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How a 5G Smart Factory Doubled Ericsson’s Output

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How will the 5G transition affect manufacturing? If you ask Ericsson Senior Vice President Åsa Tamsons, enormously.

5G will help drive global transformation, innovation and sustainability in our sector, Tamsons recently told the NAM’s Manufacturing Leadership Council. She sat down with MLC Co-Founding Executive Editor and Senior Content Director Paul Tate at Ericsson’s new 5G Smart Factory in Lewisville, Texas, to tell us more.

About Ericsson: Founded in 1876, Ericsson Inc. is a leading provider of information and communication technology. The company is now a $25 billion global enterprise with 100,000 employees serving clients in 180 countries.

About the Lewisville plant: Ericsson describes its Lewisville plant, which opened in March 2020, as a “5G-enabled, digital native” facility.

  • “We wanted to be able to obtain data from every single source, device, machine and person operating in the facility, both now and in the future,” she said. “One part was implementing 5G, but we also needed a data architecture to secure that and to use equipment that is able to extract both production data and operational status.”

Development process: In its journey to Manufacturing 4.0, Ericsson used a particularly agile development process.

  • “We had a mission to develop 25 use cases within a year,” Tamsons said. “In the first eight months, we launched seven of those 25 use cases. In the remaining four to five months, we launched the other 18. It just shows the power of doing that groundwork, while also demonstrating that you can launch end-to-end solutions in rapid time. Then you really start to have platforms that you can scale.”

Measuring impact: The Lewisville facility serves one of Ericsson’s biggest and most important markets in the world—yet it is operated by just 100 people.

  • The plant delivers 2.2 times more output than similar sites that don’t have the same degree of automation or technology in place.

Lighthouse status: Lewisville is also one of the world’s first manufacturing plants to achieve Global Lighthouse Network status under the World Economic Forum’s new sustainability category.

  •  A combination of recyclable and reused materials, renewable energy, an ideal location close to a major airport and advanced manufacturing technologies supported this award.
  • “Innovation is not all about technology,” Tamsons said. “It’s about how you apply it and how you can use the best of technology to create better solutions that are also more sustainable.”

What’s next: The Lewisville plant has plans for further innovation.

  • “We’ll continue to build out the data structure and cloud capability, really focusing on how we can scale up the value of existing use cases and applications and on what the next use cases will be,” she said. “We’re continuing to invest in upgrading our manufacturing sites to develop a reliable, sustainable, global supply chain, not only in Lewisville, but across the world.”

Attend a plant tour: Join the MLC in Texas for the Ericsson Lewisville Plant Tour on Oct. 4–5 to see Ericsson’s 5G-enabled digital native, double Lighthouse award-winning plant for yourself. Save the date and watch for more details.

ML Journal April 2022

POV: Resilient 4.0 Supply Chains

Building a resilient supply chain network cannot be achieved by any one company alone. True resiliency has to include empowering the whole ecosystem.   

In chaos theory, the butterfly effect describes a potential situation where small changes in initial conditions may initiate a series of non-linear effects that ultimately lead to large scale and unpredictable consequences in complex systems. Famously, it cites the flapping of a butterfly’s wings in a distant jungle that may initiate increasingly dramatic changes in climatic conditions which finally result in a typhoon on the other side of the planet.

In today’s world of global manufacturing networks and complex supply chains, butterflies have been flapping their wings a lot lately – whether it’s at a live animal market in Wuhan, or some suspect steering in the Suez Canal.

For manufacturing companies to be able to respond quickly to such potentially globally disruptive events, effective action demands multiple layers of insight and resiliency, and perhaps most of all, broad and deep visibility across multiple tiers of their supply chain networks, right down to the butterflies on the lowest tier.

To do that, supply chain networks need to be capable of gathering, analyzing, and sharing timely data that will alert every link in the chain about potential upcoming disruptions or shortages to allow all the partners in the chain the time to take appropriate corrective action.

But right now, that’s a problem. As the latest MLC survey reveals, the two biggest obstacles facing manufacturing companies as they strive to achieve true resiliency across their networks are the varying degrees of digital maturity of their supply chain partners and a lack of common data platforms across their networks.

