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March 28, 2002

Unwiring the Supply Chain

The advantages found in using mobile devices within the supply chain may provide the quick ROI needed in a slumping economy

Ram Reddy

When examining the traditional flow of goods and services across a company's supply chain, the observer will likely find most processes are "desktop centric." In other words, someone must enter or look up information on a computer or filing system behind a desktop to complete the process. For example, machine shop workers may periodically come to a desktop to pull up schematics on the tool they're currently building.

Look around your company — you'll likely see processes from the receiving dock, production, and shipping areas that slowly make their way to a desktop before resuming their natural flow. Mobile technology devices have the potential to deconstruct the desktop-centric workflows that often occur in supply chain processes. The secret to success while using these devices is to use them for a specific task that bypasses integration or process change issues with existing supply chain systems. Let's take a closer look at the mobile technologies.

Differences Between Consumer and Supply Chain Usage

E-business spawned a whole variety of "e" hyphenated words, such as e-learning, e-procurement, and so on. Mobile technologies followed a similar evolutionary path with proliferation of "m" hyphenated terms. The "e" in e-business commerce meant an electronic channel for traditional sourcing, manufacturing, sales, and distribution activities across the supply chain. This channel was based on Internet technologies that had the power to connect heterogeneous technology platforms. The "m" in m-business means the technologies that push this channel from the desktop and extend it to unwired areas.

Consumer mobile devices such as cell phones, pagers, personal digital assistants, and embedded mobile systems in cars have received extensive coverage in the popular media. But, special-purpose mobile devices that perform specific operational functions in the supply chain haven't received similar press. Despite the initial hype, mobile devices have had limited success in changing consumer buying behavior. Similar to the consumer Internet, mobile devices provide another channel for brick-and-mortar companies to sell goods and services. However, in the supply chain area, mobile technologies can help companies extract measurable benefits from sourcing, manufacturing, and distribution activities. Unlike the consumer space, where you're trying to change buyer behavior with mobile devices, in the supply chain you're changing existing business practices.

In Europe and Asia, mobile devices are used for things such as locating friends at sporting events and reaching consumers in the vicinity of a business. Taxis can be sent to the exact location of the mobile device user without getting lost. The opportunities to use the consumer's location-aware characteristics are only limited by the imagination and the constraints of the mobile devices. These range from bandwidth and reliability to processing power and the consumer's ability to put up with a barrage of customized offers. Because of these factors, consumer mobile technologies can only engage in a limited set of commercial transactions, clustered around commodity items, such as movie tickets, books, or flowers. To date, the dollar amount of goods and services sold via mobile technologies has been relatively small.

Specialized mobile devices have been in use in one form or another in the supply chain area for many years, such as bar code readers and specialized wands in warehouses. The current wave of location-aware mobile technologies have the potential to rapidly spread the use of mobile devices across the supply chain. The limited functionality of specialized mobile devices, such as bar code readers, can be enhanced with new features to perform value-added tasks. Enhanced mobile devices in the supply chain can deliver demonstrable value by improving cycle time and reducing costs. This ability has a bigger and more immediate economic impact that can be measured more easily in the supply chain area. Because of this reality, use of mobile technologies in the supply chain area to conduct business between trading partners will increase rapidly compared to the consumer market.

Mobile Devices: Opening the Door

Corporations have found funding major supply chain management (SCM) technology projects in this economic climate increasingly hard, and many SCM projects have been halted as corporations freeze capital spending. Paradoxically, a major source of economic value from SCM technologies to a corporation is in reducing cost of goods sold (CGS) and selling and general administrative expenses (SAGE), two items in the income statement that companies can influence. The trick is to find technologies that deliver immediate and measurable economic value without requiring extensive change to business processes and technology infrastructure. Mobile technologies have the potential to deliver on this value proposition by breaking desktop-centric models across the supply chain and opening the door to new trading partners.