and reliability.
Businesses without their own IT department don't need to miss out as third party service providers might start selling not just the hardware but the ability to collect and package the data on the businesses' behalf.
Issue: 333 | November 2014
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