Yet most manufacturing companies don’t yet have any strategies in place to solve these issues. Only one in five say they currently have specific policies to help support their supply chain partners in accelerating the maturity of their digitization efforts to ensure a more effective and resilient end-to-end digital supply network.

Unless larger companies start to collaborate more effectively and work more closely with their smaller partners at every tier to close that digital divide, this situation is likely to continue to undermine even their best efforts at preparing for, and coping with, future disruptions. Helping to empower the entire manufacturing supply chain ecosystem is becoming increasingly critical. And it’s in every company’s interest to do so.

If major manufacturers can do a better job of looking after the butterflies, future supply chain typhoons may never develop into anything more than a gentle breeze.  M

Paul Tate

About the author:
Paul Tate is Co-founding Executive Editor and Senior Content Director of the NAM’s. Manufacturing Leadership Council.

 

 

ML Journal April 2022

Congratulations to the 2022 Manufacturing Leadership Award Winners

The MLC announces the high-performing companies and outstanding leaders who have been selected as winners for this year’s 2022 Manufacturing Leadership Awards.   

An outstanding group of high-performing manufacturing companies and exceptional individual leaders have been selected as winners for the 2022 Manufacturing Leadership Awards. A record 121 projects and 23 individuals were bestowed the honor by this year’s panel of judges. This year’s program included nine project categories and two individual categories.

The projects that were awarded this year represent cost savings of millions of dollars and the elimination of untold hours lost to inefficiencies, breakdowns, redundancies, and repetitive or paper-based processes. They were the engine driving new product lines, new markets, and improved customer experiences. The individuals among this year’s winners have demonstrated a dedication to furthering the mission of digital manufacturing and a more collaborative, data-driven future both within their own organizations and throughout the greater industry.

Since the program’s inception in 2005, more than 1,000 of these awards have been given in recognition of achievement in digital manufacturing. In the beginning, categories for awards included things like Business Model Mastery and Education and Training Mastery. Today, those categories have evolved to things such as Artificial Intelligence and Machine Learning and Sustainability and the Circular Economy.

The common thread between all winners is this: A commitment to creating the best possible future for manufacturing through digital innovation. For winners, Manufacturing 4.0 is not just a “nice to have”, but a must-do for competitiveness and future business growth.

“This year’s winners are exemplary for their compelling use of technology, innovative approach to problem solving, and overall commitment to furthering the movement of advanced manufacturing,” said David R. Brousell, Vice President, Co-Founder and Executive Director of the Manufacturing Leadership Council. “These achievements have helped manufacturers to boost their competitive position and realize significant performance improvements even in the most challenging business conditions.”

All winners will be recognized at the Manufacturing Leadership Awards Gala on June 29 at the JW Marriott Marco Island Beach Resort in Florida. Also revealed at the gala will be the High Achievers in each project category, the Manufacturing Leader of the Year, the Small/Medium Enterprise Manufacturer of the Year, and the Large Manufacturer of the Year. The 2023 season of the awards will open for entries in August.

Congratulations to all of this year’s winners on a job well done.   M

About the authors:

Penelope Brown is the Content Director for the Manufacturing Leadership Council.

 

 

Press Releases

Manufacturing Leadership Council Unveils 2022 Leadership Awards

AI, Digital Supply Chains, Sustainability Projects Among Top Winners

Washington, D.C. – The Manufacturing Leadership Council, a division of the National Association of Manufacturers, today revealed the list of world-class manufacturing companies and individual leaders set to receive recognition as winners of the 2022 Manufacturing Leadership Awards, the industry’s premier awards program for achievements in digital manufacturing.

“This year’s winners are exemplary for their compelling use of technology, innovative approach to problem solving and overall commitment to furthering the progress of Manufacturing 4.0,” said MLC Co-Founder, Vice President and Executive Director David R. Brousell. “These achievements have helped manufacturers boost their competitive position and realize significant performance improvements even in the most challenging business conditions.”

The 2022 awards season featured nine company-level categories to recognize high-performing projects in the areas of Artificial Intelligence and Machine Learning; Collaborative Ecosystems; Digital Network Connectivity; Digital Supply Chains; Engineering and Production Technology; Enterprise Technology Integration; Operational Excellence; Sustainability and the Circular Economy; and Transformational Cultures. Additionally, two individual categories recognizing outstanding leaders were Digital Transformation Leadership and Next-Generation Leadership.

