We continuously see changes in the expectations customers have of their suppliers and in the way organizations operate. Purchases are made at the touch of a button. Deliveries are digitally monitored. Companies work together in ecosystems. And a critical tweet goes around the world in seconds.
For many companies, this has an impact on their fulfillment process. Often the combination of processes, which together form the fulfillment process, due to complicated IT systems, is inert and slow. Nevertheless, one must constantly be alert to keep costs under control, without reducing the level of service and the quality of the process. In today's digital age, that is a big challenge because customers expect more and more. Orders come in 24/7 and are subject to constant changes. Suppliers are responsible for the correct stock positions and orders must be delivered on time and often with a limited shelf life.
When companies want to maintain their market position, they must be agile and able to respond to the changing demands of their customers. Only those companies that innovate will be able to do this and capitalize on their opportunities.
Fortunately, we can innovate the fulfillment process using specific digital solutions. It can be more efficient and easier to adapt to new developments. Applications such as Business Process Management & Automation, Big Data, Cloud Computing, Artificial Intelligence, Machine Learning, and Robotic Process Automation make it possible to connect the various functions such as Planning, Production Control, Inventory Management, and Logistics and to achieve better synchronization between supply and demand.
Better efficiency and better service
The benefits of innovation from the fulfillment process are enormous. Between 60 to 90% of the operating costs have to do with fulfillment. So every efficiency gain is immediately reflected in the operating result. In addition, agility and efficiency result in smaller error rates and, perhaps even more importantly, better customer experience and more opportunities for revenue growth. Nowadays efficiency does not have to be at the expense of the service or vice versa, and the fulfillment process is a strategic asset with which the company can strengthen its competitive position.
Four phases to innovate the fulfillment process
In general, we recognize four phases of innovation. What we have to keep in mind is that digital technology alone will not improve the fulfillment process. Application of digital technology offers all kinds of new possibilities, but the effect is as good as the design of the system. We therefore prioritize a clear and carefully designed structure for operational and service-oriented processes.
For the design and implementation of a hypermodern fulfillment process with a high degree of efficiency and adaptability, we follow the following four phases:
Scope: Define a holistic view of the fulfillment process
Connect: Connect all IT systems for an effective information provision
Digitalize: Optimize and digitalize the processes for horizontal workflow
Transform: Develop further for effective new value creation.
Determine the scope of the fulfillment process. Map the functions and processes. And define which ecosystem the fulfillment process is part of. In other words with which partners, distributors, suppliers, buyers etcetera is close cooperation?
Every company is different and every fulfillment process is specific. It is important to have a complete picture of all parts and the way in which these parts are connected. Then the IT-architecture of the fulfillment process can be determined. This lays the foundation for synchronizing the various processes and finding the perfect balance between cost efficiency, effectiveness, and service level for effective internal collaboration and an optimal customer experience.
When there is no complete overview, parts in the process can cause delays.
Link the existing IT-systems within the architecture of the fulfillment process. Direct linkage must ensure that the right information can be used in real time.
Fulfillment is under constant pressure to stimulate sales growth for the company and to reduce costs. To manage this process well, it is important to have the right information. In recent years, companies have invested heavily in IT-solutions, such as Enterprise Resource Planning (ERP) and Business Intelligence (BI) reporting systems. However, very often these systems are outdated and not interconnected (IT-legacy), which means managers still have to work too often with incomplete or incorrect information.
To ensure better information availability, existing IT-systems need to be connected so that we better consolidate, analyze and use the data they already have to get a truly holistic and meaningful picture without costly and time-consuming adjustments to the IT-infrastructure.
Without up-to-date information and analysis of data, everyday tasks, such as measuring performance levels, preventing problems in the system or seeing future demand flows, are at best stressful and usually impossible. As a result, it is not surprising that managers spend a lot of time solving problems and do not accrue to optimizing the supply chain.
