New
generations of shopping options have come to the forefront of supply chain
management through e-commerce and m-commerce, making supply chain management a
concern for many organisations. A brief definition of these two areas of supply
chain management is:
- Electronic commerce, or E-commerce refers to online marketing, advertising, purchasing and selling products or services. It includes the exchange of money and information to enable these transactions.
- Mobile commerce, or M-commerce, involves selling and purchasing products and services using wireless handheld devices like smartphones and tablets.
However, effectively managing data and extracting insights requires specialised skill sets. Without the right expertise, technologically driven inventory management can be counterproductive for organisations. It is only beneficial when utilised expertly and appropriately.
The Evolution of Technology
The rise of e-commerce is heavily reliant on technological advancements in inventory management. This shift has blurred the lines between traditional retail and online order fulfilment, highlighting the importance of integrated inventory systems across various sales channels.
The evolution of e-commerce has led to a hybrid model where physical stores incorporate e-commerce platforms. This integration is only feasible with a comprehensive inventory management system that seamlessly tracks inventory across different retail channels.
Due to the rapid rate of change, keeping up with technological advances has historically been a challenge for organisations. However, advancements are now more accessible to all, leading to a complete transformation in organisations' operations. Organisations now have a wide array of technology options, allowing them to tailor their inventory management systems to suit their needs without incurring excessive costs.
The scalability of technology enables organisations to adapt as they grow, potentially giving rise to new business models. Despite the variety of technologies available, the primary goal remains consistent: organising, controlling, and providing inventory information.
Automated inventory management systems utilise tracking technologies like barcodes and RFID to streamline information collection and goods flow. These systems can be active or passive, with active systems offering automatic detection, tracking, and analysis capabilities.
Innovative technologies and applications are crucial in advancing inventory management practices, although manual data entry can introduce errors. Nevertheless, these systems can be a flexible and valuable option for smaller organisations.
Each process, whether conducted physically or electronically, has its unique nuances. This is especially evident when comparing competitors offering the same products but having different operations approaches. Furthermore, the peculiarities within various industries contribute to the diversity of processes, even extending to third-party logistics organisations.
- Just-in-time procurement.
- Reduction of inventory.
- Increase in manufacturing efficiency.
- To meet customer needs in a time-sensitive fashion.
Manufacturing
The evolving technological landscape and shifting customer expectations have underscored the significance of integrated supply management, particularly for manufacturing organisations aiming to expand their customer base. Digitalising business operations is no longer just an added benefit but a fundamental requirement in today's competitive market environment.
Manufacturing organisations rely heavily on their supply chain partners to deliver products, with stakeholders such as manufacturers, suppliers, retailers, shippers, and distributors playing crucial roles. The supply chain culminates in the delivery of products to the end customer, highlighting the importance of collaboration and efficiency among all involved parties.
To
streamline the overall production process, a manufacturing organisation must
clearly understand the status of products in production, anticipate any
potential issues or delays, and adjust production schedules accordingly. Technology
integration can enhance transparency throughout the process, giving
manufacturing organisations greater control over product data and information
flow across the supply chain.
Managing
inventory levels optimally poses a significant challenge for all manufacturers.
Excess inventory can result in financial risks due to waste and increased
working capital requirements. In contrast, insufficient inventory may lead to
production disruptions and business losses from stockouts. Manufacturers can
establish flexible business processes that adapt to varying demand scenarios by
leveraging technology. Analytics can help manufacturing organisations achieve
their financial objectives by effectively managing inventory and sales orders.
Manufacturers
can enhance collaboration and partnership efforts with critical suppliers
through IT-enabled real-time information sharing. Improved visibility into
supplier and distribution processes allows manufacturers to monitor activities
across the supply chain more effectively. This valuable information enables manufacturers
to make informed decisions, anticipate future material demand patterns, and
reduce costs through strategic decision-making in procurement and supplier
contract management.
Ensuring
timely material delivery is crucial for maintaining high customer satisfaction
levels, increasing customer retention, and generating repeat business. Technology
solutions play a pivotal and vital role in enhancing the delivery speed and
keeping customers informed about the status of their product deliveries.
Implementing
processes involving customers throughout the manufacturing journey, from order
confirmation to fulfilment, can empower them to track and trace their orders
and control their experience. This enhances their satisfaction and reduces the
workload on the manufacturer's customer service team.
Establishing
effective communication channels with logistics service providers can provide
real-time updates on inventory shipments and product deliveries, helping to
streamline the manufacturing process and minimise delays and costs associated
with production obstacles.
Leveraging
technology to gain comprehensive visibility across all organisational functions
and utilising real-time decision-making data can significantly improve
manufacturing efficiency. Incorporating technology into supply chain management
can result in lower product costs, reduced working capital requirements, and,
ultimately, higher customer satisfaction.
Business Intelligence
Business
intelligence (BI) comprises organisations' strategies and technologies to analyse
business data information. BI technologies provide historical, current and
predictive views of business operations. The standard business functions of
intelligence technologies include:
From
operational to strategic decisions, BI can support various aspects of an organisation's
business, including product positioning, pricing, and other essential
operations. To be most effective, BI should combine external market data with
internal organisational financial and operational data sets, to
provide a comprehensive view that enhances decision-making capabilities.