Winners will be recognized at the Manufacturing Leadership Awards Gala, an in-person event taking place at 7:00 p.m. EDT on Wednesday, June 29, at the JW Marriott Marco Island Beach Resort in Florida. The gala will also feature announcements of the High Achiever Awards in each project category, the Manufacturers of the Year and the Manufacturing Leader of the Year. See the complete list of 2022 Manufacturing Leadership Award winners here.

Select award winners will present their projects at Rethink: The Manufacturing Leadership Council Summit, the industry’s leading event for exploring manufacturing’s digital era. “This year’s theme for Rethink is Maximizing the Value from Manufacturing 4.0, and attendees can expect to discover new ideas and tactics for establishing or accelerating their digital strategy, along with many fantastic opportunities to network with other industry leaders,” Brousell said.

Rethink will take place at the JW Marriott Marco Island Beach Resort in Florida June 27–29. Details are available here. Nominations for the 2023 Manufacturing Leadership Awards will open in August.

ML Journal April 2022

SURVEY: Manufacturing Supply Disruptions to Last Well Into 2023

A new MLC survey warns that disruption could continue for as long as two years as manufacturers strive to adopt more resilient supply chain strategies.

Manufacturing supply chains may never be the same again. 

After more than two years of excessive supply disruption caused by an unprecedented combination of pandemic lockdowns, blocked shipping lanes, container scarcity, material and component shortages, extreme weather events, rising prices, and military conflict, fundamental shifts in supply chain approaches are now underway across the industry as manufacturers desperately seek to improve supply chain resiliency. 

And if you were hoping that those debilitating high levels of disruption were only a short-term problem, you may want to reconsider. Over half the manufacturers responding to the MLC’s latest Resilient M4.0 Supply Chain survey don’t expect the situation to improve for at least a year, or maybe two. Some don’t even think high levels of supply chain disruption will ever go away, at least for the foreseeable future. 

No wonder then, that managing the impacts of supply chain disruption now tops the action list for manufacturing leadership teams today. Supply chain organizations in every sector are urgently rethinking how manufacturing supply chains can operate more effectively and resiliently by reassessing traditional supply chain strategies, reducing network complexity, integrating key functions, redesigning processes, and harnessing the power of digital tools wherever they can to transform their supply chain ecosystems. 

Ultimately, the outcome of such moves may transform the dynamics of global manufacturing supply strategies forever. 

Universal Disruption

Manufacturing supply chains remain a predominantly global undertaking. While some companies are now supporting their operations with regional (15%) or local networks (12%), over half of companies (51%) continue to be dependant on global networks of suppliers to fuel their businesses (Chart 1). 

Yet irrespective of geographical strategies, it seems that the last few years of disruption have significantly impacted companies with all types of supply chain structures. A substantial 90% of all respondents to the survey report suffering either significant (52.5%) or partial (39%) disruption over the last two years. A mere half a percent say they have seen no impact at all (Chart 2). 

“The disruptive dynamics of the last few years have forced many manufacturing companies to take a long hard look at the vulnerability of their supply chains and reassess their levels of resiliency.”

 

The most severe aspects of that disruption have been in raw material shortages (36%), excessive cost rises in materials and shipping (34%), and component shortages (33%). But around a quarter of companies also say they’ve had to deal with significant issues in sudden demand surges (25%) and reduced productivity (22%) due to labor shortages and equipment failures too (Chart 3). It’s that debilitating combination of factors that is now driving many companies to reassess the vulnerability of their supply chains and their exposure to sudden global and regional events. 

And most companies don’t expect things to improve soon (Chart 4). Only a fifth see improvements by the end of this year in either Q3 (5%) or Q4 (16%). Another 13% think the situation will continue into Q1 2023. But 50% of companies predict that levels of disruption will continue much longer. A third don’t see an end in sight for over a year (36%), while another 14% believe it will take two years or more. The least optimistic, 5%, even suggest that we are entering a period where disruption will become the new norm for the industry, and that high levels of disruption will continue into the foreseeable future.

