Implications of Mobile Technologies for Supply Chain Management Irina ALBĂSTROIU Academy of Economic Studies Bucharest irina_albastroiu@yahoo.com Abstract Mobile technologies and m-business are considered the next innovation potential for organizations. Mobile technologies and applications are quickly finding their way into various supply chain management functions such as procurement, inventory management, package tracking and sales force automation. In this context, mobile computing is changing the way companies manage their entire business and mobile Supply Chain Management (mscm) is fast gaining recognition as a major source of cost reduction and supply chain performance. Therefore, this article attempts to provide some insights into the nature of mscm and the application and implementation of mobile and/or wireless technology in SCM.Furthermore, this paper attempts to explore the chances and challenges of mobile technology for successful implementation of mscm and provides an overview of how modern computing devices can support the expansion of a range of mobile solutions for SCM and how this will help business achieve total portability. Keywords: mobile Supply Chain Management (mscm), mbusiness, wireless technology, mobile devices, ubiquitous network. Introduction Supply chain is a network of facilities and distribution options, involved in the information flow, materials flow and funds flow from suppliers to customers (Zha et al., 2008). A tool to optimize the supply chain through integrated management is called Supply Chain Management (SCM), an important concept and discipline which enables business partners to integrate products and services effectively and to build long-term relationships. SCM involves coordinating and integrating activities and processes among different business functions for the benefit of the entire supply chain (Eng, 2006). SCM has been widely recognized as a significant area for IT investments to support its processes. Information technology systems have long been recognized to facilitate the process of SCM through integrated information sharing, process automation and relationship management programs. While there has been a plethora of literature on the adoption of Material Requirements Planning (MRP), Manufacturing Resource Planning (MRPL), Enterprise Resource Planning (ERP), Supplier Relationships Management (SRM), Customer Relationships Management (CRM) and other systems to improve information systems for Logistics and Supply Chain Management (LSCM), performances of mscm (or MSCM - Mobile Supply Chain Management) could still be identified. Advanced technologies such as Radio Frequency Identification (RFID), Global Positioning Satellite (GPS) and wireless and mobile technology have recently been applied in the manufacturing, service, logistics, distributions and retail sectors, but they have also resulted in mixed performances in a supply chain. The increasing use of the Internet in a business-to-business context has further improved SCM through real time collaboration, 24/7 availability, online procurement and access to worldwide markets (Lancioni et. al, 2003). Furthermore, improvements in IT, Internet security and bandwidth have spurred the growth of wireless technology or mobile applications for SCM in 66 2011, Volume 2, Number 1
industries. Mobile technology, which has emerged as the next wave in IT revolution, allows users to have anytime and anywhere access to information and applications, which provides greater flexibility in communication, collaboration, and information sharing. Each of the five major supply chain steps (Plan, Source, Make, Store and Deliver) need to be integrated and harmonized into a single application in order to derive maximum value from the supply chain and meet customer expectations. Today, the cheap, ubiquitous nature of the Internet, along with its simple, universally accepted communication standards, has thrown things wide open. The time and location independence provided by mobile technologies leads us into the era of mobile supply chain management (mscm) systems. In this context, mscm is fast gaining recognition as a major source of cost reduction and supply chain performance. mscm refers to the use of mobile applications and devices to aid the conduct of supply chain activities and help firms to gain cost reductions, supply chain responsiveness and competitive advantage. Mobile Supply Chain Management is defined as a system of suppliers, producers, distributors, retailers and customers where material, financial and information flows connect participants towards anywhere, anytime based on ubiquitous network environment and is based on advanced mobile communication technologies, a variety of mobile devices, computer and Internet technologies. 