The Role Of Communication In The Supply Chain

Executive Summary

In establishing the indispensable and critical role of communication within the Supply Chain, this report sets out with the notion, builds around the assertion and ends up with the conclusion that Communication is the oil that lubricates the interpersonal relationship. This relationship could be among and between team members within an organisation, as well as, between the organisation’s team on the one hand, and their external clients on the other. Without Communication, there would be no supply chain (we would just end at SUPPLY). It only becomes a chain because there is communication to bind it together. Communication is the glue that strengthens the various segments of the supply chain.

Across the managerial cadre, the ability to communicate with other staff within business circles is a priority need. Equally, there is a need for employees at non-managerial levels to be able to clearly and quickly communicate important information to supervisors or superiors without wasting productive work-time. When the initial communication is clear, decoding it by the ultimate user becomes easy and guaranteed.

To clearly reflect the central role of communication in the supply chain, this report addresses the following:

• The advantages of Effective Communication in the Supply Chain.
• Example of a Supply Chain with Poor Communication.
• Steps to Integrating Effective Communication in the Supply Chain.
• How Communication controls the success of the Supply Chain, A Warehouse Example

If a company will excel and get into positive competition with the Amazons of the business world, such a company must see and treat communication in its supply chain as a foundational contributor to any other pillars that it already has. This research report shows how communication with co-workers, customers, consumers, etc. is so important and needs to be managed excellently. It also enumerates a few communication tools, to make the supply chain a seamless one.

Introduction

Supply Chain is a complex network of interdependent elements. It includes procurement, quality, safety, transportation and logistics, technical operations, etc. As can be observed in the glaring omission here, it is so easy to overlook Communication, and this is why it is an aspect that still requires so much advancement. To meet the high demands and short turnarounds of today’s market, the supply chain requires fast processes and the real-time transition of information round the clock.

Interestingly, communication in the supply chain is not restricted to an organization’s borders, it also entails engaging with those outside the organization. This aspect of communication is considered very difficult as communicating with suppliers, professionals and third-party stakeholders could be rather strenuous. Nonetheless, these external communications along the supply chain, when maximized, bring more creative ideas to the table and improve productivity.

Purpose and Scope

The purpose of this report is to show how Communication controls the success of the Supply Chain and serve as a guide for different supply chains to improve their communication models.

Many times, people in the supply chain have multiple roles. In some cases, an individual may carry out different task that requires engaging with Manufacturers, Distributors, Importers, Product Representatives, Eventual users, etc. Depending on role(s) assigned, the individual has different obligations and thereby finds him/herself in need of different tools and information to execute assignments.

Assumption

This report has made recommendations on the basis of an assumption that apart from communication, the other aspects of the supply chain are perfected for applicable businesses or establishments.

Method

This report was collated primarily based on information from online sources, journals and published interviews of people with first-hand experience of how communication has improved their respective supply chains. No offline survey was conducted in the process of compiling this report.

This method, though seemingly limiting, avails other people in the space the opportunity to proffer ideas for improvements based on surveys and other different points of view to strengthen the role of communication in the supply chain.

Understanding the Position of Communication in Supply Chain

Jit Hinchman, an Engineering and Supply Chain Professional, in a LinkedIn post quoted below, explained why communicating information is so imperative in the supply chain, also highlighting the inherent challenges to the successful development and execution of effective communication.

“Information is crucial to the performance of a supply chain because it provides the foundation on which managers along the supply chain make organizational decisions. Information technology includes the tools used to gain awareness of information, break down this information, and interpret them to improve the performance of the supply chain.”

Obviously, information is essential to making good supply chain decisions because it provides the broad view needed to make optimal decisions. Information is a key supply chain driver because it serves as the glue that allows the other supply chain drivers to work together with the goal of creating an integrated, coordinated supply chain.

Hinchman also posits that “IT provides the tools to gather this information and analyze it to make the best supply chain decisions (Chopra & Meindl, 2013). In case where there is no information or information circulated along the value chain is not accurate, a manager clearly would not be able to tell what customers want, how valid the inventory about the stock is, and at what time more products should be produced or procured. Information is seen to give the supply chain visibility, afford those at the managerial level to make decisions that will accelerate the supply chain’s performance (Chopra & Meindl, 2013).”

