The Internet is usually given credit � good and bad � for every new development in manufacturing and distribution. But while processing data through the Internet has an impact on the success of many a supply chain, other developments that are less flashy shore up every link.
It depends on your view of the supply chain. If you consider the supply chain to be an information exercise only, then the Internet allows you to manipulate and transmit data without restrictions. But for most companies, there is a product to be manufactured and processed throughout every step of the supply chain. The chain stretches from raw material through componentry, manufacturing, assembly of the finished product, packaging, storage, warehousing and distribution to the final consumer � which may be another plant, a store or a householder, depending on your industry and your process.
The trends that apply to this view of the supply chain include:
� A pull strategy. That is, a product is ordered and pulled through the supply chain in small lots instead of being pushed through in bulk lots. Production is customer-driven.
� Visibility. Every transaction in the supply chain must be visible to both vendor and customer for planning and fulfillment.
� Flexibility. Customers demand changes, and the supply chain must be able to respond.
� Speed. Fast response to orders is essential, but players in today�s marketplace need predictive tools to forecast demand as well as respond to it.
� Inventory management. Inventory management software abounds. But a program can be effective only if the real product is identified and tracked in real time through every step in the supply chain.
Software products have been developed to implement these trends and are being applied in today�s supply chain, but in the end, it is manufacturing that anchors the supply chain. If your company can�t produce a product to meet customer demands, the best fulfillment strategy is useless.
Lean Manufacturing
Anyone who spends much time manufacturing plants knows you can still find operations that are throwbacks to the old, dirty and dangerous ways of bending metal and assembling pieces into products. However, manufacturing is evolving, striving in e-business to be as responsive a supply chain component as distribution is.
One approach that is growing in popularity is lean manufacturing, a system designed to eliminate waste, in both material and movement and to promote an attitude of continuous improvement. Inventory management software programs and material handling systems are important tools of continuous improvement.
James A. Tompkins, president of Tompkins Associates, a consulting and systems integration firm, talks about future capable companies. They have several characteristics, one of which is balance. �Future capable companies must have balanced manufacturing operations that result in drastic inventory reductions,� Tompkins writes. �They have no need for large work-in-process inventories and must achieve balance by determining the cycle time that needs to be met to satisfy the supply chain requirements.� Tompkins also comments on continuous improvement: �With the pace of change and the rate of innovation, what is a great process today will be suspect in a few months and obsolete shortly thereafter. The future capable company must be aware of this and continually evaluate, analyze and improve processes.�
Modern plants rely on a combination of information flow and automated material handling to provide the kind of reliability and speed required for e-commerce fulfillment. One strategy is to generate more data from programmable logic controllers on the plant floor to assist in making decisions regarding planning, scheduling and plant operations.
Software packages for inventory management abound, but identification is the critical element: identification of parts flow and storage locations of components as well as identification of workers and production machinery. Computers at the workplace � touch screen terminals or computer readouts � are used to process work instructions to line workers.
Inventory management programs are rarely stand-alone. You�ll find them integrated with modules like warehouse management systems, scheduling or advance planning. Data from controls on the plant floor as well as personal computers communicate with enterprise resource planning (ERP) systems to better manage manufacturing operations as well as assist in planning and scheduling. Manufacturing software can interface with inventory tracking software to produce a list of raw material required for production. Manufacturing software basically transfers production data to a business system like ERP.
Mass Customization
Mass customization (sometimes referred to as the postponement concept) is a process that is often a part of lean manufacturing. But it can be embraced as an initiative, whether or not you�re promoting lean manufacturing. Indeed, mass customization could even be classified as a distribution initiative.
The concept of mass customization is simple: Manufacture a product in batch, getting the economies of scale inherent in mass production. Then, at a certain point, usually in response to individual customer orders, each product is customized � maybe color or components or model differences � before delivery to the customer. Depending on the product or the company�s way of doing business, this customization can be done as part of the manufacturing process or in a distribution center.
Art St. Onge, president of St. Onge Company, a consulting firm, prefers the distribution center approach. �The closer you get to the user, the more customization becomes practical,� he says. The Internet is also a factor, St. Onge believes. �With the Internet, mass customization is possible because the customer is able to talk directly to the manufacturer,� he adds.
Customization by means of �kitting� is the assembling of parts required to customize the product and making them available for assembly just prior to shipping. This kitting functionality is available in warehouse management software. A variety of value-added functions are available including product configuration, packaging and documentation. Along with assembly instructions, the software provides the assemblers with instructions that show the portion of the bill of material required and a list of components.
Material Handling and the Supply Chain
Material handling systems facilitate the integration of both  manufacturing and distribution because they have applications in both. Take the automated storage and retrieval system (AS/RS) as an example. The AS/RS is a retrieval device mounted on a mast that travels is an aisle. Originally designed to store palletloads automatically in warehouse racks, the AS/RS now serves as buffer storage in manufacturing. For example, a process may automatically call for a replenishment load from an AS/RS. In distribution, lighter, faster AS/RS models act as buffer storage for parcels or trays of mail.
Another product of material handling automation, the automatic guided vehicle system (AGVS), was originally conceived as a driverless replacement for the tugs that pull trailers through warehouses or factories. AGVS evolved into a driverless lift truck in one manifestation and a guided assembly platform in another. However, until recently, an AGVS was difficult to justify econom-ically. That situation has changed, thanks to a number of factors:
1. Users have better simulation tools to design an AGVS with the proper number of vehicles.
2. Early versions of the AGVS had a complicated system of components. Vehicles are now much less intricate and have even fewer components.
3. The guidepath for the AGVS used to require wires in the floor, locking in the AGVS�s route. Electronic guidance systems have eliminated the wires and greatly improved flexibility in rearranging patterns. The guidepath can be changed with just a keystroke.
4. The AGVS has become easier to justify, especially for three-shift application because the labor to operate tugs and lift trucks is getting more expensive.
Put the automated storage and retrieval system together with an automatic guided vehicle system, add manufacturing software and you get a piece of factory automation. Picture this application: an automated processing machine that requires parts be fed into it automatically and be replenished automatically. Parts are stored on special trays in the AS/RS; when replenishment is required, factory software sends a request to the AS/RS. A tray of parts is pulled automatically from the AS/RS, loaded onto an AGVS and delivered to the processing machine for automatic unloading.
The new, distribution-oriented manufacturing requires modern manufacturing techniques and equipment. But it also needs a new style of management that recognizes the advantages of the Internet, of continuous improvement as well as of supply chain integration, not only in distribution but also in production and all its supporting functions.
Bernie Knill has been writing about material handling logistics in manufacturing and distribution for more than 35 years. Bernie has won the Jesse H. Neal Editorial Achievement Award four times and has received more than 20 editorial excellence awards from the American Society of Business Press Editors. He can be reached at