1. Characteristics and implications of mobile technology Mobile technology refers to technology that is portable such as: laptop and netbook computers, palmtop computers or personal digital assistants, mobile phones and smart phones, global positioning system (GPS) devices, wireless debit/credit card payment terminals etc. Mobile devices can be enabled to use a variety of communications technologies such as: wireless fidelity (Wi-Fi) - a type of wireless local area network technology; bluetooth - connects mobile devices wirelessly; third generation (3G) global system for mobile communications (GSM) and general packet radio service (GPRS) data services - data networking services for mobile phones; dial-up services - data networking services using modems and telephone lines; VPN - virtual private networks - secure access to a private network etc. Mobile technology has extended computing and the Internet to the wireless medium, thus providing more freedom to individuals in their personal life and at work. The most touted advantage of mobile technology is mobility, which enables anytime, anywhere computing. Anytime/anyplace computing can remove time and space constraints in accessing critical information and enhance capabilities for communication, coordination, collaboration and knowledge exchange. Mobile technology can provide a number of benefits to organizations, such as connectivity, flexibility, interactivity and location awareness. These benefits can help to increase the efficiency and effectiveness of an organization s value activities and to transform business processes [Barnes, 2003]. Also, mobile technology can bring strategic implications to organizations; they are: improve working process; increase internal communication and knowledge sharing; enhance sales and marketing effectiveness (Sheng et al., 2005). Contemporary supply chain management (SCM) systems are a fertile area for mobile wireless technology because of the need to provide simultaneous, accurate information about demand, supply, production, and logistics as goods move among supply chain partners. In this context, advances in wireless technology and mobile devices give rise to a new kind of e-commerce: mobile commerce. Mobile commerce has extended the functions of e-commerce and thus the e-supply chain system to previously unimagined dimensions. Mobile commerce has the potential to make information flows more efficient, coordinate the operations within the extended enterprise and thus improve supply chain management. Mobile 2011, Volume 2, Number 1 67
commerce can be used to manage logistics and work flow and streamline inventory and distribution control (for example, bluetooth devices are ideal for inventory control). Consequently, mobile supply chain management (mscm) can be regarded as a specific branch of m- commerce and it can be characterized as a layer of mobile applications that enhances existing supply chain mechanisms while enabling efficient business processes. The challenges facing mobile tehnology in Supply Chain Management regarding m-commerce are: enhance usability of mobile devices; design user-friendly interface; consolidate network infrastructure; develop content delivery and a format for mobile commerce; improve mobile access to databases; explore agent technologies; address security issues; build business models for mobile commerce (Siau & Shen, 2002). On the other hand, we should mention the role of mobile technology not only in mobile commerce, but also in mobile business when all activities, processes, and systems in an enterprise are executed with or supported by mobile technologies, including supporting the creation, negotiation, and transaction of business process internally and externally. 2. The main concerns of mobile technology in the context of Supply Chain Management The final purpose and value of mscm is to achieve the optimization of entire channel. Channel is the core of the supply chain and the capacity of channel will determine whether the supply chain would success or not. The effect of mscm is realizing the optimization of channel capacity and improving the efficiency of the entire Supply Chain Management. The main concerns of mobile technology in the context of SCM are: place for efficient distribution of goods and services, timing for meeting customer demand and managing logistics and service quality for responsiveness and customer satisfaction. These are examined and discussed in academic literature (Eng, 2006) in terms of realtime events, ubiquity and personalization as an extension of wired technology to mscm: - real time events in the supply chain refer to live or instantaneous broadcasts of occurrence using wireless technology and mobile devices. In mscm, integration of real time events using wireless technology provides a constant flow of up-to-date information from both inside and outside the organization, eliminates response lag time, delays in transaction processing and customer service and missed market opportunities such as order-to-demand, helps companies to cope with changes of uncontrollable external factors affecting demand (prices, customers general confidence) through measurement of demand in real time. In particular, prices of products and services can be changed using real time events (dynamic pricing) rather than being based on rules of thumb; - in the context of mscm, ubiquity means that supply chain activities and goods can be provided everywhere regardless of