The shifts in demand that happen seasonally in every industry can often be predicted in advance, either because the patterns are well known and have to do with factors such as the weather, or from prior years of experience. In order to handle these changes, companies need to have a robust supply chain management system that is able to send products to the right places at the right time, ensuring that there are no surpluses or shortages of goods in the different markets where a company does business.
The necessity of a supply chain management system also points to the importance of visibility in the supply chain. Companies need to know where their products are moving, and this can be done through data collection technologies as simple as barcodes that are scanned as trucks are loaded. By storing the information in an ERP or warehouse management system, a map can be made of where different products are moving. The data retrieved can be complex enough to include even the composition of finished goods, so that a company knows which factory its raw materials are coming from and where these raw materials are ending up in the marketplace in the form of sold merchandise.
Optimizing Product Mixes
One of the benefits of this data map is that companies can know which of their stock keeping units are selling the best and in which markets. By monitoring SKUs, companies can keep a close watch on the ideal product mix in their factories, Logistic Viewpoints suggested. They can also track seasonal demand of different SKUs and see the flow of merchandise and the raw materials that make up the products, allowing a sufficiently sophisticated system to generate monthly lists of what goods to buy, where to send these items, what to make out of them and where to ship the finished products. This kind of complexity can only happen in a truly transparent supply chain, where nothing is kept in the dark.
Speeding Delivery Times
JOC reported that the United Parcel Service is actually taking advantage of its own supply chain transparency to help expedite its shipments. Because the company knows on a package-by-package level where every item is being sent and through what route, it can send freight anywhere in the U.S. within one to three days. UPS is now expanding the global reach of its express service, adding 12 additional origin and nine more destination countries. The company wouldn’t be able to do this if it wasn’t using a system for understanding how its freight is moving across the country and the world. Data capture is therefore crucial to UPS’s ability to expand its services and remain competitive with third-party suppliers.
“This is not another forwarding product, a cargo service, it’s a best-in-class express service,” said John Miltenis, vice president of international marketing at UPS, according to JOC. “When critical issues arise and you have a need for speed and reliability, this is what customers want.”
Companies that desire a similar ability to deliver and receive items quickly would also benefit from having a transparent supply chain enabled through a data collection system.