Is Disruptive Technology Merely a Distraction?

If technology is adopted without having first optimized the fundamentals within an operation, you will end up with a very expensive sub-optimal outcome.

S Ttock Artificial Intelligence
Getty Images

Common technology themes such as big data, blockchain, artificial intelligence, drones and robotics have dominated supply chain and logistics conference agendas around the world for the last five years or so. In 2018, a survey conducted by MediaPost revealed blockchain was voted as the most overrated word of the year.

So, are these technologies merely buzzwords, or do they have real potential to transform the supply chain industry?

While many disruptive technologies are interesting and some of the advances impressive, if technology is adopted without having first optimized the fundamentals within an operation, you will end up with a very expensive sub-optimal outcome. Should this be discovered later, it will be far more complex to fix because the optimization post-implementation now requires changes to new and expensive technologies as well as the operation.

It’s important not to be fooled by technology advocates claiming that the operation will be optimized during specification and roll out. It may improve from where you started, but it will not be optimized. The operation will be compromised to fit the solution. Furthermore, supply chains are still underutilizing some of the technology that was invented more than 20 years ago.

Barcodes are a good example here. Invented in 1948, the potential of the barcode is still yet to be fully realized in many businesses and across significant, otherwise sophisticated, supply chains.

Furthermore, RFID was the buzzword of the 1990s and 2000s, and despite its proven capabilities, is no longer at the forefront of supply chain thinking.

Big data is one of the newer examples. While its undoubtably valuable to have access to more information, does this high-level data help us make good decisions in the supply chain? If we obsess over big data, we miss some major opportunities in the micro view.

While every supply chain is similar, every business will have a very different sweet spot. Therefore, to get your supply chain “right,” which is an outcome of reducing the “touching, moving and stopping,” keep an eye on disruptive technologies, acquire and implement to your business’s benefits and always keep focusing on the fundamentals.

These are:

1. Warehouse operations. Receiving, replenishment, picking, staging and dispatch. Getting these right is as fundamental as it comes and is always a place of significant opportunity.

2. Sales and operations planning (S&OP) ensure a robust process involving finance, sales, operations supported by strong analytics.

3. Distribution and replenishment planning (DRP) ensures a robust process involving sales, operations supported by strong analytics.

4. Barcodes. Every time something is touched, moved or stopped, it should be scanned using a barcode.

5. Warehouse management system (WMS). A modern WMS integrated with an enterprise resource planning (ERP) system facilitates stock control and visibility from purchase order on supplier through to the inbound process, receiving through to customer dispatch.

6. Freight management system (FMS). A modern and integrated FMS will save money and time in your warehouse operation. It also allows for timely and accurate freight expenditure management, reporting and removes the need for estimated accruals. These systems are also the enablers linking dispatch WMS of orders to customer service, transport providers and end customers.

7. Freight execution strategy (domestic and international), designed to minimize the cost of your network, simplifying your DRP complexity and optimizing market opportunities.

8. Continuous improvement. All aspects of supply chain should be in a mode of constant continuous improvement and each key area fully reviewed at every 3-5 years.

9. Data. There are two data files that must be 100% accurate to be operating a robust and efficient supply chain. They are customer master file and product master file, including dimensional details by SKU.

Technology is essential if businesses are going to maintain globally competitive businesses, but technology will not eliminate sub-optimal processes. Getting the basics right will assist turning your supply chain into the distinctive competency and competitive advantage it can become.

Click here to hear more about technology in the supply chain: