Can you take advantage of Jan Romein's Law of the Handicap of a Head start?

As companies find it difficult to interface to all their supply chain partners in a world of outsourcing and co-manufacturing, the laggards may overtake the leaders. How the Internet of Things enables a paradigm shift in supply chain collaboration and how you can use this to your benefit.

A new trend emerges in outsourced manufacturing and manufacturing postponement strategies such as co-packing and co-manufacturing: Integrated real time data from the extended supply chain. We recently helped both manufacturing centric OEM's and CPG companies to implement not just supply chain visibility but device based real time collaboration with their manufacturing partners in the extended supply chain. The common rationale is the need for speed, accuracy and control. Although activities are outsourced to provide increased agility and lower cost per unit, the brand owner will eventually be held accountable for the overall performance of the supply chain. In stead of monitoring this within the 4 walls of his factory with a QA department he now has a global shopfloor to manage with far less control!

Typically these co-makers have less sophisticated IT systems than their OEM and CPG clients. Their core competence is in assembly, not in IT systems and MS Excel is most commonly used for planning and reporting with e-mail as the favourite channel of communication.

We designed strategies based on simple barcode scanners, connected directly to the internet or with an ultralight web browser based off line cache. These are operated directly by the people that do the work; without written instructions or computer applications and they provide ultra simple controls and instantaneous feedback to the supply chain monitoring system. This controls raw materials and consignment stock, manufacturing progress and finished goods as well as advanced functions of scrap, loss and non-conformity inspections.

In fact a virtual ERP system comes in with the goods which virtually monitor themselves and as soon as the work is done the system and data have disappeared again from the shopfloor of the sub-contractor. Typically summary reports are provided to the sub contractor on-line that allow them to do activity based reverse billing based on work performed. They also have heads up visibility of work coming towards them within an agreed horizon so they can do their capacity planning.

It is really fascinating to observe about 15 small factories distributed worldwide building rather complex equipment and working in concert without local systems deployed; let alone OEM ERP systems being rolled out, interfaced and people trained. The information latency is in fact less than in the in-house systems that rely on nightly batch procedures and netting processes to run.

The Internet of Things will take global supply chain collaboration to a completely next level making on premise systems and applications obsolete. The system comes and goes as the night: It invades in a non-intrusive way together with the goods and when the goods are gone, the system is gone again too.

Just start imagining how this can work out in your environment.

Extended Supply Chain

Internet of Things

Outsourced Manufacturing

Supply Chain Collaboration