According to Jit Hinchman, “Using IT systems to capture and analyze information can have a significant impact on a firm’s performance. A germane component of a successful supply chain is the availability and analysis of information to drive profit-oriented decision-making. To support impressive supply chain decisions, information must have the following characteristics: Information must be accurate, must be reachable in a timely manner, must be of the right kind, and must be shared (Chopra & Meindl, 2013). The underlying challenges to the successful development and implementation of effective information are information dissemination along supply chain.

Next to information dissemination is the discipline to ascertain the integrity of the data collected through the process. The information and communication systems that are available to organizations today lead to the collection and storage of vast amount of data, but some organizations may not be taking advantage of the abundant of data to develop information systems to improve decision-making. The accumulation and efficient storage of data is important, nonetheless, this processes are almost useless unless the data collated are shared horizontally and vertically in the supply chain and used to make decisions about inventory, customer services, transportation, and other related sectors. If it is on time, factual, well-managed, and duly shared, information remains a powerful tool.” (Coyle, Langley, Novack & Gibson, 2013.) (1)

Summarily, Jin Hinchman’s publication asserts that, “to make good supply chain decisions, continuous flow of information is very vital at all three levels of decision making (strategy, planning, and operations) and other supply chain components (facilities, inventory, transportation, sourcing, and pricing). Information Technology enables not only the gathering of these data to create supply chain visibility, but also the extraction and interpretation of data gathered to ensure that the supply chain decisions made will maximize the organization’s profitability (Chopra & Meindl, 2013).” - (1)

Advantages of Effective Communication in the Supply Chain

In a blog post(3) by Westford University College, School of Business and Information Technology in UAE, three major advantages of effective communication in the supply chain were identified: Improving the Morale, Increasing Productivity and Developing a Team.

Increasing Productivity: The post posits that if the communication is effective then there will not be any need for repeated communication. There will not be any necessity for clarifying often and wasting time. The post submits that it is necessary to make the communication clear by making the juniors and superiors understand the matter excellently. In essence, it concludes that setting priorities and delegating tasks will become easier and this will lead to increased productivity.

Improving the Morale: This second point raised in the post shows that the existence of clear communication between a Supply Chain Manager and other staff boosts the morale of the workers and improves their performance. It also suggested that if the communication between the management and employees is effective then the poise of the employees will increase; summarily, expectations of the employees will be satisfied through clear communication which will advance the employees’ morale.

Developing a Team: The third point raised in the post affirms that when the communication between the Supply chain Managers and employees becomes clear it can contribute to the building of an effective team. It therefore concludes that if the expectations and goals of both employees and management become aligned, it will lead to a strong team.

A First-hand Representation of Supply Chain with Poor Communication

In a report made public by Quick Books Manufacturing(4), a client shared a horrible experience with a supplier. For the purpose of clear understanding, we are reproducing the illustration verbatim. “They had ordered a large number of items to be put in a large container and shipped across the ocean from China. Communication is an important part of having a healthy supply chain, However, the supplier discovered that all of the items wouldn’t fit in the container they had agreed upon. Instead of alerting their customer to this problem, they simply indiscriminately removed a large number of products and did not ship them at all without giving any warning of what they had done. Fast forward a little while and when the container was finally delivered to the customer, they discovered that many badly needed supplies were missing.

This meant that they had to disappoint their own customers who had been waiting for them. This bad situation could have been resolved before it ballooned into a major problem if the supplier had just called, text, or emailed their client. If there was no way to get another container, the customer could have at least worked with the supplier to prioritize the most important items they needed to get as soon as possible.”Quick Books Manufacturing(4)

This illustration above by Quick Books Manufacturing underscores the point that while information itself is a fundamental, rudimentary and basic element, the application of information (effective communication) is actually key to any tangible action within and along the supply chain.

Every supply chain management professional must understand that a crucial element of his job is centered on effective communication. In this regard, to make desired success of the supply chain, such manager must maximize and effectively manage the communication with co-workers, clients and customers, etc. needs to be managed effectively. What the flip side of this implies is that without effective communication, there can be no success.

Steps to Integrating Effective Communication in the Supply Chain

Understanding the important role that communication plays in the supply chain is the first step of integrating effective communication. The other point that equally demands more attention is the process of setting up model(s) that actually improve(s) communications in the supply chain.

