Driving Value to the Next Generation Supply Chain through Technology - What Next?
1. Driving Value to the Next Generation Supply Chain through Technology - What Next? for GS1 Malaysia Supply Chain Conference 2008 12 th August 2008 presented by Richard Sebastian Research Analyst, Auto ID Group - RFID, APAC
5. Business Environment Today Business Dynamics Lower Cost Branding Competitive Fast Moving Market Higher Quality of Service Volatile Rising Profitability Demands Sourcing & Retaining Human Capital Demanding Policies & Regulations
6. Competitive Trends in Global Supply Chain Global Challenges How is Your Company’s Supply Chain Coping? Supply Chain Today Price Deflation Raw Material Cost Globalization Integrity & Security Visibility Quality of Service Environmental Regulations
10. Supply Chain Performance 1970 2010 RFID 10 year milestone Evolution of Technologies in Supply Chain Material Resources Planning Enterprise Resources Planning Advance Planning and Scheduling Bar coding System GPS Manual tracking Fax Vendor Management System Fleet Management System Warehouse Management System
13. ERP, MRP & APS System Fleet/Warehouse MS Barcode, RFID & GPS Advanced Logistic Technologies Increase supply chain efficiency Logistics Costs Reengineer supply chain Consultation from LSPs Engage new LSPs Initiatives to reduce logistic costs Used of advance technologies Average Logistics Cost Currently incurred in ASEAN 4 countries: 14.4% 14.4% Advanced Technologies + Initiatives = Lower Operational Costs ** LSP refers to Logistics Service Providers
15. Just two and a half square centimeters will decisively alter the future of supply chain management (EPCglobal)
18. Value of Real Time Information What is the value of WSJ dated 1 month ago ? What is the value of WSJ dated yesterday ? What is the value of WSJ dated today ? What is the value of WSJ dated tomorrow ?
19. Supply Chain Behavior Today – The ‘Bull-Whip Effect’ Source: Auto-ID Labs @ MIT Variability can be up to 10X or more between manufacturer and retailer! “ Distorted information from one end of a supply chain to the other can lead to tremendous inefficiencies excessive inventory investment, poor customer service, lost revenues, misguided capacity plans, ineffective transportation, and missed production schedules.” (Hau Lee et al.)
20. The Bull-Whip Effect with RFID Source: Auto-ID Labs @ MIT Variability difference in the supply chain is significantly less with better visibility
24. RFID Applications – Cross Functional Activities Security & Collaboration The unique ID of the EPC in the RFID tag ensures authenticity of products moving along the supply chain is not compromised. Shrinkage can be detected immediately based on pro- active alerts leveraging on business intelligence in the RFID system. The EPCIS network enables stakeholders to securely share private data of tagged goods. Supply/Demand Planning & Replenishment Forecasting Real time visibility enables supply side to have accurate information on what is actually available for more precise replenishment of products. The demand side able to monitor entire movement of goods such as sales, damage, theft making projection of demand more accurate.
25. RFID Applications – Manufacturers and Suppliers Procurement & Materials Storage Manufacturers are able to better manage the raw materials received from the suppliers thus improving operational efficiency with RFID. Case or pallet level tagging of raw materials from supplier can ensure required materials are received on time, and at the same time ensure storing and retrieving it at the plant is done rapidly. Production Tracking of goods as it flows through the manufacturing floor can aid in pin-pointing and resolving bottlenecks. As goods in work-in-progress inventory becomes finished goods, RFID applications can automatically trigger downstream transportation. Real time connectivity can ensure planners and schedulers can respond instantaneously to demand conditions from the consumer end thus reducing the need for safety stocks.
26. RFID Applications – Warehouse and Distribution Receiving & Check-In Inventory is automatically updated for tagged pallets and cases as it reaches the distribution center. All tagged goods received will be cross-checked with the purchase order to ensure any potential discrepancies is swiftly identified. Labor intensive manual based quantity checks can be eventually eliminated. Exception Product Location Goods which are potentially harmful or require special care can be detected immediately when scanning the pallets or cases. Information can be relayed to the personnel in charge to take specific precautions when handling such goods. This will ensure quality of product and consumer safety is never undermined.
