Thursday, October 08, 2009

Mobile Applications and Location Based Systems for Supply Chain and Inventory Management

In an article I published recently about grocery stores using LBS (location based services) on mobile devices and Smart phones, I proposed there were additional areas that large enterprises could benefit from real-time data collection, B2B integrations, business intelligence and location based services. Let's take a look at a couple of additional scenarios:

  1. 14 trucks are delivering perishable products on routes
  2. Truck #7 has a customer that has an unexpectedly high demand for a product
  3. Truck #7, using a mobile handheld computer, requests additional inventory from the SAP ERP (enterprise resource planning) software in the central office.
  4. The SAP ERP reports inventory levels on all 14 trucks based upon the real-time synchronization of data with each of the handheld barcode scanners of the trucks
  5. It is determined that truck #9 has excess inventory of the needed perishable product
  6. The GPS service in the handheld computer used by truck 9 identifies it's position and a meeting location is quickly identified so inventory can be transferred from one truck to another to enable maximum product sales
  7. The route driver for truck #7 scans the bar codes on the boxes of perishable products in truck #9 and transfer the inventory from #9 to #7 and goes on his/her way.

That is a simple mobile inventory example using GPS integration with barcode scanners. What if there was an example of products sold on consignment? Let's use pre-paid calling cards as an example:

  • The product is distributed to 500 stores
  • Some stores sell more of these products than others
  • When one store is low on these, an EDI message should be sent to the product company informing them of a need for additional inventory at a specific location
  • The product company should be able to quickly determine where additional inventory is available in other locations.
  • A representative of the product company should be able to remove excess inventory from one store to replenish another.
  • With a handheld computer that includes a barcode scanner, the product representative can check inventory back into the SAP ERP system, which removes it from one store's inventory, an EDI or B2B electronic message is sent to the stores ERP notifying them of the product's removal from inventory.
  • Next the product representative takes the excess inventory to the store that needs additional inventory, the products are scanned, using the barcode scanner and added to the local stores inventory. The barcode scanned inventory information is then synchronized to theproduct company's SAP ERP system which sends an EDI message to the store notifying them of the additional inventory at that location.

Where does LBS (location based services) fit into these scenarios? Inventory levels from various locations are constantly being uploaded via EDI/B2B and monitored. The inventory of each location, rather than being static, becomes a dynamic inventory that is able to be shifted according to local demand.

If inventories can be considered dynamic and mobile, able to be shifted according to demand, then there is the opportunity for incredible savings. Much of the guess work can be avoided as the inventory for one entire region can be moved and shifted according to demand.

I picture a scenario where a consumer can visit the website of the product manufacturer and request the location of the nearest available inventory to their moving vehicle. iPhone applications already request to use your current location. This information can be automatically passed to the product manufacturer and used to query for the nearest product location. Perhaps best prices can also be included at some point and mobile coupons.

The ROI for the distributor or manufacturer comes from avoiding loss, excess or slow moving product inventories that trap or lock-up cash flow, reduced inventory storage costs, and a reduced need to discount in order to move the products. A benefit is the ability to move product inventories to the locations where there is the most demand so sales can be maximized at the locations with the highest margins.

If you would like to discuss this topic in more detail please contact me.

Author Kevin Benedict
Independent Mobile Computing, EDI and B2B Expert and Consultant