Additionally,
business intelligence tools can empower organisations to gain insights into new
markets, assess product or service suitability for different market segments,
and evaluate the impact of marketing efforts.
- Reporting.
- Online analytical processing.
- Analytics.
- Process Data Mining.
- Business performance management.
- Benchmarking.
Inventory Management
Inventory
management is a challenging and crucial task that involves constantly checking
and verifying stock levels. It is a task that is never complete as the inventory
position continually changes. However, it is essential for the successful
operation of any retail or manufacturing organisation. When issues arise with
inventory, they can significantly impact the organisation in terms of cost and
inefficiency.
Fortunately,
technology has evolved to help address these inventory management problems. The
goal is to eliminate the manual aspects of inventory management that are slow
and prone to errors. In the past, the traditional manual approach to inventory
management meant that accuracy was never achieved, and the actual state of the organisation's
inventory needed to be accurately represented. Staff had to manually compare
incoming and outgoing orders and physically count the inventory to identify and
correct errors.
Due to
the nature of manual inventory counting, it could not be done continuously and
in real time. It was typically done during pre-determined periods set by the organisation.
This manual process made it difficult to verify the accuracy of the inventory,
and mistakes were inevitable, especially when the task was repetitive and
laborious.
However,
technological advancements have introduced RFID technology, which can revolutionise
inventory management. RFID tags and scanners automate inventory management and continuously
track all items entering and leaving a warehouse. Each time a product is moved,
its movement is logged, allowing for precise tracking of its location.
For organisations
that offer services besides goods, RFID technology can also be invaluable for
asset inventory management. It eliminates errors, ensures accuracy, enhances
customer service, and enables better decision-making.
Organisations
rely heavily on inventory management decisions enhanced through insightful data
analysis. This approach saves time and equips managers with the necessary tools
to improve overall business decision-making processes.
Technologically
driven inventory management enables organisations to collect and analyse data,
providing valuable insights into product trends and demand patterns. This
data-driven approach is crucial for making efficient sales decisions and
leveraging big data in the future.
Warehouse Management
While different organisations provide blueprints for key processes
using barcoding and radio frequency controls, these standardised methods only
apply to reading and recording data. The actual handling of physical materials
and the specific procedures followed in each warehouse are distinct and
tailored to the individual business. This is driven by factors including:
- The magnitude of the warehouse operation.
- Storage capacity.
- Temperature.
- Order profiles.
- Legislative requirements.
- Organisational culture.
- Volume of goods moving through the facility.
- Receiving.
- Put-Away.
- Picking.
- Packing.
- Dispatching.
- Returns.
- Value-adding.
The complexity around handling value-adding processes and the changing
nature of component products in and out-of-shelf locations can be daunting.
Over the years, systems have evolved to assist. Yet, many companies find that recording
value-adding components may be incompatible with how their logistics system or
WMS is set up.
Business
Process Management (BPM) is how an organisation creates, edits, and analyses
the predictable processes comprising its core. Each team is responsible for
taking some form of raw material or data and transforming it into a usable
product or information. Each team may handle a dozen or more core processes,
either in part or as a whole.
The
flow of goods within an organisation involves various procedures, during which
a Warehouse Management System (WMS) or an Enterprise Resource Planning (ERP) is
utilised to document the corresponding transactions:
Business
Process Management is not associated with task Management, which focuses on
individual tasks, or with project Management, which handles one-time or
unpredictable task flows. It is an ongoing organisational improvement process that
aims to make the organisation operate more effectively and efficiently.
Staff
will only see one part of a process at the individual level. Very few can scan
out and see the full effects of an entire process and where potential
bottlenecks and inefficiencies lie. Un-coordinated and chaotic organisational processes
lead to ineffectiveness and inefficiency in one or more of these scenarios:
An ERP system is a cohesive force that combines the various computer systems within a large organisation. Without an ERP application, each team within the organisation would have its IT system tailored to its specific tasks. However, with ERP software implementation, each team retains its system while gaining access to all systems through a single application and interface. This integration facilitates a comprehensive planning and operating system.
ERP applications are crucial in enhancing communication and information sharing among different teams within an organisation. By collecting data on the organisation's activities and the status of various teams, the ERP system makes this information readily available to other teams, enabling them to utilise it effectively.
Implementing ERP applications can significantly contribute to an organisation's self-awareness by connecting information related to production, finance, distribution, and human resources. This integration bridges the technological gaps between different parts of the organisation, eliminating duplication and incompatible technologies. It often integrates systems such as accounts payable, stock control, order monitoring, and customer databases into a unified system.
Over the years, ERP offerings have evolved from traditional software models reliant on physical client servers to cloud-based software that offers remote web-based access. While an ERP system does not entirely eradicate inefficiencies, it prompts the organisation to reconsider its structure and operations to maximise the benefits of ERP technology.