27. RFID Applications – Transportation Electronic Seal Specially designed seals embedded with RFID to be used to lock containers. The e-seal will cease to operate once it has been tampered with. This will effectively make any form of tampering, theft or sabotage on the goods inside the container known early on. Security checks at customs checkpoints can also be decreased with swifter processing. Cold Chain Sensor RFID tags will enable constant temperature monitoring of goods being transported. High temperature variability can be detected immediately and necessary actions can be taken to protect this perishable goods.
28. RFID Applications – Store Operations and Retail Receiving Pallet and case level tagging will be able to update the inventory system accurately during the receiving process. Data can also be relayed to other parties in the supply chain on exact status of the batches received. Overall store labor productivity can be improved besides increasing inventory accuracy. Point of Sale Products tagged with RFID can enable a swifter checkout as total bill is automatically calculated at POS as no line of sight is required. The use of RFID at item level can heighten the overall customer satisfaction level.
30. RFID in the Supply Chain Today – Asia Pacific Refers to the present state in July 2008 4-7% 8-15% 10-18% 20-25% 25-30%
32. Extra References – Potential Applications by Segment Production Tracking Procurement & Material Storage Supplier & Manufacturer Cross Functional Activities Asset Tracking Safety Stock Inventory Security & Collaboration Batch Item Tracking Supply / Demand Planning Loss Prevention Exception Product Location Shipping Put-away & Replenishment Order Selection Receiving & Check-in Warehouse & Distribution Cold Chain Routing & Demurrage Electronic Seal Contract Compliance Yard Management Transportation Automated Payment Self Manage Kiosk Point of Sale Security Exception Handling Receiving Store Operations & Retail
Business environment – increasingly competitive & volatile Outer ring = factor Circles = influenced by
Try to see if can include “how to achieve” part
resources – people, energy-gas, electricity, etc Supply chain integrity strategies guarantee the authenticity, quality and efficient delivery of a product as it passes through different handlers in the distribution network to its destination
No line of sight required – Unlike barcodes which require a line of sight for it to be read, RFID does not require line of sight when read. Very long read range – While barcodes can only be read from a couple of feet distance at the very maximum, RFID is capable of being read from a few feet to hundreds of meters away. Durability – While barcodes are prone to damage, RFID tags can withstand extreme conditions (i.e. high temperatures, “dirty – oil/water”, outdoor, etc) Information storage –Barcodes cannot store any information and only represents a serial number. RFID tags can store large amounts of data as necessary. Multiple reads – Barcodes must be read one at a time while in the case of RFID, hundreds of tags can be read in one instance. Rewriteable - Data can be updated in real-time on RFID tags and old data can be replaced with new data as appropriate. Automation – RFID tags can be read without human intervention – fully automated. Sensor capabilities – RFID tags can incorporate any types of sensors to enhance its sensing capability (i.e. temperature, humidity, pH, vibration, light, etc)
Cohen says, however, that more companies are beginning to realize that they need end-to end visibility in their supply chain management efforts. “SCM is about more than just sensing and responding,” he explains. “Companies need to anticipate demand, since it takes time to respond to demand-side changes. They’re learning, but there’s still plenty of room for improvement.” Distorted information from one end of a supply chain to the other can lead to tremendous inefficiencies: excessive inventory investment, poor customer service, lost revenues, mis^ided capacity plans, ineffective transportation, and missed production schedides
Role of RFID in the SC is to optimize business processes and streamline operations in the entire SC to ensure the essence of SCM is achieved…ensure the right product…. Its role is compliment and ensure the essence of SCM is achieved, which is: ensure the right product reaches the…. If the essence of supply chain management is to provide the right products in the right amounts to the right place at the right time — all at the right cost — then a concept called the “efficient frontier” is a useful way to gage capability.