Improving Resiliency

Those disruptive dynamics of the last few years have forced many manufacturing companies to take a long hard look at the vulnerability of their supply chains and reassess their levels of resiliency. Many have already taken action to improve their exposure, but almost three quarters (73%) of companies admit that their current supply chains are still not yet fully protected and remain only somewhat resilient (Chart 5). A worrying 12% believe their supply chains still don’t have any effective resiliency at all. 

Not surprising, then, that 80% of manufacturing companies say they are now urgently increasing their focus on developing more resilient supply chains for the future (Chart 6). Over half (52%) are actively working to increase their adoption of supply chain analytics and digital technologies as a way to increase visibility and predictability across their supply networks to better deal with potential disruptions. Two in five (39%) are now exploring partnerships with more regional and local suppliers to reduce global vulnerability, and almost a quarter are also considering more regional and local production footprints. Only 2% of manufacturers say they not making any changes. 

“Over half the manufacturers in the survey expect high levels of disruption to continue for at least a year, maybe two.”

 

 

Traditional supply chain strategies are also coming under close scrutiny. Over half of the companies in the survey (53%) are now questioning whether Just-In-Time approaches are still viable in today’s world and are now rethinking inventory levels so they have a better buffer that will help them deal with sudden shortages (Chart 7). Three quarters (76%) are also making specific efforts to reduce the overall complexity of their supply chains to increase their speed of responsiveness to disruption (Chart 8). And a third say they are moving away from the traditional SCOR supply chain model (Chart 9) and are now either moving towards more of an end-to-end value model approach (30%) or have already done so (4%). 

Integrated Supply Chains

Moves to overcome the legacy of siloed functions within supply chains are also set to accelerate over the next two years as companies seek to create more integrated and collaborative supply chain organizations that can more easily share key information and act faster and in a more coordinated way to resolve disruptive issues. While only 19% of companies say their supply chain structures are fully integrated today, this proportion is set to more than double to 47% within the next two years (Chart 10). The number of companies still depending on largely siloed operations, meanwhile, is set to fall from 14% to just 4% over the same period. 

Both internal and external supply chain functions are also becoming increasingly digitized (Chart 11). While over 70% of manufacturers have already partially digitized some of their supply chain functions, according to the survey, only 11% have so far digitized all their internal supply chain functions (plan, source, make, deliver), and only 6% have achieved this same level of digital maturity across their external supply chain functions (external suppliers, partners). 

Digital Opportunities

Nevertheless, the race to fully digitize ever more supply chain operations is accelerating rapidly. In almost every supply chain function, companies are now planning significant increases in digital adoption over the next two years to help streamline and improve their supply chain organizations (Chart 12). This is especially the case in supply planning and demand forecasting where around a third of companies now expect to have fully digitized operations by 2025. Similar increased adoption rates are also underway in S&OP, sourcing and procurement, manufacturing operations, and customer fulfilment and service.  

And while companies expect to maintain similar levels of dependence on more established technologies such as cloud systems and traditional supply chain management software to support their supply chain operations over the next two years, the use of other advanced technologies is predicted to almost double as companies explore new kinds of applications and use cases (Chart 13). These include more predictive AI and Machine Learning (up from 28% of companies to 53% in 2 years), collaborative robots (up from 18% to 35%), AR/VR technologies (up from 14% to 27%), wearables (up from 13% to 26%), and blockchain (up from 10% to 21%). 

“In almost every supply chain function, companies are now planning significant increases in digital adoption over the next two years to help streamline and improve their supply chain organizations.”

 

But it’s not just the technologies themselves that are key elements in this digital transformation. It’s the opportunity to use those new digital tools and approaches to support an extensive rethinking of basic supply chain processes at the same time. 

Almost 72% of respondents in the survey say that, as they continue to adopt more digital technologies across their supply chains, they are also taking the opportunity to redesign their supply chain processes too (Chart 14). The implications of such widespread digital transformation of both supply chain structures and processes for the future are enormous. 

Obstacles to Progress

The road ahead is not simple, though. Transforming a supply chain is not entirely under the control of any single manufacturing company. It takes a whole network of partners to work together effectively to create end-to-end resiliency. That’s where some of the key obstacles to future supply chain development now lie for the industry. 

