Does a flat world change materials handling and supply chain management?

Globalization is impacting the way the world does business. One visioneer wants you to think about what it's doing to materials and information handling as well.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 8/21/2007

Anyone who’s read The World is Flat, Thomas L. Freidman’s brief history of the 21^st century, has wondered what globalization might mean to their future.  

Richard Sherman, president of Gold & Domas Research, a supply chain consulting company, wants you to envision what a flat world might mean to your materials and information handling systems as well.

If you don’t know him or haven’t heard him speak at a supply chain conference, Sherman is a self-described visioneer. We’re not sure what that means, but he says visioneering is a matter of “defining your future and then engineering what is required to achieve it."

What then is Sherman’s vision for materials handling and information handling going forward?

First, he believes systems will become much more integrated in the future than they are today. “You’re going to see more direct integration between planning systems, optimization systems, execution systems and materials handling systems,” says Sherman.

That’s because companies realize that in future they will still have to store inventory. But what they store, how much they store, and how long it stays in the warehouse, will determine the winners and losers in the supply chain.

Integrating technology

That’s where the integration of technologies comes into play. “I still can’t make or ship one product at a time,” says Sherman. “But, I’m also going to move to more manufacturing that’s synchronized with point-of-sale consumption data, and more flow through warehousing and crossdocking.” 

In fact, Sherman adds, “there are already large consumer packaged goods (CPG) companies that are doing real-time forecasting for every item and every stock keeping unit (SKU) they produce every day.”

To do that, a company has to have real-time visibility into all its resources across the supply chain. That visibility is enabled by the increased use of:

• automatic identification technologies, like RFID and voice,

• along with wireless communications and the Internet.

Vision for the future

“We’re already beginning to see RFID-enabled pallets and totes coming into the market from providers like CHEP and iGPS,” says Sherman. “They can carry content information so that when a product comes in the door in a returnable container, I know what’s in it, whether there’s an order for that material so I can crossdock it, and if not where I’m going to put it away. Meanwhile, I can transmit instructions to an operator via voice and get feedback from that operator, in the operator’s native language and dialect.”

Meanwhile, Sherman says, the information collected at the docks can flow from an execution system directly into a decision support and planning system that’s scheduling transportation, replenishment and production. Last but not least, if the product on the returnable container is wrong, an exception notice can be automatically routed to a decision-maker who can address the issue.

While Sherman is a visioneer, who imagines how supply chains may operate in the future, he says that much of the technology and software systems to synchronize the supply chain in real time are available today. 

“The software applications are available, and with fiber optic networks and the Internet, we have the capacity available at a cost that’s affordable to many companies,” he says. “What companies have to overcome is fear, uncertainty and doubt about deploying the technologies.”