time and location. Ubiquitous existence is mainly supported by the Internet, where a company s website is available 24/7 and accessible from any location around the world. A ubiquitous supply chain based on wireless technology is changing conventional understanding of SCM in at least three important ways: first, mscm is offering geographical reach on an unparalleled scale by deconstructing the process of SCM and logistics (for example, supply chain services - product information in transit - can be requested at any location without reaching a certain stage of logistics; also, location-based services automatically match services according to customer profile in specific locations without relying on initiation of demand from the customer); second, ubiquity is changing the collective nature of SCM by dispersing and unbundling supply chain functions and activities in a virtual environment without fixed coordination and integration points because mobile SCM creates the need to manage dispersed resources in order to coordinate and integrate them for the benefit of the 68 2011, Volume 2, Number 1
entire supply chain; third, ubiquity is challenging reliance on structural coordinating mechanisms (e.g. organizational designs and hierarchies), when supply chain activities can take place anywhere and whenever needed in real time; - personalization can be described as an act of customizing and targeting specific supply chain information based on individual needs and circumstances. In mscm, wireless technology coupled with software applications (e.g. electronic Customer Relationship Management) can be used to deliver personalized services to users in the supply chain and to customers. Wireless technology extends the benefits of personalization by not only offering instant services and user interfaces but also enabling execution of multiple tasks at remote locations. Personalization using mobile supply chain applications is creating new types of challenges for SCM by enabling a closer integration between operations and marketing activities than efforts based on ad-hoc cross-functional teams in the supply chain. Managers or sales people in the field connected to their companies database and supply chain systems by mobile devices are confronted with the autonomy to make personalized decisions and/or carry out supply chain activities on the spot (on demand). 3. Mobile technology applications in Supply Chain Management Mobile technology has been implemented in the supply chain of many businesses today - in warehouses and in retail stores, for instance. But it's not entirely a new phenomenon, as many of these organizations have utilized mobile technologies for a number of years, via tracking through Radio Frequency Identification (RFID) for example, or with some sort of handheld unit tracking things like onsite orders and deliveries. Arguably then, it's not simply the mobile hardware itself that is changing the supply chain, but it's the ability to integrate information from these mobile devices with other aspects of business - and to do so in real time. Mobile SCM applications can be used to streamline business processes of different business functions to ensure efficient flow and exchange of supply chain activities from the inception of a product, design, production, sales, customer service to the end of its useful life. There are various mobile applications vis-à-vis the bearer technologies, from Global Positioning Systems (GPS), Wireless Wide Area Networks (WWAN) and Wireless Local Area Networks (WLAN) to cellular and Push-to-Talk (P2T) devices and Radio Frequency Identification (RFID) technologies. Mobile systems for supply chain management integrate software applications with mobile devices (e.g. mobile phones, PDAs, pocket computers, etc.), in order to provide flexibility for users to work in the wireless computing environment from any location (e.g. shop or warehouse, using mobile devices and possibly other wireless units (e.g. RFID readers). Mobile devices connect to the company server via a wireless infrastructure (mobile network or WiFi- WLAN), which enables data and information exchange between different functions within a company and along the supply chain. In this way, a software application for mobile supply chain management enables intra-company and inter-company business systems, enabling participants in the supply chain to realize business activities such as online transactions, share and exchange of updated information, providing customer service, logistics and transport management, warehouse management, and so on. Transactions that are entered through mobile applications can be processed immediately or asynchronously, or when the customer voluntarily submits it to the processing center. On the market today there are several commercial solutions for mobile supply chain management, developed by the famous companies in the field of software and business information systems, applicable on supply, production control, warehouse management, transportation, etc. In the academic literature (Ruhi & Turel, 2005), mscm applications are divided into: 2011, Volume 2, Number 1 69
