As the recent launch of Apple’s iPhone 4 underlines, cell phones continue to morph into communications hubs with a seemingly limitless range of applications. While the supply chain corner of this expanding universe might appear dull alongside the Retina displays and LED flash cameras that color the consumer domain, the transformative potential of mobile technology in this area is no less exciting.
Companies are already using mobile technology to improve supply chain efficiency. Take just one example, how retailers are connecting store delivery drivers with operations managers through a combination of cell phone communications and cloud computing. The drivers are able to update inventory information in real time as they make their rounds, provide valuable feedback on buying patterns, and even trigger payment processes when they confirm that deliveries have been made.
No doubt these applications will become even more versatile over the next few years. But in many ways the hottest prospects for using mobile technology to supercharge supply chains can be found in emerging economies. In these countries the technology is enabling companies to leapfrog many of the hurdles that slow the advance of supply chain management.
Again, this is not new. For example, manufacturer Nokia has been using the technology in India for some time. The company’s products are sold by countless small retail outlets in India. Nokia uses its cell phones to track inventory in these mom-and-pop stores and provide visual checks of product displays.
But these are early-stage applications. The number of cell phone subscriptions has surpassed 4 billion worldwide, and as users become more sophisticated the technology’s supply chain footprint in developing countries will expand. Technical advances will add fuel to this expansion.
For example, supply chain is one of the verticals that an initiative at the Massachusetts Institute of Technology called the MIT NextLab Program is focusing on. NextLab works with industry partners to design and deploy mobile platforms. The research team is currently building a platform that will open the door to a profusion of supply network applications in developing countries.
To imagine the possibilities, think of the Latin America region where there are huge tracts of territory that are poorly served by conventional telecommunications. Mobile technology will help to fill these voids. For instance, networks of carriers and shippers will be able to communicate over large distances to improve truck utilization. A lack of real-time information on the status of loads currently causes serious congestion at freight terminals in that part of the world.
In Mexico Estafeta, SA de CV, the country’s premier courier and delivery company, has engaged NextLab to research the potential role of new smartphone technologies for enabling and scaling low-cost supply chain and distribution networks. Serving low-income consumers in developing countries often requires intricate supply chains that are cost-prohibitive, making it difficult for companies to expand in these untapped markets. The project aims to understand the basic commercial processes (e.g., pricing, transaction, and procurement mechanisms), in resource-constrained environments. This knowledge will be used to design and implement a smartphone software platform that will enable member firms to distribute their products and services in these markets at a substantially lower cost.
Some pioneering companies in emerging countries are already demonstrating the potential of mobile-enabled supply chains. Argos, a $3.5 billion cement and concrete manufacturer, is piloting an automated distribution center in Medellin, Colombia. When a truck approaches the facility a radio frequency identification system identifies the vehicle and automatically assigns it loads. When the truck reaches the end customer the driver uses a cell phone to confirm the final status of the shipment. There are various codes that the driver uses to confirm a delivery or notify Argos of glitches such as unloading problems. The company plans to introduce the system in other DCs.
When Steve Jobs, Apple’s CEO, unveiled the iPhone 4 this month he called it “the biggest leap since the original iPhone.” Look for many leaps forward in the way emerging market supply chains are designed and managed with mobile technology as the catalyst.