Visibility and traceability are no longer buzzwords, according to identification and mobility solutions innovation expert Gerrit-Jan Steenbergen, who considers consider the reasons why
Visibility and traceability are no longer buzzwords, according to identification and mobility solutions innovation expert Gerrit-Jan Steenbergen, who considers consider the reasons why
Until 2008, rises in the transportation of goods mirrored overall economic growth. The recession brought a decline of 10-12% in early 2009, but this has stabilised and by 2011, transportation levels should return to 2008 levels, according to Gerrit-Jan Steenbergen, vice president for innovation and competence centres at Zetes Group.
Steenbergen also pointed out that improved availability of online networks is also contributing to traceability and visibility expectations. In the first half of 2010, more than 315 million smartphones were sold, up 50% on 2009 levels.
He continued: “Another trend is the changing expectation for traceability among consumers who want information on the origin of their products, constituent raw materials and product components as well as overall product quality. Discerning consumers look ‘behind the brand’ to make their purchasing decisions. Green initiatives seeking to improve utilisation of warehouse, freezer and truck space are widespread, spurred by both a desire to do good and cut operational costs.
“For suppliers, there is a demand for traceability to drive logistics efficiency, quality and visibility. The availability of ‘always on-line’ information creates an early warning system to reduce out-of-stocks, shrinkage or delivery problems and more targeted recalls.
“Overall, the emphasis on improving the customer experience using technology whilst seeking to cut operational costs is a trend occurring across Europe. Many retailers have already invested in self-service scanning, self-checkout, smart shelf labelling or queue-busting systems,” he said.
From supply chain to demand pull network
Steenbergen continued by saying that these trends have transformed the traditional supply chain (source-make-deliver-buy) model from a push to a pull channel with the customer firmly in control. “In the retail sector, companies like Nike are responding by allowing customers to customise shoes,” he added.
“This re-emphasises the right product, right place, right time, right price mix, which is dependant upon visibility. Balance requires a dynamic interaction between information and physical flows to ensure customer demands are met with just the right amount of stock.”
Steenbergen gave examples, which he said highlight why visibility is important for a networked supply chain:
Flexibility – No longer can goods only be returned to the store of purchase. Now customers can choose to buy online and collect from a local store, or buy from one store, return to another or a repair centre or the web.
Forecasting – This can be expensive, especially for smaller retailers with correspondingly smaller amounts of capital tied up in stock. Regardless of a retailer’s size, data accuracy remains the biggest issue. As an alternative to planning from forecasts, ‘visible’ networks can be built based on the ability to supply according to previous activity - creating a 100% demand driven supply network.
For example, vendor managed inventory systems (VMIs) are straightforward to introduce whereby the vendor is completely responsible for the product, has direct access to the retailer’s systems to monitor sales or stock levels and then creates replenishment orders based on demand, stock levels and existing inbound purchase orders. Working in this way can reduce inventory levels and eliminate out of stocks, significantly reducing costs for the retailer.
Manufacturer driven vs. customer driven promotions – Many manufacturers are operating retailer and customer led promotions in which the promotion is tailored according to the preferences or shopping habits of the local clientele. Alternatively, manufacturer and retailer work in partnership based on anticipated demand. So for example, after Kate Middleton wore a navy dress as her engagement to Prince William was announced, clothing suppliers to Tesco were fast to react with a near identical garment available in their stores within days.
Focusing on adding value to customers vs. straight cost-reduction – Cutting costs used to be the motivation behind investment in the supply chain whereas in the future, the emphasis needs to be on delivering added value to specific customer groups. For instance, retailers are starting to understand that customers buying premium products will value traceability information verifying the origin and quality of their goods above other customers just looking for the lowest cost products.
Building ‘always online’ visible supply networks
“Traditional barcodes are still used for identification of products but slowly, interest in serialised packaging is creating applications for the 2D barcode,” he added. “To reduce time to market, many retailers in Europe have implemented voice picking and are expanding their use of voice directed working in the warehouse. And smaller, more specialised retailers are following suit, but seeking ‘out of the-box’ solutions that are quick to implement and show investment payback.
In the end, picking a technology is the easy part.
“More challenging is enabling the retailers, suppliers and other network members to collaborate and use technology to operate more effective supply chain networks,’ he concluded.