- mobile technology applications in internal supply chain. Mobile technologies offer significant advantages to internal business operations by facilitating express and streamlined workflows. Among others, workflow applications in business operations include document approval, expense reporting, payment, and purchase orders. The most significant benefits in wireless procurement services result from speeding the overall processing time of an approval request. Another major category of technologies that is redefining internal supply chain processes is wireless product identification. An example of wireless product identification technology is an RFID system that scans electronic product codes stored on RFID tags. These tags can be read seamlessly through tactically placed RFID scanners which in turn transmit inventory information to backoffice systems through specific middleware. The tag readers can hence be attached to forklifts, mounted in pathways or built into stacking shelves. The idea in using such a technology is to automate the extra step in scanning pallets or items. Other internal applications that drive process efficiencies include direct machine-to-machine data exchanges through telemetry (the use of telecommunication devices, including wireless, to automatically record measurements from a distance). The automatic notification of an inventory management system by an RFID reader when inventory is depleted below a certain level would be an example of a telemetric application. It should be noted that wireless technologies need to be strongly integrated with enterprise systems and the medium of transmission for updates between wireless devices and enterprise systems can be in the form of a WLAN based on short-range Wi-Fi technology or the proximity-based Bluetooth technology. - mobile technology applications in downstream supply chain. Many technology applications in outbound logistics coincide with those in inbound logistics, because of the sophisticated omni-directional nature of supply networks where the position of an organization might be that of an upstream supplier as well as a downstream customer. Similar technologies can be utilized in both cases, but in different business contexts (for example, GPS bearer technologies can be used in conjunction with transportation management systems to determine dispatching routes and daily delivery schedules). The marketing and sales function in Customer Relationship Management can benefit greatly from information access provided through wireless handheld and pocket-pc device types (for example, using their handhelds, field sales employees can connect directly to back-office inventory management systems or Enterprise Resource Planning systems). Returns processing and reverse logistics presents yet another area where mobile technologies can help alleviate business pain spots. By allowing drivers and field service representatives to accept returns (due to defects or changing minds) and with the ability to dispatch pickup trucks in the near vicinity if necessary, businesses can increase productivity and customer satisfaction. Lastly, telemetry applications have the potential to provide an effective means of monitoring and controlling remote resources. Service levels could be monitored and service personnel can be assigned based on the type of problem incurred. These applications can help reduce personnel time and costs associated with routine overseeing of assets in remote locations. The most important application areas of the mobile technologies in the Supply Chain activities are (Kalinic Z. et al., 2011; Yuan, Q. et al., 2008): - information information management, fast and efficient reception, transfer and exchange of information is one of the key aspects of mobile supply chain management. Except for reception, mobile devices are used to collect, generate and distribute information to the others, including updating information on central information system; - mobile production - in combination with scanning of bar codes or RFID tags, data entry using mobile applications allows more efficient use of 70 2011, Volume 2, Number 1
time and the possibility of validation and correction in real time. Production workers can use mobile devices to read operating instructions, anywhere within the factory i.e. at their workplace/ environment. Also, production data and task reports can be collected; - mobile inventory management accurate and efficient inventory management, based on the solutions with bar codes or RFID tags, is used to track the level of the stocks of those products that are critical for the company. In this way, companies can reduce the problems of duplication or lack of entries, and enable people to know exactly where some item is; - mobile sale - using mobile systems for supply chain management, retailers can increase sales by providing the right amount of right products at the right place at the right time. The system improves customer satisfaction by informing them about the status of their orders and reducing the probability of delays or incomplete orders. The system also improves