Despite the potential advantages, ERP systems often fail to achieve their intended objectives due to organisations' reluctance to abandon outdated processes incompatible with the software. Additionally, some organisations are hesitant to let go of old software that has proven effective in the past. To ensure the success of ERP projects, it is crucial to keep them distinct from numerous smaller projects, which can lead to product and service cost overruns.
Electronic commerce or E-commerce, is the natural evolution of MRP systems. The term E-commerce refers to any commercial activity or financial
transaction that involves exchanging products, services, financial resources and information over the internet.
- Inbound.
- Goods In.
- Main Storage.
- Picking.
- Packing.
- Dispatch.
- Time wasted in non-value-adding activities.
- Increased errors decreasing the value of an organisation's data and information.
- A “blame” culture developing as opposed to corrective actions being taken.
- Lack of accurate data being accrued or created.
- Demoralised staff whose focus is the error rather than a solution.
- Gain control of chaotic and unwieldy processes.
- Create, map, analyse and improve business processes.
- The ability to run everyday operations more efficiently.
- Potentially realise bigger organisational goals.
- Move towards digital transformation utilising internet-based technologies.
- Improve and optimise chaotic supply chain and logistical processes.
- Closely track individual products or materials as they move through a workflow.
Business Process Management centres on repetitive and ongoing processes that follow predictable patterns or process management routines. When organised and systemised, business processes can lead to increased organisational performance.
Enterprise Resource Planning
Enterprise resource planning (ERP) is a crucial process that organisations utilise to manage and integrate essential components of their operations. ERP software applications play a critical role in resource planning by consolidating all necessary processes into one system. This integrated system encompasses planning, purchasing, inventory management, sales, and marketing, streamlining organisational operations.
E-Commerce
The activities are focused on conducting internal and external business processes as a continuous stream of product and data flows, upstream and downstream of the supply chain, utilising cloud based internet technologies, across many different IT networks and platforms.
- Mobile commerce.
- Electronic funds transfer.
- Supply chain Management.
- Internet marketing.
- Online transaction processing.
- Electronic data interchange (EDI).
- Inventory management systems.
- Automated data collection.
This can unify all internal and external organisational operations encompassing
the tangible, monetary, and informational movements of products, services, and
data across the supply chain. Furthermore,
the influence of e-commerce on supply chains is considerably more advanced.
By
utilising electronic solutions, organisations can now pinpoint discrepancies
between various levels of supply chains, thereby eliminating the performance
gap. The advent of e-commerce has also facilitated the implementation of ERP
and WMS systems, enabling organisations to enhance the efficiency and effectiveness
of their supply operations with customers and suppliers.
These
new capabilities still need to be fully exploited as technology organisations invest
in new e-commerce software solutions and expect greater investment returns.
E-commerce helps solve many issues that organisations may need help coping
with, such as political barriers or cross-country changes, and it provides
organisations with a more efficient and effective way to collaborate within the
supply chain.
The
emergence of e-commerce has created job opportunities in information-related
services, software apps, and digital products. However, e-commerce has also resulted in job losses, especially within the
retail, postal, and travel sectors, which are expected to experience the most
significant job losses due to the increasing reliance on e-commerce and
customers' self-sufficiency in using online services provided by organisations.
One of
the main advantages of e-commerce is its convenience to customers. They can now
shop from home and easily browse through an organisation's online
shopping portal. This is especially beneficial when purchasing products or
services that are not available locally.
By shopping online, customers can
access a broader range of products, saving them time, money, and effort. Additionally, online shopping gives customers purchasing
power as people can research products and compare prices among multiple
retailers.
E-commerce
technologies have also helped reduce transaction costs by eliminating the need
for intermediaries. Organisations and end users can now directly engage in
online product or service searches, which has contributed to the success of
e-commerce at both urban and regional levels. However, the success of
e-commerce relies on how effectively local organisations utilise it and how
well local end users adapt to its use.
Despite
e-commerce's advantages, human interaction is still needed, especially for
customers who prefer face-to-face contact. Many customers are concerned about
online transactions' security and integrity and remain loyal to well-known
retailers.
To address these concerns, some clothing retailers, like Tommy
Hilfiger, have introduced "Virtual Fit" platforms on their e-commerce
sites to minimise the risk of customers purchasing ill-fitting clothes.
However, the effectiveness of these platforms varies significantly.
While
e-commerce has created new job opportunities and increased customer
convenience, it has also led to job losses in specific sectors. The success of
e-commerce depends on the proper use of local organisations and the adaptation
of local end users. Additionally, human interaction is still needed to address
customer concerns regarding online transactions.
The
rise of e-commerce has been identified as a principal and significant factor
contributing to the decline of brick-and-mortar retailers, a phenomenon often
dubbed the "retail apocalypse". The proliferation of online shopping
platforms like Amazon has posed challenges for traditional retailers in
retaining and attracting customers, prompting them to revamp their sales
tactics.
Many businesses have resorted to implementing sales promotions and
intensifying their digital presence to entice consumers, leading to the closure
of physical store locations. This shift in consumer behaviour has compelled
some traditional retailers to prioritise their online operations over their
traditional storefronts, ultimately reshaping the landscape of the retail
industry.
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