Significant differences in the levels of digital maturity across various partners in a supply chain network are cited by over half the survey respondents (54%) as their most difficult challenge as they strive to implement a more resilient end-to-end digital strategy that successfully shares the key information they need to act swiftly in the face of sudden disruption (Chart 15). Over half the respondents (53%) also highlight the lack of common data platforms across their supply networks as one of the primary barriers to exchanging such key information in a crisis. Many also face problems in simply transforming traditional supply chain processes (29%), upgrading legacy equipment (26%), and dealing with a lack of skilled employees (22%) as hindrances to progress. 

“Almost 72% of respondents in the survey say that as they continue to adopt more digital technologies across their supply chains, they are also taking the opportunity to redesign their supply chain processes too.”

 

Yet despite the primary problems of disparate levels of digital maturity and incompatible data platforms across partner networks, only around one in five manufacturers (19%) have so far adopted specific policies to actively help accelerate digital maturity across their supply chain partners to overcome these key obstacles (Chart 16). Over 60% have no such network-wide policies in place. Perhaps this is one area that many more manufacturers will need to address as they seek to expand their digital supply chain strategies across their partner ecosystems in the future. 

And as 89% of all survey respondents believe that digital technologies will ultimately be either a game-changer (44%) or at least significant (45%) to the future of manufacturing supply chains (Chart 17), it’s clear that as manufacturers continue to rethink their supply chain strategies in search of greater resiliency, digital supply chains will be one of their most important weapons in combatting future disruption. M


Part 1: SUPPLY CHAIN DISRUPTION

1. Global Supply Chains Dominate Manufacturing

Q: Geographically, how is your supply chain network structured?


2
Over Half Suffered Significant Supply Chain Disruption in Last 2 Years

  Q: Over the last two years, how would you describe the level of disruption in your supply chain?

 

3 Materials/Component Shortages and Excessive Cost Rises Caused Most Severe Impacts

  Q: Over the last two years, what have been the most impactful types of supply chain disruption you have encountered?
(Scale 1-5, where 1 is most severe)


4
More Than Half Expect High Levels of Disruption to Continue for at Least a Year

  Q: When do you expect the current high levels of supply chain disruption to subside?

Part 2: IMPROVING RESILIENCY


5
Majority of Manufacturers Admit Their Supply Chains Lack Full Resiliency

Q: How would you rate the level of resiliency in your current supply chain?

6 80% Say Improving Resiliency Is Now a Top Priority; Over Half Adopting Digital Tools to Help

Q: What strategies are you now adopting to help mitigate future supply chain disruption? (All that apply)


7
Over Half Moving from JIT Approach to Rethinking Inventory Levels for More Resiliency

Q: Is the Just-In-Time approach still viable for your company or are you rethinking that model to provide more inventory buffer?


8
Three Quarters Making Specific Efforts to Reduce Supply Chain Complexity

Q: Are you making specific efforts to reduce supply chain complexity in order to simply your supply chains and help increase responsiveness and resiliency to disruption?

 

9 A Third Now Replacing SCOR With End-to-End Value Supply Chain Model

Q: Are you still using SCOR as the basic supply chain model or are you rethinking this in favor of a more end-to-end value model?


10
Major Shift to Fully Integrated Supply Chains Over Next 2 Years

Q: To what extent are your supply chain functions integrated today, and how integrated will they be in two years’ time?


11
Yet Most Internal and External Supply Chain Functions Still Only Partially Digitized

Q: Which description best characterizes the digital maturity of your internal supply chain functions (plan, source, make, deliver) and your external supply chain functions (external suppliers, partners)?

Part 3: DIGITAL SUPPLY CHAINS


12
Significant Digitization Planned Across Multiple Supply Chain Functions Over Next 2 Years

  Q: Which supply chain functions are all digital today and which do you plan to be all digital in 2 years’ time?


13
Adoption of AI, Cobots, AR/VR, Wearables, and Blockchain Predicted to Almost Double Over Next 2 Years

Q: Which digital technologies are you using in your supply chain today and which do you plan to use in 2 years’ time?

