As market conditions tighten around the world and pressure on margins increases, the challenge for logistics and supply chain companies is to remain competitive – and profitable.
Karl-Heinz Wessinger, software development manager at IQ Business Group, says with most logistics companies having already pared their input and overhead costs as much as possible, finding ways to boost operational efficiencies has become a survival imperative.
"What logistics companies need is a totally new approach to the utilisation of technology," he says.
"While many have recognised the value of technology as a major efficiency enabler, their IT spend has tended to focus on automating individual operational processes in a random fashion. In some instances, this has resulted in the automation of inefficiencies, or even the unintended introduction of new problems and logjams."
Wessinger says businesses should rather have a tactical, long-term plan for the entire operation and technology investments should be made in line with this plan.
He believes that technology use and business process has to grow together within the organisation. The technology infrastructure has to be used to strategically optimise the business as a whole, and the first step to achieving this is a clear understanding of how the business works.
"It's surprising how many businesses just 'happen' and how quickly inefficiencies become standardised routines. This usually occurs when new processes are bolted on over the years and little adjustments and sub-processes are put in place to paper over misalignments. And when major technological innovations such as RFID are implemented, misalignments and unanticipated problems can wipe out any benefit the technology should bring," he explains.
By taking a step back and mapping all business processes, disjoints can be identified and technology can be more effectively aligned with business requirements.
In addition, once one knows what the process is, how it works and how it fits in with the rest of the business, the entire business can begin operating off a more strategic foundation.
Wessinger provides the example of RFID implementation as an example of the doubled-edged power of technology adoption.
RFID is rapidly becoming a de facto requirement within the logistics and supply chain sectors. Major players in the chain from retailers to port operators are demanding more from their suppliers and partners to adopt RFID and exchange data electronically. This means smaller operators have no choice – they have to adopt RFID technology.
However, the implementation of RFID into any logistics or supply chain business can be incredibly disruptive.
"It's not just another automation technology that can be deal with in isolation. Its impact will be felt across the entire organisation. It could, for example, result in a change in the number of employees needed for different tasks and the types of skills and training they would require.
"It should only be undertaken once process mapping, planning, process optimisation and testing has been thoroughly undertaken. The alternative is to risk implementation failure which could have a knock-on effective across the entire organisation and result in the failure of the business itself," Wessinger concludes.