customer service and the ability to quickly respond to customer needs changes, by passing information about the new requirements throughout the supply chain and by possibility of using mobile devices to serve customers on site; - tracking goods in supply chains by using GPS systems, mobile devices and networks, now is possible to monitor the progress of each transport vehicle in real time efficiently, and thus to know exactly its position and time of arrival at the final destination, and the type and quantity of goods carried by transporter, thus opening to possibilities of transport optimization and lowering the costs. Figure 1 Mobile device capabilities for different supply chain activities Order Enabler Always On Always Connected Warehouse&Inventory Management Thick Client Applications Wireless PDA Device Recognition&Rendering Mobile Business Online on Demand Device-Resident Apps Thin Client Applications Transportation and Logistic Reverse Logistics Offline Mobile Handhelds/Laptop Mobile Sales&Service Distribution (Adapted after E.P. Lim & K. Siau, 2003) The three trends in the modern supply chain, namely fulfillment velocity, inventory visibility and coordination versatility are laying the foundation for adaptive supply chains. Mobile applications are playing a certain role in 2011, Volume 2, Number 1 71
the enabling of that foundation. Supply chain processes in companies today are desktop-centric. Processes from the receiving dock, production and ship areas slowly make their way to a desktop before resuming their natural flow. Mobile devices are deconstructing desktop-centric workflows, as shown in the Figure 1, wich illustrates the application of different mobile device capabilities for different suply chain activities. Figure 2. Model of mscm based ubiquitous network Internet Integrated operator Telecomunication network Mobile Supply Chain Management Platform Mobile comunication service provider Enterprise in supply chain Terminal user in supply chain Mobile terminal User layer receives information from User layer submit information to platform through (Adapted after M. Zha, X. Liu, Z. Zhang, 2008) In ubiquitous network environment (a network environment that enables access anytime, anywhere, by any device, by anyone) supply chain activities and goods can be provided everywhere regardless of time and location. Mobile supply chain applications allow users to request information and conduct whatever they want, whenever they want and how they want. By using Supply Chain Management platform, specialists (Zha et al., 2008) have proposed a theoretical model, a mscm model based ubiquitous network that is divided into three layers: - user layer: it represents the users who actually use mscm platform, including the users who directly use mobile terminals and enterprises which use supply chain management platform. Based on the functions of network layer and platform layer, the terminal user of mobile supply chain in user layer only needs to use mobile devices. Network layer and platform layer are transparent for the terminal user of mscm (this terminal can be the ultimate consumers, secondtier suppliers, second-tier distributors, retailers, merchandiser and 72 2011, Volume 2, Number 1
sales, or even the storekeepers and production workers). - network layer: it is the concrete channel of information flow of mobile supply chain, including mobile terminals, mobile communication service providers, telecommunication networks, integrated operator and Internet networks. Integrated operator is a kind of enterprise which integrates telecommunication resources, Internet services and software services, and provides services of data and information collection, storage, trusteeship, conversion and transmission services. - system platform layer, including supply chain management platform and mscm platform. According to various types of user objects, system platform possesses main function modules such as business, service and query management, as shown in Figure 2. In this model, users of mscm submit information by mobile terminal devices. Through the telecommunication networks provided by mobile communication service providers, the information is transmitted to integrated operators. Integrated operators will store, convert and integrate the information, and release the information to MSCM platform to be utilized. Enterprises in supply chain transmit the information which needs to be released to supply chain management platform. Once the integrated operators receive information posted through Internet, they will store, convert, and separate the information. After those processes, the information is transmitted to specific mobile terminals via telecommunication networks. In this way, the interactive commerce activity about information is achieved. Conclusion The key ingredient for success in managing a supply chain is fast, accurate information from a wide range of operating areas including transportation, inventory, purchasing, customer service, production scheduling, order processing and vendor operations. The ability to react quickly to market changes and to adjust