Supply Chain Integration

Let's take a quick look and analyze your position insupply chain is viewed as a freight problem with a
the Supply Chain. You are either the one driving thegeographic solution. The dilemma of reducing cost is
truck, the one pumping the gas, or the one payingmeasured in time or transportation, with the scales
the other two. It does not matter if you are acontinuously pivoting to and fro. Sometimes the
vendor, supplier, manufacturer, dealer, service supplierobjectives favor customer satisfaction, speed to
or customer, the cost of freight either impacts themarket and the ability to deliver, while in other
amount you charge, the amount you are reimbursedinstances the burden favors the bottom line.
or the price you pay. It is safe to assume that youFortunately there is an alternative. It is not about
are the center of the universe for your personalmoving products more quickly, or choosing the most
Supply Chain and that suppliers and customerseconomical method of transportation, or the
revolve around your business. That was easy, nowgeography. The new objective for business is moving
let's move on.items less.
A zeitgeist must first understand how the threads ofFor years companies have utilized computers and
history have been woven to reflect the patchworkinternal IT development to create sophisticated
quilt of the current generation, and only thenreports that measure business according to
endeavor to peer into the next. Let's take a momentantiquated rules. The idea that generating forecasts
to contrast emerging communication technologies asfor purchasing and rotating inventory is based on the
reflected with Supply Chain Solutions andassumption that stock must be owned and managed
transportation.in-house. IT development has been used to provide
The Pony Expressexpanded reports and expedited processes based on
The famous Pony Express operated from April 1860existing procedures. This frequently results in a
to November 1861. The cost of mail was $5 per 1/2company investing millions of dollars to improve
ounce, later reduced to $1 per 1/2 ounce. Thealgorithms that forecast purchases, increasing manual
quickest run took 7 days and 17 hours to carryintervention to correct predictions in direct proportion
President Lincoln's inaugural address from St. Joseph,to the number of variables. Not surprisingly, such IT
Missouri to Sacramento, California.investments typically do not yield the desired bottom
In 1825, British inventor William Sturgeon exhibited aline results.
device that laid the foundation for electronicNext generation of Supply Chain Integration utilizes
communications, the electro-magnet. By 1830, annetwork connectivity with multiple vendors to reduce
American, Joseph Henry used Sturgeon's device tofreight, transportation, geographical boundaries and in
send an electric current over one mile of wire whichsome cases ownership. IT development is focused
caused a bell to strike. By 1838 Samuel Morse gave aon integrating partners in collective, secure and
public demonstration of an electromagnetic devicecollaborative networks for shared visibility and
that embossed dots and dashes on a piece of paper.planning. Data is moved more effectively and
Five years later, Congress funded development toefficiently than products, parts or parcels. Ownership
construct an experimental telegraph line. On May 24,transfers when orders transmit, and inventory is
1844, the message "What hath God wrought?" wasmanaged in a manner that mitigates movement.
transmitted from the Supreme Court chamber in theVendor Managed Inventory can be achieved
United States Capitol to an office in Baltimore andsimultaneously with multiple vendors and numerous
officially opened the first completed telegraph line.customer partners through sophisticated impartial
Western Union built a transcontinental telegraph line inthird party integrators. The exchange of products
1861, and suddenly news by wire traveled faster andand purchases can be replaced by a data exchange,
reached more people than the parcels by Pony.creating total cost reductions that benefit the
On March 10, 1876 Alexander Graham Bell inventedbottom line.
the telephone. Telephones quickly surpassedThe next generation of Supply Chain Integration can
telegraphs as lines were installed, because it broughtbe achieved by major manufacturers, dealers,
instant communication and connectivity to thedistributors and service providers through third party
common man. Instant communication by phoneintegration and common platforms. The greatest
quickly replaced Morse Code and Mail to staysavings in the supply chain are not related to a truck,
connected.a plane or a warehouse. The greatest efficiencies in
Consolidated Freight, Low Rates and Speedthe supply chain are coming from IT. Much like the
In 1907 James Casey borrowed $100 from a friendimpact of the telephone and telegraph to the Pony
to establish the American Messenger System inExpress, the Internet is providing the next generation
Seattle, Washington. The 19 year old founded hisof improvements for our supply chain.