14 Digital Adoption Driving Extensive Redesign of Supply Chain Processes

Q: As you adopt more digital technologies across your supply chain, are you also taking the opportunity to redesign your supply chain processes?

Part 4: CHALLENGES AND OPPORTUNITIES


15
Digital Maturity of Partners, Disparate Data Platforms, Legacy Processes Are Main Roadblocks to Implementing End-to-End Digital Supply Chain Strategies

Q: What are your company’s primary challenges in implementing an end-to-end digital supply chain strategy? (Top 3)

16 Yet Only One in Five Have Specific Policies to Help Accelerate Digital Maturity Across Supply Chain Partners

Q: Do you have a specific policy to help support your supply chain partners in accelerating the maturity of their digitization efforts to ensure a more effective end-to-end digital supply network?

17 44% See Digital Technologies as a Game Changer in Creating More Resilient Manufacturing Supply Chains in the Future

Q: Ultimately, how significant an impact will digital technologies have on creating more resilient manufacturing supply chains in the years ahead?

Paul Tate

About the author:
Paul Tate is Co-founding Executive Editor and Senior Content Director of the NAM’s. Manufacturing Leadership Council.


Survey development
was led by Paul Tate, with input from the MLC editorial team and the MLC’s Board of Governors.

 

ML Journal February 2022

DIALOGUE: Ericsson’s Sustainable 5G Lighthouse Factory

Ericsson SVP Åsa Tamsons believes 5G provides a digital backbone that can help drive transformation, innovation, and sustainability in manufacturing.

Ericsson SVP Åsa Tamsons believes 5G provides a digital backbone that can help drive transformation, innovation, and sustainability in manufacturing.

“We see an exceptional opportunity to create connections with 5G that will help make the unimaginable possible.”

Åsa Tamsons, SVP and Head of Business Area Technologies & New Businesses, Ericsson

Founded in 1876 by visionary telegraph engineer Lars Magnus Ericsson, Swedish communications and networking giant Ericsson Inc. has since grown into a $25 billion global enterprise with 100,000 employees serving clients in over 180 countries and reaching over a billion people worldwide through its mobile network managed services partnerships alone.

In the fall of last year, Ericsson’s new $100 million greenfield 5G Smart Factory in Lewisville, Texas, which was built to serve the company’s U.S. customers and had already won World Economic Forum Lighthouse accreditation for its application of next generation manufacturing technologies, also became one of the world’s first facilities to gain Lighthouse status under the WEF’s new Sustainability Leadership category.

In our latest Dialogue with a manufacturing industry thought leader, Ericsson’s Åsa Tamsons, Senior Vice President and Head of Business Area Technologies & New Businesses, talks to Manufacturing Leadership Council Executive Editor Paul Tate about the transformational impact of 5G networking, how Ericsson has used agile development approaches to deliver value at scale, how it created one of the world’s most sustainable production plants, and the importance of empowering human creativity with digital tools.  

 Q: What excites you about your role at Ericsson?

A: I’m a naturally curious person, So, having the chance to work with new ideas and learn new things on the job every day, is amazing. It’s exciting to work with a 145-year-old company that has already had such an impact on the world and to be part of the transformational change that our technologies have enabled. And we are still just  scratching the surface. Now we’re entering the fifth generation of mobile technologies and we see an exceptional opportunity to create connections with 5G that will help make the unimaginable possible.

That makes it much more than just work. Not only is it fun and exciting to work with new technologies and new solutions, it also feels deeply meaningful. And it becomes even more meaningful in the context we’re living in right now, where the world is facing major challenges when it comes to sustainability. Technology will not be the only thing, but it will play an important role in finding sustainable solutions that can help people, businesses, and economies worldwide. So, I’m very proud to be working for a company with so many knowledgeable and talented people with such a strong sense of purpose and a commitment to a more sustainable future.

“Technology will play an important role in finding sustainable solutions that can help people, businesses, and economies worldwide.”

 

Q: What challenges still keep you awake at night?

