Supply Chain integration is Digital Data sharing

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Supply Chain integration is Digital Data sharing

Innovation in logistics is becoming more complex due to a different way of working together. Data are becoming increasingly important. Far reaching integration of technologies, IoT, AI, new and other partners. A common Cloud for the industry to share data is becoming increasingly necessary, Chain integration is Digital Data sharing.

From internal functional thinking to digital chain thinking

Chain integration is understood to mean aligning the logistic activities between and within separate logistics links and activities in such a way that the logistics processes can be managed as an integrated whole. The logistics activities must be supported by an integrated information system, with the aim of optimizing the logistical performance of the entire chain (Boorsma & Van Noord, 1992).

What results could digital chain integration and transformation brings:

  • Collaboration (working more efficiently, faster and more effectively);
  • Transparency (track & trace);
  • Cost control (eliminate cost control system and unnecessary links);
  • Possibility to divest or outsource non-core activities (takeover by chain partner or party);
  • Reduced hardware by Cloud (SaaS and PaaS);
  • Less dependent on existing IT systems which often just do good work but have lost flexibility, connectivity and online real-time information provision;
  • Predictability through information (proactive service & maintenance possible);
  • Smaller (web) apps portray important areas of the company (No longer dependent on large or bulky transaction processing systems).

Logistics is a flow from the first to the last phase

Logistics is more than just transport from one place to another. It is a collective term for everything that comes with organizing, planning, managing and executing a flow of goods from the first to the last phase. In order to manage your logistic processes in the right direction, you are looking at the moment when the raw materials, semi-finished products or finished products are purchased until the end product goes to the consumer. Examples of (sub) logistics sectors where this plays are, for example:

Measure the Perfect Order

In logistics, it’s about order types and their inherent data, from raw material to end product, by 'managing' the chain. The following order types can be identified: sales order, purchase order, production order and service order. An order management system (OMS) ensures that order types can be ‘monitored’ and ‘controlled’ by the system. Orders ‘flowing’ through the supply tube in a flexible and efficient way. This is important both in the corporate companies and between independent companies. In the latter case, we talk about collaboration and control in the supply chain.

Order performance can be measured

An example. Order measurement calculates the error free stage of each purchase order. This measurement must capture every step in the life of an order. It measures the errors per order line. But how does one deal with errors? For example, the warehouse picks up and sends the wrong item. As soon as the customer has received the order and notices the error, they contact the supplier and inform them about the error. The supplier then enters a credit for the item that was sent incorrectly, there is return logistics and the order will be executed again. Errors are recorded and classified (non-conformity category and code). An analysis provides a statistic. Now the order flow is measured and optimized in the chain. The data reporting could then look like this:

  • Order Entry Accuracy: 99.95% Correct (5 errors per 10,000 order lines);
  • Warehouse Pick Accuracy: 99.2%;
  • Delivered on Time: 96%;
  • Shipped without Damage: 99%;
  • Invoiced Correctly: 99.8%.

Internet ‘makes your materials flow’

An assignment in the supply chain sector turned out to be a breeding ground for logistics blogs at the time. To place 'the perfect order', read an example. Here you can read about data in relation to the supply chain and cooperation between the chain parties:

In this environment 'on-line real-time event data streams' are integrated and can always be compared with recent and historical data. These analyzes generate insights and contribute to proactive decision-making. In other words: 'you are always fast and on time ... you are sitting firmly and satisfied in the drivers seat'.

What exactly is an Order Management System

An order management system (OMS) is the system you use to track the purchases or orders that you receive from customers for goods or services. An OMS also tracks customer data and stocks. Every company probably has an OMS, even if it's just in the form of a messy spreadsheet.

Your existing ERP or business systems can stay

By implementing an innovative Order Management System in the Cloud, existing software, old or legacy, can remain 'operational' as long as data exchange is possible between the existing operational systems and your Order Management Cloud Portal. The data exchange (EDI) can for instance be done via an Enterprise Service Bus(ESB). Irrevocably said: a modern electronic power strip. Using an ESB promotes structure, harmonization, overview, standardization and implementation speed. It does not matter an innovative ESB, which provides system or database data. Electronic data interchange (EDI) is the exchange of structured and standardized data between computers of the parties involved in a commercial transaction.

Knowing your own costs is an absolute condition before you can look at the chain

Chain costs

Knowing your own costs is an absolute condition before you can look at the chain. Otherwise, how could a company discover savings out of supply chain integration? The logistics manager must therefore, in close cooperation with the purchasing and sales departments, investigate what costs are incurred before and after their own links in the area of logistics. Think of inventory costs, warehouse costs and transport costs that suppliers and buyers make. To get a good picture of costs, there are proven methods. Read to understand the blogpost: The advantages of ABC lead to logistics ROI.

HARRY LUIJK – Partner at  MERLYN Consult | Partner at MERLYN Commerce