Got Growing Pains? How Data Capture Can Help Eliminate Inefficiencies of Scale

Meagan Douglas
Thu, Jan 8, 2015

Manufacturing, according to November data by the Institute for Supply Management, is doing very well. As such, it could be a time for expansion. With new orders coming into a company, the ambition tends to be to grow the business so that recent customers become steady customers, which in turn helps to grow the business in a virtuous cycle of needs satisfied and profits raised. In order to make this happen, a company needs to grow its supply chain. But this is easier said than done.

The question is how a company can grow without succumbing to inefficiencies of scale. The best way of doing this, according to Supply Chain Management Review, is to begin assessing the status of a company's supply chain at the very beginning of any endeavor to expand it. Look for areas where the communication is lagging or shipments to and from a warehouse or factory are particularly slow. These are the points that need to be addressed in order for a business to successfully expand without any hiccups.

Getting the Attention of the People in Charge of the Supply Chain
If the person in charge of writing out checks for buying new supply chain tools isn't the same as the one getting supply chain reports, then it becomes more necessary to open a channel of communication.

One way to do that, according to Robert Rudzki, blogger for Supply Chain Management Review, is to bluntly explain the situation in financial terms. If a company already has a rudimentary data capturing ability in place, then it should be easy to crunch numbers and quickly assess how much money can be saved by switching from a major carrier to a very particular third party shipper that can save on deliveries within a certain part of a state. Otherwise, it might be difficult to make an argument because the raw materials haven't been tagged coming into a factory, and the finished goods haven't been tagged leaving the factory. Neither have items been marked individually when they enter a warehouse. In general, a person in such a situation will have the idea that 3,000 units of a certain machine part have been moved from one part of a state to another part, but this person doesn't necessarily know what makes up the machine parts and has no way of tracking each one.

This is a problem because it becomes difficult to explain to management how inefficiencies are causing a company to lose money, and cash is often the best way to explain to a financial executive why it is important to buy a new technology.

Data Capture Can Save Money
This is one of the many areas where using a data capture technology can help a business save money. Tagging everything as it flows through a supply chain means that a manager is no longer looking at a vague impression of trucks with different items going from one place to another - instead, the person in charge knows what parts are inside the trucks and what the parts are made from, and from where those raw materials have come. This is incredibly granular. From the factory perspective, it is even better because as each item is tagged as it goes from one machine to another, different inefficiencies in the factory are automatically picked up through a careful analysis of the information.

Tagging items is as easy as using barcode data collection software or radio frequency ID technology. The tools have been around for years, but using them has so far been spotty, or at least not nearly as complete as it ought to be, considering the tremendous efficiency it can bring to the manufacturing and supply chain industries.

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