According to the Oxford College of Procurement and Supply (5), the following six (6) points have been proven to be useful to integrate effective communication in the Supply Chain.

• Prioritize Stakeholders and Suppliers: assess how helpful your stakeholders are and their status in the organization. For suppliers, determine how strategic they are and deliberate on the impact it would have on your business if they cease to supply.
• Meet With Stakeholders and Suppliers Regularly: by getting together with them on a regular basis (weekly, fortnightly or monthly, depending on the management) you can highlight and address their apprehensions and uncertainties as they occur. Do not be afraid to over-communicate, make sure they are frequently in the know, even if it is through a quick summary email. With suppliers, it is also important to regularly asses how you can improve your relationship from both sides, and offer constructive feedback to the supplier as well as asking for it yourself.
• Offer Options: after negotiations, share a list of possibilities and relevant cases that back up each option. This, in some way, appears to give the stakeholders some influence along the entire supply chain process. In this way, they feel recognised and that decisions are not taken out of their hands.
• Be Clear: this sounds like a profound basic principle, but it is vital to make sure the ‘narrative’ of the proposal comes across so stakeholders comprehend and are enthusiastic by what you are proposing. With a brief headline, you can sum up the proposal and focus on the profits the project will deliver as well as how they will be attained.
• Tailor the Message: when getting across the key benefits of the project, do not just focus on general benefits and costs. Consider the stakeholders you are addressing and tailor your communication to express how you will tackle their own individual needs.
• Be Personal and Pragmatic: using the examples of stakeholders, it is sometimes valuable to give them a call or pay a quick visit than to send less direct communication such as emails. A personal and pragmatic approach will be faster and better when targeting to implement change.

How Communication Controls the Success of the Supply Chain (using the example of warehouses)

The modern warehouse is so important in the procurement-manufacturing-warehousing-marketing-and-distribution supply chain that it has become so easy to presume that the entire chain could be automated. Technically sophisticated organizations have even begun to benchmark their effectiveness based on J-I-T delivery of their raw materials inputs and the compact distribution networks for their finished products. However, a simple disconnect in the information thread in this chain is more than sufficient to overrun, overturn and even destroy the entire system. This emphasize the assertion by everythingsupplychain.com that “if supply chain had an arch enemy, it is bad communication.” (earlier represented on Page iii - Communication Graphics)

In understanding the role of communication in the supply chain, being updated on available communication methods is imperative. It is necessary for the Manager to assess which method best suits the situation and will deliver the optimum results. Today, with ICT and rapid advancements in AI and the likes, communication in the supply chain is a lot easier and can be more effective when modernized supply chain communications methods are maximized in warehouses. It is clear that companies that fail to do this, will quickly drop out of the race by losing profitability, customer base and market share. ClarusWMS, a UK-based supplier of warehouse management solutions, in an online publication (6) tilted ‘Communication is crucial for supply chain management success’ clearly outlines the benefits of modernising supply chain communications.

“Creating an effective business backbone: While warehouses are more modern, they are still big, loud and sometimes disorganized environments. This is why constant communication is crucial to keep processes flowing. Whether communicating between managers and staff, warehouse supervisors and operatives, or between different points of the supply chain network, there is a vital need for instant and constant communication.

New technology makes it possible to streamline warehouse communications, thereby ensuring maximum productivity. Mobile communication, for instance, means that staff and managers can now be ‘connected’ at all times, ensuring the warehouse continues to run at its best and reducing the possibility for delays. The need for a coordinated communication line across the entire network is getting more important than ever and forms the basis for the rest of the warehouse to operative effectively. In today’s business environment, everyone wants to be “carried along”.

Optimised operations: While warehouses are still primarily geared towards a model of shipping bulk items to stores, they must now also deal with smaller direct-to-customer deliveries and be able to pick up and redistribute returned items across the supply chain. With so many moving parts, any delay in communication within the supply chain, and within the warehouse particularly, will ultimately lead to delays to items getting where they need to be the most – in the hands of customers.

Older communications like telephone stations and loud speakers are not effective in a modern warehouse environment. Operatives and managers now need access to mobile devices which allow them to communicate and track each other’s movement around the warehouse to speed up fulfillment rates. Some technology, like Voice Directed Picking (VDP) has been helpful in the past, enabling warehouse operatives to respond to voice-based direction and process tasks in a more natural and timely manner.

