"In a perfect world, I can optimize the supply chain by knowing exactly what was loaded overseas and streamline clearance through customs. All the technologies to do that are available today, but the challenge is getting the information to feed the technologies," Johnson explains. "The velocity of that information has to exceed the velocity of the product itself. You don't want to just react -- you want to be able to plan and adjust."
To that end, Johnson has launched an enterprise BI initiative to integrate the systems and upgrade existing data warehouses that track the data, which can be startlingly granular when it comes to the contents of pallets or containers. "It's not really a big data challenge -- it's a small data challenge. But to get to the small data, you have to go through the big data."
In addition to potentially smoothing out the supply chain at the beginning of the process, analytics technology can also help later in the process. Ranjit Thaker is CIO of Broomfield, Colo.-based Network Global Logistics, a third-party logistics (3PL) provider specializing in time-critical deliveries and aftermarket service support for the healthcare industry. "The supply chain challenges are totally different when you're a manufacturer getting supplies to a retailer versus getting an organ to the hospital when someone is being prepped for surgery."
Thaker cites the example of one client, a manufacturer whose medical devices cost six to seven figures each. "There's a high level of analytics involved in calculating where you need to warehouse replacement parts for those devices," he says. In order to avoid warehousing expensive parts that may be used infrequently, NGL's analytics involves mapping the physical location of manufacturers' warehouses, the ages of the machines at the medical facilities, the mean time between failure (MBTF) of those machines, the criticality of the parts and the cost of getting equipment to locations.
"It's complicated, because the parts may be critical but they cost thousands of dollars and may only have been needed ten times in the past five years," Thaker explains. "Doing the analytics helps them optimize their inventory."
Calculate cost vs. risk
The issue of cost is, of course, considerable in calculating supply chain risk and vulnerability. The conundrum facing manufacturers regarding cost is two-edged: Every time you audit the product, it creates friction in the supply chain.
And then there's the consumer to consider, especially when it comes to consumables and expensive goods that have a cachet. Supply chain advances are "changing in the food industry, any place where the product touches or goes into the human body, because of the health risk," says Accenture's Alvarenga. He believes that for certain products, the day will come when the consumer will be able to scan smart packaging using a smartphone camera and see exactly where a product came from.
The question is, will consumers pay more for a higher degree of integrity or a more ethical supply chain? That question has yet to be answered.
In other areas, several sources say, costs are coming down. RFID chips are cheaper (though antennas aren't). XML is making electronic data interchange (EDI) feeds easier to integrate, and making data connections less onerous. Sensors are also cheaper and easier to incorporate; as sensors become inexpensive enough to incorporate in packaging, pallets, trailers and warehouses, commercial shippers like FedEx, which recently debuted its new Senseaware technology, are able to easily identify exactly where their packages are in transit.
Thaker points to specific technologies bringing costs down. "In the old days, we would have someone hand-carry a live organ to the transplant destination to ensure it was properly handled. But now you can buy temperature control sensors for $100 that keep the organ at the proper temperature when it's shipped as cargo."
PricewaterhouseCoopers' Goldbach also sees value in supply chain technology. "Companies can use it to reduce inventory in order to save capital. That's especially true for industries such as technology, where products have a short lifecycle and you don't want to be caught with inventory whose value goes to zero quickly. With the right technology, you can now substitute information for inventory."
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