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Why a business’ supply chain must be mobile by,Karsten Horn, director international sales of the Inventory and Supply Chain Division at INFORM

The advent of new technologies has enabled shoppers to make a purchase anywhere, and at anytime.

This has given pace to the rapid development of e-commerce using mobile devices. Due to its inherent characteristics such as personalisation and flexibility, mobile commerce offers unprecedented market potential for business and its impact is already being seen on the business world. This form of commerce is changing the way consumers can buy goods, and it makes transactions more convenient, ultimately helping businesses drive sales.

However, this consumer shift towards purchasing goods ‘on the move’ also means that organisations are faced with a key challenge; companies must ensure the business is able to meet the potentially drastic variations and upswings in demand that m-commerce may introduce.

Consumers on the move
The number of consumers adopting the method of m-commerce to buy goods is continuing to increase; 50 per cent of people with a smartphone or tablet computer planned to use their mobile device to buy Christmas presents in 2011, compared to just 22 per cent the year before .

Distribution operations in the future need to be aware of this trend and support mobile commerce, including consumers ordering and paying for products with their smartphones. Organisations must be prepared to go when and where their customers and consumers are.

With mobile commerce expected to grow by 55 per cent over the next five years and social shopping through networks such as Facebook on the increase , I firmly believe that this year organisations must have greater awareness of the impact m-commerce can have on their business.

M-commerce will begin to change the structure of supply chains in 2012 and I expect that to meet the frequent demand for small quantities that these technologies enable companies will have to engage in rapid replenishment to ensure on-the-shelf availability of products.

Managing unusual buying habits
It could be argued that 2012 holds more potential shopping peak periods than any other year in recent history. The Olympics, Euro 2012, Queen’s Jubilee and the additional day due to it being a leap year, combined with annual key dates including Easter, bank holidays and Christmas, equate to a busy time for consumers and business alike.

The shopping peaks combined with the advent of m-commerce technology present a number of unique opportunities for companies. Plans should be in place to fully take advantage of both the opportunities and challenges these peaks may bring, so as not to be caught out by unusual buying habits.

Key to this is managing the potential effect m-commerce will have on the supply chain. Businesses need solutions in place to effectively optimise the supply chain and manage potential spikes in demand throughout the year. These solutions should grant the ability to foresee potential problems before they happen and minimise the risk and subsequent impact to the business.

Advanced planning systems, for example, can provide decision support for the supply chain. These focus on the demand and supply of materials, providing managers with a clearer, bigger picture of the likely requirements of the business and allow them to make informed decisions based on up-to-date facts.

Collaboration between trading partners should also be improved using these systems to integrate the supply chain, which may then have a positive influence on real-time visibility, potentially reducing waste and lead times, supporting sustainability, and enhancing service levels.

A new model
Businesses that want to take advantage of the opportunities presented by m-commerce will have to understand how it fits with existing business models and how it will impact upon the supply chain.

This new technology opens up the way an organisation’s customers can search for products, place orders and track shipments, making the supply chain much more visible in the buying process.

The upside is that mobile phones can be used to keep track of stock and send updates to a central database which can then be used effectively by a supply chain manager, in conjunction with advanced planning tools to respond quickly to unexpected changes in demand, which may occur during peak shopping periods.

M-commerce technology can transform a traditional supply chain to become a more responsive network, enabling efficient data exchange among businesses and consumers wherever they reside. This can leverage the responsiveness of the entire supply chain network, making it more effective in coping with market changes, which may be crucial given the key UK events taking place in 2012.

Apart from location tracking of goods as well as relevant services, m-commerce is also able to play an important role to enhance the performance of a supply chain network during peak shopping periods. For example, m-commerce can assist through the effective monitoring of suppliers and production circles and can be utilised in a wide range of value chain activities ranging from product design to after-sales services.

Changing circumstances
The events of 2012, such as the Olympics and Jubilee, are unprecedented, and so it may be difficult for businesses to know what to expect when it comes to managing the supply chain. At worst, disruptions to transport could leave businesses unable to meet demand.

Organisations must therefore be prepared to react quickly to new and changing circumstances. Considerations to ensure the supply chain is managed effectively include lead times and prices of alternative suppliers; batch sizes, shelf life, minimum and maximum ordering constraints; storage costs and delivery frequencies to ensure optimal replenishment.

Companies might also need to consider putting into place alternative transport options. Measures could also include deciding to store products in multiple locations to minimise risk of shortages, or holding more inventory within the supply chain to absorb any disruption for a temporary period. By developing more accurate requirement plans which conform to lean principles, businesses will be able to buffer the supply chain from risks and changing situations.

The opportunities created by mobile internet devices and technologies will take time to fully materialise, but 2012’s national events will accelerate this process. Mobile internet and social network technologies are transforming the consumer world, and a similar transformation is occurring in business and supply chain management.

Companies are becoming mobile and supply chains have to respond. It is the organisations with the tools and flexibility to react to changes throughout 2012 that will be at a significant advantage to their competition.

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