Real-time location systems (RTLS) are essential for tracking the location and movement of items through the supply chain. But the data (and the resulting visibility into processes) that RTLS provides is even more critical for optimizing business costs, efficiency and performance.
The process of managing raw materials all the way to finished goods delivered to an end customer involves a huge number of steps. An inability to understand where materials are in the process and how they are handled can degrade the integrity of the entire supply chain, cause delays, logistics issues, drive up costs and erode customer service. When consumer products manufacturers started implementing RTLS a decade ago, the idea was simple: identify and timestamp where items existed in the supply chain process through technologies like passive RFID and GPS. Over time, more tracking tools were added such as optical, Wi-Fi, infrared and low energy beacons.
Having this “map” of where and when items existed in the supply chain was a major improvement. It opened up a whole new way to track and manage assets though data points. But with access to all this new data, consumer products manufacturers started to identify gaps in real-time visibility – what they really needed was the ability to better understand the impact that combined data points had on overarching business processes as change happened, not after it happened.
Today, an RTLS is just one important part of supply chain monitoring. It provides some of the foundational data required to understand movements of and interactions with assets over time. But overlaying business requirements creates visibility beyond place and time, and allows an organization to be responsive to changes happening at every point the supply chain.
The key to visibility is having a centralized view that provides access to RTLS data, but also logistics, POS, inventory, financial, and more. Only with access to all levels and types of data can manufacturers start to identify the relationship among data points and how change can lead to process improvements. Then, when an organization sets up its business parameters, the company can run analytics against a wide set of integrated big data points to determine if business objectives are being met. For consumer products manufacturers there are four areas where this has become critically important to success.
Maintain compliance with mandates
Track and trace requirements continue to be expanded. Consumer products manufacturers, primarily in food and pharmaceutical, are under increasing pressure to provide data that accounts for the location and interactions a product has along the entire supply chain. This is becoming more prevalent for electronics and automotive components as well as other industries.
Complete supply chain traceability must include visibility into product creation as well as movement of goods and assets, without regard to system or company boundaries. This is essential functionality in global life science supply chains. Database and technology solutions, including those powered by the SAP HANA platform, now enable manufacturers to monitor high volumes of data in real time for compliance recording. These data points may include orders, serialized items, alerts, expected and unexpected events, in-transit stock, and more – all used to enrich analytics and find exceptions to mitigate risk.
Improve accuracy and increase the speed
eCommerce players like Amazon have stepped up the game when it comes to availability and same-day delivery. For consumer products manufacturers and their retailer supply chain partners, competing with the likes of Amazon requires visibility into logistics, inventory, workforce management and information from other systems. Poor transparency into distribution is unacceptable today as it leads to costly corrections and excess inventory buffers. This is an issue
whether production processes are lengthy and complex, or have been outsourced. The biggest challenge comes when there are different logistics service
providers for delivery to different customers through different channels. When business-relevant data is scattered across systems and company boundaries, it hinders the ability to create decision quickly, slowing own the entire partner network.
Reduce waste
RTLS data combined with business process data can drive innovations beyond pure automation and compliance. It allows for more controlled monitoring of reimbursement and returns processes. By providing end-to-end business process visibility linked to the physical material flow, order-to-cash as well as procure-to-pay processes can be monitored beyond the limited view of one single participant of the value chain. It helps organizations monitor the condition of goods – for example, in the case of expensive, raw materials. In addition, companies prone to counterfeiting and gray market activities can provide authentication service or detailed pedigree information when needed. These authentication services allow process automation and alerting in the distribution network, which enables manufacturing companies to take accountability and adhere to liability obligations toward end-customers and consumers.
Increase customer service and protect brand reputation
The bottom line is that a high-level of transparency combined with big data allows for compliance, raises customer sentiment and service levels, mitigates supply chain risks, and helps protect the brand. In one example, a consumer products company was suffering from a lack of visibility into distribution – in too many cases, managers didn’t know when products would arrive at distribution centers or at retail customer locations. Trying to get insight was very time consuming because it required manually checking in with various other teams including third party contract manufacturers. The company was at an increased risk of not meeting delivery promises to customers and needed more insight. The company was able to deploy RFID tags on shipments and roll logistics data into its SAP ERP system to create a central repository for information. It started by incorporating automated manifests into the company's SAP system via a flat file. It later moved to direct integration for even more visibility of individual items from point-of-manufacture to point-of-sale. Since the SAP ERP system serves as the system of record, informing these systems with RFID and other RTLS data can provide up-to-the minute updates for manufacturing, logistics and service operations.
Recently the new SAP supply chain strategy has gained interest, which enables businesses of all sizes, industries and regions to transform supply chains into demand networks. New business realities, such as demographical and geographical changes of buying power, individualization of products with innovative technologies and growing logistics complexity with same day delivery concepts, put companies under immense pressure to transform supply chain processes. A new strategy is to address these business realities and deliver cloud-based solutions in areas such as integrated business planning, supply network orchestration and logistics by leveraging the SAP HANA® platform as the platform for big data. As integration of systems continues and we learn how to tap into more data, consumer products companies will find more ways to leverage information and improve business processes.
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Article originally published in Supply Chain World – July 2014”. Copyright 2013, Phoenix Media, Reprinted with Permission