inventory, production, and transportation systems accordingly is necessary for cost efficiency and for the improved utilization of assets. This is the main reason for the use of the Internet in SCM, wich is rapidly increasing. Logistics management and supply chain operations often involve more mobile resources than any other business function while needing to integrate with a wide range of other workforce and business processes. The combination of technical advances, price point reductions and solution integration sets the stage for widespread adoption of mobile technologies across industries and company sizes, with projects that deliver value in weeks, not months and years. The capabilities of today s smartphones and mobile data networks have expanded well beyond the rudimentary mobile tracking solutions that have been used to manage resources on the road in the past. At the same time, the cost of mobile technology has dropped while the functionality of mobile devices, ranging from smartphones and iphones to tablets and GPS devices, has expanded. Mobile data coverage has increased, as network providers have invested substantially in 3G, 4G, LTE (long-term evolution) and WiMAX infrastructures to deliver broadband speeds over any distance to any location. With this combination of advanced capabilities, lower cost and ubiquitous access, logistics providers have an unprecedented opportunity to capitalize on what mobile has to offer, whether that is tracking mileage, measuring driver/field worker performance, interacting with back-end systems (e.g. CRM Customer Relationship Management, payroll, etc.), managing scheduling and routing. The Internet has and will continue to provide logistics managers with this information and enable them to improve the profitability of their supply chains. On a continuing basis, the Internet will enable logistics managers to monitor their supply chain operations and reduce costs when inefficiencies arise. The Internet will enable companies to achieve the true efficiencies embodied in supply chain cost reductions, which is based on the axiom that a 1-cent reduction in supply chain 2011, Volume 2, Number 1 73
costs can have as much as a 5-cent improvement on operating profits. Moreover, mobile technologies within enterprise and across the supply chain have the potential to create tremendous value by gradually changing old methods of doing business. They can be used to create differentiation opportunities or to reduce cycle time, transaction costs and coordination costs. The value extracted from mobile applications will be small in comparison to a firm s overall revenue. Mobile technology is an enabling technology that can and should be applied to firm and supply chain specific practices. Through omni-directional real-time transmission of information, instantaneous reconciliations, and elimination of non value-added activities from the supply chain, these new mobile applications are enabling increased fulfillment velocity, improved inventory visibility and higher levels of supplier coordination versatility in the supply network. Researchers and futurists contend that mobile SCM technology applications can turn that vision into reality by enabling new processes to seamlessly connect into existing planning and execution systems. References Barnes, S. (2003) M-Business: The strategic implications of wireless communications, MA: Butterworth- Heinemann; Eng, T.Y. (2006) Mobile supply chain management: Challenges for implementation, Technovation, no.26: p.682 686; Kalinic Z., Arsovski S., Arsovski Z., Rankovic V., Milanovic I., Rejman-Petrovic D. (2011) Mobile supply chain management key technologies and applications, 5th International Quality Conference Manual, Kragujevac: Center for Quality, Faculty of Mechanical Engineering, University of Kragujevac, p. 431-438; Lancioni, R., Schau, H.J., Smith, M.F. (2003) Internet impacts on supply chain management, Industrial Marketing Management, no.23: p.173 175; Lim, E.P., Siau K., (2003), Advances in mobile commerce technologies, London: Idea Publishing House; Ruhi, U., Turel, O. (2005) Driving visibility, velocity and versatility: the role of mobile technologies in Supply Chain Management, Journal of Internet Commerce, no.4: p.95-117; Sheng, H., Nah, F.F.H., Siau, K. (2005) Strategic implications of mobile technology: a case study using valuefocused thinking, Journal of Strategic Information Systems, no.14: p.269 290; Siau, K., Shen, Z. (2002) Mobile commerce applications in Supply Chain Management, Journal of Internet Commerce, no.3: p.3-14; Yuan, Q., Xiaokang, Z., Qiong, Z., (2008), Key technology and system design in mobile Supply Chain Management, Proceedings of the ISECS'08 - International Symposium on Electronic Commerce and Security, Guangzhou, pp.258-263; Zha, M., Liu, X., Zhang, Z. (2008) Research on mobile Supply Chain Management based ubiquitous network, Proceedings of the WiCOM 2008-4th International Conference on Wireless Communications, Networking and Mobile Computing, available on-line at http://ieeexplore.ieee.org/xpl/freeabs_all. jsp?arnumber=4679502 74 2011, Volume 2, Number 1