A: I have a very optimistic outlook and tend to see the potential of things before they happen. What keeps me up at night is that I always have a sense that things are moving too slow. If you think about IOT, or automated machines, or AI, people have been talking about these things for 10 to 20 years. But it takes time to get new standards out that work across the world and are interoperable across many systems. We know 5G works. The next step is to make sure the devices are out there and that people can implement it into their existing IT and OT environments. The exciting thing is that, once you get over that hurdle, you can start to see a significant impact. And it’s not only incremental, it’s exponential. But it’s important to recognize that this represents a real change, a transformation, a challenge, as much as getting the technology to work. So, it’s going to take some time.

We’ve also been living through the pandemic for almost two years now and the world has changed a lot. I think we’re also going to change how we work in the future. We’re not going to go back; we’ll go forward to something new. The challenge is, how do we continue to adapt our operating model and the way we work with our teams so we can have the best of both worlds? The pandemic showed that when there’s a real sense of urgency, we can change. It was not a technology issue; it was about our habits. How can we use that force for something better and bring together some of the great things from the past with some of the changes we’ve adopted over the last two years so that we can create a better way of doing things? That means we need to continue attracting and developing the best talent. The competition for talent is increasing, so I’m thinking about that a lot. If we want to turn that challenge into an opportunity, to be a leading and competitive force, we need to actively adapt how we work and how we attract the best talent for the future.

Q: What was the strategic intent behind the creation of the new Lewisville plant?

A: We needed to increase production capacity and we saw a lot of value investing in a site closer to our customers in North America where we have a number of strong and close strategic collaborations. Lewisville was also an opportunity to build a new style of production environment, with the smart implementation of the latest manufacturing technologies and the best ways of working when it comes to the connectivity of information and intelligence. Given the promise of 5G to help transform manufacturing, we wanted to implement the technology in our own site to show that it’s not only faster technology, it’s also an impactful technology and it can be successfully applied in a comparatively high-cost location. So, in part, it was also about showing innovation leadership, not only in terms of cost and productivity, but also in quality and sustainability, from the way we built the plant, to the technology applications, to the type of materials we used, to the types of energy sources, in order to create a cost-effective, high-performing, and sustainable plant that can deliver more in terms of both its economic and sustainability impact.

“From day one we wanted to be able to obtain data from every single source, device, machine, and person operating in the facility, both now and in the future.”

 

Q: The Lewisville plant has been described as a “5G-enabled, digital native” facility. What does that mean, in practice?

A: We believe that 5G is not only a next generation networking technology. It’s really the digital backbone and the platform for innovation with Industry 4.0. That’s because the architecture, the build, and the scale of many of the other technologies that you want to apply in a 4.0 world – like AR, VR, and AI at scale – not only need to send, but also process and quickly react to vast amounts of data from across many different devices.

In practical terms that meant, from day one of this factory, we wanted to be able to obtain data from every single source, device, machine, and person operating in the facility, both now and in the future. One part was implementing 5G, but we also needed a data architecture to secure that and to use equipment that is able to extract both production data and operational status. So, the intention was to build 5G into the fabric of the factory, along with several other networks, such as WiFi 6, to make sure we have full connectivity with both current equipment and any new systems in the years to come.

We also designed the industrial IT platform with the intent to be flexible and scalable enough so it could capture all the data and use all the benefits of 5G while also working with things that you could say are not directly technology-related, but more design-related. For example, we decided to make data easily available across the whole workforce. You can overcome some of the transformational barriers you may typically see in 4.0 implementations by using this approach and industrializing the whole platform. It served us really well and had an important impact on how quickly we could scale up new use cases to get value from all the technology and intelligence in the machines, in the system, in the processes, and from the people in operations too.

Q: How did that agile development process work?

A: We had a mission to develop 25 use cases within a year. First, we went through an ideation process, which generated around 100 ideas based on internal and external best practices. Then we started to prioritize and set about designing and protoyping the first five of those use cases.

One of the keys here was to ensure we had small, empowered teams, and that we had the right people on those teams. Those teams combined the expertise of around six to eight people from production, from supply chain, from IT, from sourcing, and from the technology side. It’s important to get that kind of diversity when you are working on end-to-end ideas. If it’s too siloed, you can get stuck.

