How Supply Chain Automation Using Microsoft Dynamics AX Can Take Sting Out of Rising Energy, Commodity Costs

Improving supply chain efficiency via automated data collection provided by scanners, bar codes, and other such devices used to be a luxury.

No longer. The runup in energy and other commodity prices is increasing the size of the savings from seemingly small improvements in supply chain management, argues Pete Palazzolo, marketing director of  ICS, an ISV specializing in providing automated data collection systems via Microsoft Dynamics AX. ICS is a developer of RF-SMART and radio-frequency identification (RFID) systems.

Microsoft Dynamics AX is especially adaptable for warehouse automation, he says, because AX "is designed to be tailored to a business' unique processes. Its layered architecture enables users to design systems to fit their business processes, without compromising core functionality."

This advantage becomes key in today's environment of rapidly rising production and carrying costs. "If you have a warehouse with an average of $10 million of inventory, 10% is safety stock, to be there in case you run out" says Palazzolo. Reducing that safety stock by half, to 5%, and "you've saved half a million dollars," he says.

Another problem in many paper-based systems is errors. "If you have 500 orders that come through, eight to ten per cent are inaccurage. Every incorrect order has a price. You have to pick it out, re-make it, re-pack it, re-ship it." It's a price that is increasing seemingly daily.

Companies with automated data collection systems are more effective competitors, says Palazzolo. "It's important to look at logistics as a means to gain competitive advantage."

Companies that recognize the importance of efficient logistics-what Palazzolo refers to as "warehouse intelligence"--will "do better than companies that think they are in the business of storing and shipping stuff."

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