Tam, Patrick K

July 29, 2003

Originally Published:20030701.

Wireless technology has arrived as an effective method for supply chain management because of its capabilities of extending the enterprise.

In the past, through various technologies such as enterprise application integration and enterprise resource planning (ERP), companies have been able to facilitate information flow and analysis within the four walls of their enterprise. Today, leading companies are looking beyond their enterprise, embracing the Internet to create a networked supply chain to provide two-way communication and information sharing to their supply chain constituents.

For instance, Internet gear manufacturer Cisco Systems Inc. has implemented a private, Internet-based information hub that links contract manufacturers, distributors and component suppliers. This information hub allows Cisco to gain visibility into its supply chain and notify trading partners when performance falls below certain thresholds.

By combining wireless technologies with a networked supply chain, companies will be able to further propagate and track critical information to manage processes throughout the entire supply chain more effectively, efficiently and accurately.

Wireless impacts all areas of the supply chain, from the initial customer order to the distribution of finished goods. Let's look at some specific areas within the supply chain.

Logistics

Wireless technologies allow companies to manage the distribution of products and assets throughout the supply chain more efficiently. By installing computers on each vehicle and wirelessly sending real-time data such as capacity, vehicle performance and location, companies can optimize the utilization of their transportation fleet to improve fuel economy, asset utilization and productivity. Additionally, this information allows companies and customers to have visibility into their shipments and material throughout the supply chain.

One company that has embraced wireless technologies is UPS. Throughout its worldwide distribution hubs, UPS is rolling out one of the world's largest wireless local area networks (LANs). By providing package sorters with wireless ring scanners, productivity is increased significantly, contributing to a projected payback within 16 months and $13.7 million/year over the next five years.

Beyond wirelessly enabling its distribution centers, UPS envisions an information technology network that will enable the capability to execute transactions and payment upon shipment receipt, send part replacements to warehouses, and manage inventory globally.

Order management

Although many companies allow their customers to order products/services online, very few allow their customer to do so wirelessly through a mobile device. By allowing customers to order online, and check order status anywhere/anytime, significant increases in customer satisfaction and additional revenue streams will surface.

For instance, a leading provider of computing servers expects a payback of nine months for its mobile online order system.

Inventory management

Through wireless technologies, management of raw materials and inventory is greatly improved. Wireless allows companies to better track existing material throughout the supply chain, monitoring inventory within a warehouse or material in transit from one supply chain node to another.

Avail, an aircraft parts distributor, has implemented a wireless solution to improve inventory management within its warehouse. The problem was that people had to go from bin-to-bin in warehouses to manually check stock levels to determine reordering quantities. Avail's solution was to label its inventory and bins with bar codes, track inventory using a wireless scanner, and utilize the Internet to transfer the data into its ERP system.

Consequently, Avail now knows immediately what to reorder and how much to reorder. With anticipated savings of $1 million/year in productivity improvements, headcount avoidance and reduced costs, payback for the $100,000 project is estimated at one year.

Manufacturing

At the most basic level, wireless can help eliminate paper-based processes throughout manufacturing and improve timely information flow to factory floor workers. For instance, one of Hewlett Packard Co.'s printer manufacturing facilities suffered from work-order backlogs and inefficiencies as a result of the reliance on paper work orders. The solution was to implement a wireless infrastructure and utilize handheld computers as an electronic clipboard to automate data collection and dissemination to technicians and to provide real-time information to HP's data repository.

As a result, HP estimates:

* improved productivity of 43 minutes per day per technician;

* increased accuracy of part and inventory status;

* increased asset reliability by 47%;

* decreased errors by eliminating the paper-based processes;

* decreased plant maintenance costs by 25%.

Besides eliminating paper-based processes, wireless technologies offer other significant benefits for manufacturing. Coupled with a decision support information hub, wireless can be used to propagate critical alerts to notify the right person at the right time when a specific condition or event occurs. By alerting the appropriate individual immediately through a wireless device, the situation can be addressed and resolved in less time, reducing the impact of the event.

Here's one scenario of how a line-down situation can be avoided:

1. A decision support information hub detects an expected delivery disconnect: company X expects the delivery of material on October 1, but supplier Y is scheduled to ship the material on December 1.

2. The Internet hub alerts all impacted parties of the situation through various wireless devices, such as a PDA, pager or cellular phone.

3. Impacted individuals receive information and respond immediately to resolve the situation.

4. A line-down situation was avoided by eliminating the material shortage condition.

The wireless-enabled supply chain is the next step in the evolution of supply chain management. By freeing the supply chain from grounded facilities, wireless technologies enable the capture, monitoring and dissemination of information at various mobile nodes of the supply chain, resulting in greater visibility and improved decision making.

(C) 2003 Transportation & Distribution. via ProQuest Information and Learning Company; All Rights Reserved

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