company on the principles of courtesy, reliability andThis concept is already entrenched in e-commerce.
low rates. By 1913 his company acquired it's firstIndividuals operating home based businesses are
automobile to consolidate shipments and carry moreselling goods on eBay, procuring supply in direct
goods. In 1919 the company changed it's name toproportion to demand. It is not uncommon for
United Parcel Services, and in 1922 it acquired a Losindividuals to sell products on eBay that are acquired
Angeles company with innovative "common carrier"from a local vendor or craftsman. The seller on eBay
services. In 1929 UPS was the first package deliveryis the impartial third party integrator between the
company to use airlines, serving all US states by 1978.supply and the demand, leveraging the convenience
On the first night of continuous operation In 1971, 14of the Internet to connect the interested parties.
Federal Express jets delivered 186 packagesThis is a very simple example of using technology to
overnight to 25 cities. By 1981 Federal Expressminimize inventory ownership by maximizing
introduced the overnight letter and expanded servicetechnology. Imagine how much more effective the
into Canada. In 1985, bar code labeling was introducedsolution can be for complex integration of multiple
to trace packages. By 1995 FedEx acquires air routessuppliers with diverse geographic locations and
with international authority to serve China. Ten yearsreduced transfer of inventory. This is the concept of
later FedEx announces development of a new Asiathe next generation of Supply Chain Integration.
Pacific hub in China, and around the world flightsWe are only at the beginning of this transformation.
Eastbound and Westbound.Some companies have already realized the financial
The first recorded transcripts of a "Galactic Network"benefits of leveraging IT solutions to maximize and
are attributed to J.C.R. Licklider of MIT in 1962. Incompress the supply chain. Recognizing and
1964 Leonard Kleinrock of MIT published a book onunderstanding this transformation is the first step,
the theoretical feasibility of communications usingwhat you do with this knowledge is the next.
packet switching rather than circuits. The concept ofExperts in technology and supply chain solutions are
open architecture networking was introduced byavailable to help guide you and offer the secure
Kahn in 1972, and subsequently became known as abuffer that is your link between multiple vendors. The
program called "Internetting". In 1991 Modemsdirection is not as difficult as you may imagine. Trade
transmitted data at 14.4 kilobits per second. Speedsin your microscope from studying your exchange of
doubled to 28.8k by 1994, and eventually to 56k.products or parts, and turn it in for your periscope to
Meanwhile, Bob Metcalf and David Boggs haddata exchange.
developed the Ethernet at Xerox Palo Alto Research_________________
Center (PARC) in 1973. Xerox, DEC and IntelWords of Wisdom
invested in development and agreed to make the"Technology is dominated by two types of people:
technology free to anyone to build. By 1981 thethose who understand what they do not manage,
technology emerged from the laboratory to theand those who manage what they do not
public as 3Com shipped the first Ethernet Hardware.understand."
As the ability to move parcels overnight has- Putt's Law
improved dramatically, so has the ability to transmit"With leaders, the future calls to them in a voice they
packets by increasingly high speed connections.can't drown out. The future is more real than the
The Next Generation of Supply Chain Integrationpresent; it compels them to act."
Common approaches to improving the supply chain- Marcus Buckingham, "Three Things You Need to
involve faster delivery or lower cost forKnow"
transportation. Solutions are typically centered on"Reinvention. What a quintessential America idea. It's
geographic locations of hubs, consolidated carriersthe frontier spirit. It's Ben Franklin. It's Ralph Waldo
and maximized routes. In some cases the response isEmerson, and by God, it's Tony Robbins and Stephen
a galleria of products and processes housed in aCovey too. They all understand the American
consolidated campus, while another strategyimpetus and genius for wholesale self-reinvention. We
promotes multiple regional facilities for geographicsurvive by staring change in the eye, and adapting.
convenience. There is a common theme that the