With Ferbin, the Digital Commerce & Fulfillment Suite of Kien, data can be recorded, stored and analyzed at all levels. A cloud-based facility for process optimization and connection with IT-legacy, linking with the Internet of Things and smart analysis of data, are just some of the innovations it can apply. In addition, it reduces the hardware and software costs.
Managers get a holistic view of the processes for planning, production control, inventory, transport and delivery in real time, across the “silos” of the various departments. This shows the mutual connections between operations and other business functions. With real-time availability of the right information, management is better able to identify and realize higher efficiency and service improvements.
Digitalizing the work processes over the walls of the silos. This way it is achieved that employees can collaborate better and faster in the entire chain. In this way we achieve greater efficiency in the current way of working, and we prevent too much manual work and parts do not fall between two stools.
Based on the scope, we can improve the efficiency and effectiveness of the various processes through digitalization. An additional important advantage of digitalization is that the fulfillment process is also easy to adapt to new developments.
Start with the weaknesses in the system to achieve the greatest performance gain. Work from there until the entire fulfillment has been digitalized and the company has an effective dashboard that provides real-time insight into the performance indicators.
Ferbin integrates the Internet of Things and the possibility of data analysis techniques. We can constantly have real-time information. This allows us to constantly evaluate and improve the fulfillment process. The speed with which performance feedback can be obtained makes it possible to experiment with different production scenarios. Application of Robotic Process Automation and Machine Learning gives perspective on continuous improvement of the fulfillment process.
With a stable fulfillment process, better synchronization of repetitive patterns is possible, lean principles can be implemented further, planning is simpler and production less wasteful and more reliable. Digitalization improves efficiency, shortens the lead time and reduces the chance of errors. It is the surest way to create stability, efficiency and effectiveness in the light of increasing service requirements and the unpredictability of demand.
And, last but not least, implement more advanced digital technology so that the fulfillment process optimally contributes to new value creation for the company?
For optimum innovative value creation, it is important to link the fulfillment directly to the business strategy. The basis for this is that the digitalized fulfillment process works well. To optimize this process further, the options are enormous. From more extensive use of the Internet of Things, Robotics and Artificial Intelligence to autonomous vehicles and automated factories and warehouses.
However, too often the fulfillment process is purely functional, with the primary aim being to get products to the customer on time at the lowest cost. Still too little is fulfillment seen as a strategic asset with which the company can grow its topline and can make an enormous contribution to the experience of the customer. In several respects this is strange at this time: indeed fulfillment is responsible for a large part of the total costs and has a direct influence on the overall competitiveness (due to production times, product quality, customer engagement, et cetera).
As a result of the possibilities for innovation, we expect change here. On the basis of the information that becomes available real-time from the fulfillment process, forecasts can be made with great accuracy for different business scenarios. For example, for optimal configuration of the process, network configuration, supplier selection, and operational performance indicators. This all helps to achieve the business objectives and to strengthen competitiveness.
With advanced data analysis and modeling software, smart analyzes can be made about predictability of the behavior of the fulfillment process. This allows managers to provide valuable insights into discussions about a broader business strategy. This not only increases the chances of meaningful internal collaboration and multifunctional dialogue, but also the prospect of greater operational and strategic coordination within the company.
These new developments do not make the operational manager superfluous. Human insight and decision-making is still essential. The difference is the speed and accuracy with which decisions can be made. Moving digital technology does not change the principles of operation. They simply ensure that a synchronized system can do what it is designed for now - only faster, more efficient and with much higher accuracy.
Now is the time
The digital technologies for collecting, storing and analyzing data are an essential factor for innovating the fulfillment process. The time for action is now. At present, only a third of the companies see themselves as digitally competitive. Nevertheless, digital management of their company is high on the agenda of many management teams. For 2020 it is expected that the number of companies that see themselves as digitally competitive will have risen to 70%. Fulfillment of tomorrow is characterized by a higher product flow, better customer service, greater flexibility, and lower total costs. But do not wait until tomorrow. Make sure you are part of that 70%.