Data homogenization in supply chains – benefits of managing the flow of information accompanying the flow of goods in logistics processes
The paper was presented at the Polish Logistics Congress “Logistics 2004 – Logistics networks in the integrated European market”. Poznań, May 19-21, 2004.
In an era of increasing competition, optimizing business operating costs is becoming a key issue, deciding the “to be or not to be” in the market. Cost reduction understood as limiting the number of employees or accepting the minimization of margins is reaching its limit. Hence, more and more entities operating on the market are looking for savings, and thus increasing the price attractiveness of their products and services in areas that have so far been treated as secondary or unattractive in Polish market realities. This is the reason why more and more companies see opportunities for cost reduction in the area of information management. Ensuring fast and complete information is becoming just as attractive a cost reducer as reducing the number of employees or modernizing a production line. Hence the growing interest in solutions and technologies aimed at ensuring access to fast, reliable, and homogeneous information describing the entire spectrum of processes occurring in supply chains.
Growing competition between economic entities competing in the market requires continuous development of offered products and constant improvement of enterprise efficiency. Creating new products and solutions entails – apart from the need for their creation – the requirement to meet high technical demands. Sophisticated solutions allowing for the effective satisfaction of growing customer requirements are beginning to gain importance. The times when delivering a shipment from point A to point B, supplying components necessary for production, or fulfilling an order reasonably on time, in a satisfactory condition and quantity were sufficient conditions for functioning on the market are fading into oblivion. The present, the accession to the United Europe and the resulting increase in competitiveness set the bar at a much higher level, and the desire to achieve spectacular success causes this threshold to move upwards. The aforementioned growing customer requirements create standards, meeting which requires having a very large amount of information regarding logistics processes. It is important that this data be complete and delivered sufficiently quickly. Such a situation will mean that in the near future, one of the most important elements in the market game will be the ability to effectively manage information flowing in the supply chain parallel to the transport of goods. Conversely, the inability to provide proper information will be a factor eliminating one from the market. What is the reason for such great importance of information flow? If we pay attention to the symmetry of supply and delivery processes and assume that one of the main goals of logistics is to ensure production continuity and the fulfillment of orders placed by the company’s customers at an accepted level, then all forms of buffer stocks should be considered a direct reflection of economic uncertainty. It can therefore be stated that reducing the risk associated with the lack of transparency in information flow leads to the release of significant capital reserves. This is confirmed by the analysis of trends in the global economy related to the increasing demand for individualized products, even in the sector of goods that have so far been associated with mass production. The same effect can be observed by analyzing issues related to the distribution of goods. If the goal is to meet customer requirements regarding product availability, then proper management of information flow provides the basis for optimizing the distribution network structure, and also limits the volume of products that must be in the network to ensure product availability at an appropriate level. Again, we are talking about optimizing capital allocation.
The automotive industry can serve as an example. Both car manufacturers and component suppliers attach great importance to the information accompanying the transported goods. The goal of projects implemented by AXIT, among others for companies such as BMW, Pierburg, or Cargobull, was to provide those responsible for planning raw material supply with the fastest possible access to information about potential deviations between the planned and actual progress of the purchasing process. This allows for taking the necessary steps to develop alternative solutions. For the essence of the process, it is important to ensure automatic data exchange between the ordering party, their supplier, and the logistics operator handling the process.
From the point of view of the logic of information flow, and especially the differences in the way the essence of the process is perceived, maintaining the relationship between the order / call off and the transport orders associated with it is decisive. Only then does support from the Supply Chain Event Management system make sense, which registers all deviations from the adopted delivery scenario and informs the responsible persons about the situation that has occurred. Is it enough that information flows? This seemingly ordinary question prompts the use of the argumentation built by modern forms of cost accounting, which include Activity Based Costing. From the point of view of the ABC method, one can only speak of actual resource release if we are dealing with a homogeneous flow of information. In the context of electronic data processing, this means that the most favorable situation is when only data saved in electronic form is processed, and what is more – saved in the same format understood as the syntax and semantics of the saved data and the storage medium. Achieving this state can be very difficult or expensive for many companies because not all suppliers or customers have the appropriate infrastructure or follow the same information exchange standards. The solution to this problem is support from independent logistics platforms, such as the AX4 logistics platform. AX4 allows for achieving the aforementioned homogenization of the flow of data exchanged with partners, regardless of the IT infrastructure they possess and the adopted forms of communication. Achieving this becomes possible thanks to providing a diversified, dependent on the aforementioned infrastructure of entities participating in supply chains, way of communicating with the AX4 platform, and thus with other entities. Enabling data exchange via EDI in the case of companies using solutions supporting company management allows for reducing the number of communication interfaces, bringing communication down to one tool – their own ERP system using the platform’s mechanisms. In the case of communication via a web application made available to customers with a less developed IT architecture, the situation is similar. The only difference is that the communication interface with other participants becomes the aforementioned application, allowing for the use of the full functionality of the AX4 logistics platform. A significant advantage of using a logistics platform is also achieving high process transparency thanks to making the correct data available to everyone involved in the supply chain. Examples of data flow homogenization within an independent logistics platform are provided by projects implemented by the AXIT group. It is worth emphasizing that they concern not only manufacturing enterprises but also companies that are logistics operators.
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