A typical example of the use of technology in supply chain management is a company which is well-known worldwide as the largest producer of commercial aircraft's. It makes a big effort to keep its production on schedule. Most commercial airplanes require more than 1 million individual parts and assemblies and each airplane is configured according to specific needs of the purchasing airline. Timely availability of these parts must be ensured otherwise entire production schedule would be disturbed.
In 1997 the company had to stop its two assembly operations for several weeks due to errors in production and scheduling system causing it a huge financial loss. Thereafter, it decided to invest in information systems in every element of its supply chain. Involving its suppliers in the process, it began the use of EDI and internet technology, so that the suppliers could supply the right part or assembly at right time to prevent production delay.
Now, the suppliers could get engineering specifications and drawings before the start of manufacturing using a secure internet connection, and plan their own business activities, accordingly. Also, members of the supply chain could have the knowledge of the completion of milestones and any changes in production schedule. In two years time, this approach resulted in reducing half the time needed to complete individual assembly processes. Thus, instead of waiting for 3 years the customer airlines could now have the ordered airplane ready for delivery in 10-12 months. Furthermore, the company launched a spare parts web site for ordering replacement parts. The site allowed customer airlines to register and order for replacement parts through browsers. Soon, the site was processing 5000 transactions per day at much lower cost as compared to orders cost through phone, mail, or fax. It also improved customer service in the sense that most parts could now be delivered the same day or the next day.
Another example is of a famous computer selling brand. It realized that by increasing the amount of information about its customers it was able to reduce amount of inventory it should hold. It decided to share this information with other members of the supply chain by allowing its top suppliers to have access to a secure web site which informed them about its latest sales forecasts, planned product changes or any warranty claims etc. It also provided information about its customers and their buying pattern. Thus, it helped suppliers to plan their own production in a much better way. The above examples show how members of supply chain can work together to reduce inventory, increase quality of product, reduce production cost and increase process speed.
In 1997 the company had to stop its two assembly operations for several weeks due to errors in production and scheduling system causing it a huge financial loss. Thereafter, it decided to invest in information systems in every element of its supply chain. Involving its suppliers in the process, it began the use of EDI and internet technology, so that the suppliers could supply the right part or assembly at right time to prevent production delay.
Now, the suppliers could get engineering specifications and drawings before the start of manufacturing using a secure internet connection, and plan their own business activities, accordingly. Also, members of the supply chain could have the knowledge of the completion of milestones and any changes in production schedule. In two years time, this approach resulted in reducing half the time needed to complete individual assembly processes. Thus, instead of waiting for 3 years the customer airlines could now have the ordered airplane ready for delivery in 10-12 months. Furthermore, the company launched a spare parts web site for ordering replacement parts. The site allowed customer airlines to register and order for replacement parts through browsers. Soon, the site was processing 5000 transactions per day at much lower cost as compared to orders cost through phone, mail, or fax. It also improved customer service in the sense that most parts could now be delivered the same day or the next day.
Another example is of a famous computer selling brand. It realized that by increasing the amount of information about its customers it was able to reduce amount of inventory it should hold. It decided to share this information with other members of the supply chain by allowing its top suppliers to have access to a secure web site which informed them about its latest sales forecasts, planned product changes or any warranty claims etc. It also provided information about its customers and their buying pattern. Thus, it helped suppliers to plan their own production in a much better way. The above examples show how members of supply chain can work together to reduce inventory, increase quality of product, reduce production cost and increase process speed.
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