Building a customer-centric supply chain requires investing in the right technology

The aftermarket supply chain is shifting from its traditional structure to an omni-channel model in which both business-to-business and business-to-consumer online customers, along with brick-and-mortar customers, have rising expectations about availability and delivery that are increasingly difficult to meet. Technology will play a more important role in meeting those customer requirements moving forward.

"In the customer-centric supply chain, customers are becoming more and more demanding," says Charlie Covert, vice president of global solutions and implementation at UPS. "In the automotive industry, let's say there was a recall [and parts are] being delivered to dealers. Their customers are now expected to have a very good understanding of when those parts will be available, and have visibility and control over those time windows when they will be available."

That will require multiple warehouse and supply chain management solutions to provide an end-to-end view of product. According to the latest Gartner Warehouse Management System (WMS) magic quadrant report, supply chain convergence is a key trend in the WMS space. Supply chain organization have to better synchronize execution processes across operational domains.

"Warehousing and transportation are notable points of convergence, but they're not the only ones," Gartner said in its report. "True supply chain execution (SCE) convergence is when a vendor has developed multiple SCE and related functions on a common technical architecture that shares a [user interface], data model and business logic, and this is only obtainable from a small number of WMS vendors today."

Looking outside the aftermarket, retailers and distributors in other sectors have turned to a wide variety of technology solutions and operational strategies to improve supply chain performance. A recent study by ARC Advisory Group on omni-channel retailers found that 17 percent of respondents with e-commerce distribution centers outsource operations to a third-party logistics (3PL) provider, while 62 percent operate their own facility. Another 21 percent take a hybrid approach.

Within those distribution centers, 64 percent are using a WMS along with radio frequency (RF) computing technology. Interestingly, one-third of DCs still perform order selection using paper-based processes in conjunction with a WMS, and 16 percent have deployed voice recognition systems. Fifty-eight percent deployed bar code scanners on the sales floor and in the stock room.

According to Mike Maris, senior director of transportation and logistics at Zebra Technologies, which completed its acquisition of Motorola Solutions’ Enterprise business in October 2014, bar codes have been particularly beneficial for inbound receiving, because they make it easy to ensure that the right item has been received. "On the picking side, most picking systems we work with either use voice with scanning or just scanning to ensure they are picking the right item and the right number of pieces," Maris says.

On the back-end of operations, 64 percent of respondents are using demand management software, and 24 percent use a "demand signal repository" to gather information on stocking needs. More than half (56 percent) are using distributed order management software for visibility into multi-location inventory.

"We see a move to real-time systems, as well as improvements on integration from different partners," Covert says. "What that's allowing companies to do is take a look at analytical technologies that combine data from multiple systems, and that gives supply chain managers the ability to make near or real-time decisions based on changing events."

For example, based on the possibility of a delay on a shipment that is critical to a manufacturing line, a company could expedite a replacement product before the delay on the original shipment actually occurs.

There are also more software vendors in the WMS and supply chain space offering hosted or cloud-based solutions, which has helped smaller companies in particular quickly deploy software at a lower cost.

"There are a lot of technologies that before were only available to large companies, that are now available to small companies," Covert says.

Emerging technology trends

What are the emerging areas of innovation in the supply chain? According to participants at a recent Council of Supply Chain Management Professionals roundtable, private equity firms are placing their supply chain management bets on omni-channel solutions, the Internet of Things (connecting assets and equipment to the Internet), and third-party logistics solutions.

RFID and sensors will play a big role in the emerging Internet of Things space, but the technology has not expanded as rapidly in retail as was previously expected.

RFID and 2D bar codes have shown more utility in security and product authentication. "With aftermarket parts, it's easy for a foreign company to put a non-OEM part into a package with the right bar code. If you can encrypt authentication data in a 2D code or RFID tag, you can make sure you eliminate those counterfeit parts," Maris says.

Elsewhere in the supply chain, RFID has mostly been used with high-value items. "I still think RFID is really complementary to the bar code," Maris says. "Bar codes are still just fractions of a penny to print. Anybody with a printer can make one. For RFID, you still need other equipment to encode the tag with the right information and read it. If you are dealing with expensive auto or aerospace parts, the value proposition is there for RFID."

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