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CIA/PICME Seminar: Supply Chain Optimisation, 6th March '03, Ford College, Loughborough

Supply Chain Automation Using the Internet - Mike Brand - www.DEDICATEDengines.com

(March 2003)

This synopsis outlines how supply chains for bulk product can be automated to enable collaboration using 'low cost of entry', 'hosted' services on the Internet, delivering savings through:-
  • utilising the existing silo level sensors
  • not requiring specialist software (web browser interface only)
  • global coverage, by using the Internet world wide web to connect the silos from wherever they are located in the world
The cost of implementing collaborative business systems using closed 'computer-to-computer' links often outweighs the benefits. This paper shows how Legacy/Internet interface units (Enablers) can allow communication over the Internet with existing legacy equipment - and can bring many of the benefits, without the large capital outlay involved in replacing the existing control system hardware. The Enabler can use the GSM mobile phone network to provide 'wireless Internet' connection, promoting flexible deployment and increasing ease and speed of roll out on customers' sites. An intelligent system, the Enabler downloads it's instructions from the central service, as programmed in through a web browser by the haulier, or the Supplier. Using 'data push' techniques, it then only connects to the Internet whenever it sees the silo level drop below the pre-programmed re-stock level, avoiding the need for a permanent Internet connection.

A system where the web pages and central server are located on the Internet itself ("Internet based") promotes a collaborative approach and reduces cost of entry to use the system. All access to the system is via a web browser, such as Microsoft's Internet Explorer. Access can be via LAN/WAN and through the Internet proper. There is no restriction on the number of users.

Existing Supply Chains

On average, suppliers of bulk raw product, (e.g. the food, oil and gas, chemicals, building materials and pharmaceutical industries), spend between 10% and 15% of their annual turnover on their supply chain. The Supplier has only historical performance to rely on and frequently holds excess stock to cope with last minute panic orders from their customers. Equally, last minute panic orders involve last minute haulage arrangements leaving the haulage company struggling to supply suitable tankers and the Supplier with a large haulage bill. The Haulier is not able to make best use of his tanker fleet, forcing him to amortise the cost of 'idle' tankers over his standard delivery rates. In the end, it is the Customer who pays through higher raw material prices for the overhead costs of managing the supply chain, panic deliveries and excess stock. He also has the burden of capital tied up in his own excess stock and of managing his own stock to match his usage.

Efficiencies through Internet based Systems

If visibility of the supply chain is made available, then management of the Supply Chain can pass to the Haulier. The Haulier is then better aware of forthcoming delivery requirements and can make more efficient usage of his haulage fleet, reducing eg. demurrage.

Visibility of forthcoming customer product usage now allows the Supplier to reduce his capital tied up in his stock holding to more closely match his customers' requirements. Efficiencies made by his Haulier results in lower transport bills. His customer support teams can now stop juggling the everyday last minute panic deliveries and can become more pro-active and customer-facing, helping to grow the Supplier's business.

The Customer no-longer has to look after his stocks of raw materials. He also benefits from reduced raw material costs through cost savings passed on to him by his Supplier and has fewer production hold-ups through minimising out-of-stock occurrences. Less capital is tied up in excess stock holding as the supplier moves closer to just-in-time delivery.

Typical savings of 5%, up to 20%, can be made on haulage costs. Suppliers can save up to 10% to 15% on inventory carrying costs.


Marketing: Mike Brand


DEDICATEDengines Ltd
Pixmore Centre Letchworth  SG6 1JG UK

Tel:+44 (0)870 444 0700
F +44 (0)870 444 0722
Email: info@DEDICATEDengines.com
Web: www.DEDICATEDengines.com

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