More modern, multi-modal speech-directed solutions have now developed this ability even further. For example, if a worker needed to pick multiple orders at once, in addition to getting voice instructions to the next pick up location, they can also view on a mobile screen where to place the item, while being able to scan barcodes and RFID tags to confirm correct pick-ups removes the delays of seeking verification from a manager.

Effective order management: We have already seen how warehouses have become a bigger part of direct to customer shipping fulfillment, and the need to meet next day and same day commitments alongside the store deliveries means that the operatives are under more pressure to optimise processes.

From scanning and tracking items through the warehouse, to monitoring progress through delivery or managing any returns, being able to track and communicate the progress of both supplies and finished goods is essential in today’s fast paced business world.

Connected mobile devices, equipped with scanners and location tracking technology, enable operatives to monitor the process of orders from the warehouse floor. The result is that items anywhere within the supply chain can be instantly located, significantly increasing accuracy.

Multi-mode solutions are key to the optimisation of order management, with research showing that these systems can reduce overall order fulfillment times by more than 15%, compared to voice-only solutions.It also helps to reduce error rates – again saving time and money – with error rates in voice-only systems being 63% higher compared to multi-modal communication.

Network-wide collaboration: The ability of managers to communicate with operatives on the warehouse floor is now only a small part of the fulfillment process and collaboration is now required across the entire supply network to track and monitor stock – including through the distribution and transportation stages. Mobile computers, which can be connected to the same voice and data communications and available at any point in the supply chain, make it much easier to keep the supply chain moving. In this way, issues are raised and solved immediately from anywhere.

For instance, in the past, the only time a wrong delivery could be identified was when the driver got to the end point. Now, the ability to directly scan items in situ means that items can be confirmed before they are even moved and stocks can be identified and delivered much more quickly.This alone is making the supply chain much more streamlined and ensuring that when problems do occur they are rapidly addressed.

Improving collaboration across the network also produces significant benefits from a fulfillment point, with individual items picked nearly 17% faster, and complete order fulfillment is more than 15% faster with multi-modal communication. It should be noted that “collaboration” as used here, refers to effective communication.

Operational optimization: Aligning operations throughout the supply chain – from the warehouse to the end user – ensures the smoothest and most efficient journey of stocks and items. In an environment where different-sized orders are being distributed to stores and customers, it becomes ever more important to improve communication and co-ordination: and a break down in either instantly affects co-operation along the supply chain – costing time and money and impacting a company’s reputation.

New technology, particularly wearable technology, means operatives and managers can be in constant contact while activities can be optimised, and productivity maximised, through the use of mobile communications, scanners and devices. Implementing this technology throughout the supply chain is vital in a modern, fast-paced environment, particularly one which has many more points of contact than previously.

Ensuring critical business information can be accessed, shared and edited across the network has become a fundamental component of the modern warehouse network and modernising communication is the only way the supply chain can handle current consumer lead demands.” (7)

Several others have also opined that effective communication between downstream users and suppliers at all stages in the process ensures that appropriate information is provided in the supply chain.

The European Chemicals Agency (an agency of the European Union) affirms in an article(7) titled Communication in the Supply Chain that “When downstream users provide information regarding their uses and conditions of use to their suppliers, registrants can base the exposure scenarios in their chemical safety assessment on this information. Consequently, the advice on safe use that the registrant communicates to downstream users is likely to be relevant and realistic”(7)

Conclusions and Recommendation

To maintain profitability and productivity of the supply chain, due attention has to be paid to communication. It must be noted that communication is not only the responsibility of the leaders at the managerial level but a skill that must be incorporated by every player in the supply chain. This is even more important when we realize that communication is a two-way street, where they is a smooth link between a communicator and decoder(s) of the communication.

In other to maximize communication in the supply chain therefore, our ideal organization must do the following:

1. Establish the important and critical role of communication.
2. Establish a budget that reflects integration of communication to the supply chain, through the procurement of technology, building staff capacity within the organization, enhancing staff’s soft skills and their application to communication.
3. Establish a system that involves all clients including the external clients in maintaining the flow of communication for relevant issues.
4. Kill the nemesis of supply chain at the onset by keeping effective communication in focus as the glue that binds all segment of the supply chain.