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M2M for Supply-Chain Management

When the machines start plotting together...

No longer do people request information from machines, now they're all talking to each other!

M2M technologies and applications span the supply chain. At near individual item level, RFID tags and sensors automate data communications about pallets and cases. Like bar codes, the devices are ID'ed and tracked, and with them the goods and inventory.

For this tracking, the devices need a path to communicate through. Communications infrastructure includes cellular (CDMA, GSM), and value-added networks like Sterling (www.sterlingcommerce.com). Finally, RFID tags and sensors talk to computers that process and interpret collected data so that those computers, or an individual, can make decisions about managing the supply chain (placing orders).

Vendor-Managed Inventory
Vendor-Managed Inventory (VMI) uses "pallet level technologies to track sales and inventory on a daily basis. Data moves from the customer's server to the machine at the VMI solutions provider or the supplier, and is processed. Recommendations are derived for how much of what inventory to replace and when," says Ian Barkin, managing director, The FocalPoint Group (www.thefpgroup.com).

With VMI, M2M enables vendors to collect accurate, real-time data from their customers, whether they are manufacturers using consumables, parts and raw materials, or retailers and distributors moving finished products. Computers and staff at the VMI solutions providers use exception reports and purchasing recommendations that result from this data to make SCM decisions on behalf of the supplied customer. Through VMI, SCM is not only outsourced so that the customer can attend to other priorities, but also more efficient.

Enterprise Data Management's solution offers a magnified view of VMI. "We gather data from our customers' customers, who generally speaking, are distributors," says Carl Hall, president, Enterprise Data Management (www.edm1.com). The company gathers sales and inventory position data nightly in a variety of formats. These communications are always machine-to-machine, says Hall. "There are no people involved in this process."

Once the customer sets up a means of pushing the data to Hall's organization, via flat-file, EDI, XML, or a combination thereof, SCM is in the hands of its Datalliance VMI solution.

Results
Analysis of Enterprise Data Management's Datalliance VMI solution as used by truck parts suppliers and distributors demonstrated a 49-75% increase in inventory turns, a 31-39% decrease in out-of-stock situations, a 24% sales increase, and a 50% decrease in administrative effort, according to Hall.

VMI moves more product; this benefits every member of the supply chain.

"Some of our customers are pretty vocal about being our customers. Rockwell Automation (www.rockwell.com) is a big customer of ours. They use this data to manage inventory at their distributors' locations around the world," says Hall.

Product, Information, and Finance Flow
Pallets are scanned into warehouses, around warehouses, out of warehouses, and on to trucks that travel to retail stockrooms. "The enterprise planning system registers that so you know exactly where that pallet is at all times," says Barkin. Products are then scanned to the shelf at the retailer.

The scanned information is fed (preferably automatically) into computers at the warehouses and retailers. This is the kind of data that makes its way to VMI solutions providers like Enterprise Data Management.

Enterprise Data Management's Datalliance VMI solution communicates price files and orders by a variety of methodologies. Order placement information is directly available to the customer's record-keeping infrastructure.

Empowering Decisions
"Just-in-time stocking" is realized because the retailer knows immediately what needs to be restocked, says Barkin. You don't need the stock person to check the aisles and discover too late that you are out of something you could have been earning revenue on. "There are software applications that can communicate that relevant data to the appropriate parties," says Barkin.

RFID Tags - Freeing Up the Management Process
RFID tags are imbued with characteristics that facilitate better, faster SCM. You don't have to have line of sight from the tag to the reader, meaning you don't have to move the pallet to read the tag. Radio tags can be reused, which increases their flexibility and worth.

Whereas a bar code is used once and discarded, a read-write RFID tag can be embedded in the pallet. You can keep using that tag over and over, says Dwight Klappich, lead analyst for supply chain research, the META Group (www.metagroup.com). Finally, extra data can be written, rewritten, and tracked through RFID. If you try to do the same thing with bar codes, you have to read multiple areas on the tag. This is awkward, time-consuming, and error-prone.

RFID the IBM Way
Bundled with its middleware offerings, IBM offers three RFID solutions on a single platform. These include automated goods receiving with a three-way matching process, matching against a watch list, and finally, shrinkage detection.

Automated goods receiving with three-way matching automates resolution of discrepancies between ordered goods, promised fulfillment, and actual receipt of goods. The watch list solution speeds the immediate turnaround of goods to the retailer once they are on the radar. Shrinkage detection uses the radio tags to track lost, perished, and stolen goods. These solutions can produce savings for all members of the supply chain against the cost of manually administered chargebacks and related inconveniences.

IBM's single-platform methodology saves the cost of having more than one infrastructure in the course of adding RFID to SCM. IBM's WebSphere Business Integration "helps companies identify the key business processes, and functions within those processes, that they want to string together to orchestrate an RFID process," says Umesh Patel, solutions executive in distribution and industrial sectors, IBM.

"As goods make their way through the supply chain, every custodian has bits and pieces of information related to that pallet or case. When things get down to the item level tagging, far out in the future, how do you associate and fetter it all together? That's where our information integration tool, which comes from the data management category, is very helpful," says Patel.

RFID Aids Manufacturing
By evolving from bar codes to RFID tags, manufacturing can deliver parts to needed destinations in an accelerated fashion. If you have totes with parts that you've dispatched to the work center, those totes can be embedded with RFID tags. You can use the tag to identify the tote and its destination. The tag can be updated for each new delivery, says Klappich.

Practical uses for item-level tracking today don't include small-ticket items. It's too much trouble and expense for too little reward to radio tag at the item level for cheap goods. However, TVs, cars, and other big-ticket items are practical applications of RFID in the current market.

M2M - More Toward Unattended SCM
Much of the collecting of data in the chain and decision making about when to restock or how to regulate the flow of inventory can be handed over to M2M machines and platforms. For example, an IBM customer uses RFID technology in the fabrication process for quality control. In fact, a few months back, when they had a snowstorm, they were able to run the fabrication process for four days in unattended mode because they had been using RFID technology, says Patel.

Thoughts on M2M for SCM
M2M for SCM makes its case when providers and enterprises large enough to see significant ROI work to find applications suited to specific needs and problems. This occurs often enough to support VMI solutions providers, RFID providers, and the acquisition of M2M technologies for SCM by large corporate entities. This trend should expand as the cost of the technologies decreases and examples of successful implementations proliferate in the marketplace.

More Stories By David Geer

David Geer is a contributing writer to WBT, a journalist, and a computer technician. He graduated from Lake Erie College in 1993 with a BA in psychology and has worked in the computer industry and in the media since 1998.

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The open source community has now entered the M2M world. Serotonin software recently announced that its Mango M2M software will be released under GPL. The initial download distribution is expected within a month. Go to http://mango.serotoninsoftware.com for details.

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