Applying the Supply Chain Model

The concept of supply chain automation has revolutionized manufacturing and distribution processes during the past two decades, and has resulted in dramatic ongoing business opportunities for large software and consulting companies such as SAP and Oracle.

Often combined with related topics like enterprise resource management and customer relationship management, supply chain automation involves a holistic look at the overall manufacturing and distribution process from cradle to grave, ensuring that all raw materials and components arrive just in time from suppliers for processing in manufacturing plants, that finished products are shipped just in time to customers to be sold, and sold items are quickly replaced without maintaining large inventories on hand at any point in the chain.

Supply chain automation involves the use of advanced planning, simulation, and management software, and has spurred adoption of new technologies for tracking, such as barcode tracking and, more recently, radio frequency identification (RFID).

During a recent ski vacation, I was reminded of how ubiquitous technologies like RFID have become in everyday life. Some resorts now issue RFID ski passes that automatically charge me for each day I ski and track my progression across the mountain, perhaps to help monitor lift utilization and skier distribution throughout the resort. I'm simply another widget in their skiing production chain.

We typically think of supply chain management within manufacturing and retailing, where companies such as Wal-Mart and Dell Computers are known as best practitioners—continuously improving their overall processes not only within their own companies but with their suppliers and customers as well. Wal-Mart, in particular, was one of the first large-scale adopters of RFID. And when you place an order for a new Dell computer, this triggers a complex series of events where individual components are requisitioned and immediately replaced in the Dell supply chain.