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Can Technology Ease Complexity In Supply Chain Management?

August 1, 2013BY AMS Editor

Companies should turn to technology solutions for supply chain management, as it will help them navigate increasingly complex supply chains.

A recent post on the Supply Management blog highlights a report that explains how wholesale and retail distribution firms are having a harder time handling supply chains and stand to lose more than ever if they’re unsuccessful.

The report argues that companies “are leaving their reputation in the hands of suppliers because they don’t understand how they operate or have adequate risk management strategies in place.”

Supply chains are becoming more complex, but this is usually by design as wholesale and retail distributors are looking more to a virtual supply chain as a way of reducing fixed costs and their related break-even. This allows them to achieve a much faster go-to-market schedule, but it also creates multiple dependencies that they may have little control over. Part of the solution is automation, part is process and part is legal.

From an automation standpoint, the ERP system used must have built-in support for real-time transmission of data to supply chain partners, including suppliers, customers and third-party logistics firms.

From a process standpoint, supply chain management leaders are now responsible for better supply chain planning and monitoring, as there are multiple moving pieces that are independently owned and managed.

From a legal standpoint, better due diligence is required in selecting and contractually binding supply chain partners. Distributors should use both incentives and disincentives based on meeting agreed-upon service levels.

In the end, organizations need a greater emphasis on technology to support this complexity. There must be a way to communicate B2B for these separate components of your supply chain.

For example, if you’re working with a third-party logistics provider, order information from a customer must be immediately relayed to the provider so they can start picking and shipping. Then, the provider needs to send you real-time updates so that you have an up-to-date order status at all times for the customer.

Spreadsheets simply can’t handle that type of communication between businesses. Distributors need more sophisticated technology solutions for supply chain management to manage increasingly complex business models.

Source: Supply Management, June 2013

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