In parallel, we wanted to design the use cases with a long-term strategy in mind and establish a common data architecture because it’s important that people have easy access to many different types of data. That may take some work initially, but you gain a lot in return once you really start use that data. It’s fundamental to build that architecture  to be able to quickly develop new algorithms and connect new solutions in the future. So, we established a way to launch completely new solutions, end-to-end, while still securing the long-term architectural strategy. That not only enables us to scale each solution across the factory network, but also to quickly scale any new applications that use similar or overlapping data sources or devices.

“Innovation is not all about technology. It’s about how you apply it and how you can use the best of technology to create better solutions that are also more sustainable.”

 

To show the power of this approach, in the first eight months we launched seven of those 25 use cases. In the remaining four to five months, we launched the other 18. It just shows the power of doing that groundwork, while also demonstrating that you can launch end-to-end solutions in rapid time. Then you really start to have platforms that you can scale.

Q: How are you measuring the impact of what you’ve achieved in Lewisville?

A: We now have a site that serves one of Ericsson’s biggest and most important markets in the world with a 5G-enabled high-tech factory operated by 100 people. I think that, in itself, is quite impressive. In terms of performance, Lewisville is now delivering 2.2 times more output compared to similar sites that don’t have the same degree of automation or technology in place. That’s more than 100 percent improvement. That brings us a lot of credibility with our customers and shows that we can do this and fully implement this technology in an ideal way.

Q: How do those 100 people fit into this highly automated factory concept?

A: People drive transformation. In many ways, technology emphasizes the importance of those people because you cannot succeed with this kind of transformation if they’re not in the lead and driving the change. You need that human competence. Take process engineers, for example. Those are the people who typically drive and design how we produce and run our production processes. Now we have empowered them with even more tools and more intelligence to do that. If anything, they’re now playing an even more prominent role in how we develop and produce our products in more innovative ways. So that puts a new emphasis on human creativity and problem solving, because it becomes a bigger part of many roles on the plant floor. We have been able to replace many repetitive tasks, which seem demanding and challenging at first, but for many, it also makes their roles more exciting and fulfilling. We don’t see a digital approach as a way to replace humans. It’s about bringing out the best in humans in collaboration with the machines and intelligence on the factory floor.

Q: Lewisville is also one the world’s first manufacturing plants to achieve Lighthouse status under the WEF’s new Sustainability category. What aspects of the plant’s design and operations supported this award?

A: On the sustainability side, it’s a lot about how the plant itself was built. That’s an integral part. When we first prepared the site, we reused all the things that we could, either on site or shipped to other parts of Ericsson so it didn’t get wasted. We also used almost 100 percent recyclable material and a lot of reused materials. That’s one dimension.

The other key area is energy usage. With solar panels, we’re running the factory with 100 percent renewable energy. Also, we’re reusing rainwater, and that’s been a key, fundamental driver for the impact on the indoor water usage. A big area for us has been energy monitoring and utilization, which is a combination of tracking the energy usage and adjusting in real time, while also using digital twin and AI models to optimize any actions. So, we have been able to reduce energy consumption by 24 percent and indoor water usage by 75 percent compared to similar sites. This is an exponential improvement when it comes to the efficiency of water and energy usage.

The location itself also has many benefits. We’re now able to manufacture closer to our customers.This has reduced airport travel from 30 to 10 percent. We still need to source some components, but that’s a significant and major reduction.

And then there’s the impact of the technology and how we’re using it in many other areas to drive more efficiency, reduce new material usage, reduce transportation time, and reduce the need for energy in a smarter way. I think that demonstrates the holistic view of innovation we take. Innovation is not all about technology. It’s about how you apply it and how you can use the best of technology to create better solutions that are also more sustainable.

Q: What are the next steps for the Lewisville plant? Where do you go from here?

A: We’ll continue to build out the data structure and cloud capability, really focusing on how we can continue scaling up the value of existing use cases and applications and on what the next use cases will be. We are also looking at scaling the things we have learned across our other facilities. We’re continuing to invest in upgrading our manufacturing sites to make sure we continue to develop a reliable, sustainable, global supply chain, not only in Lewisville, but across the world. We have a global production footprint with a presence on all continents and main production operations in the U.S., Brazil, Mexico, India, China, Poland, and Estonia. We’re looking at how can we use the capabilities used in Lewisville in an agile way to get better information and capture more value from data across the whole supply chain and the whole production system worldwide.

“We don’t see a digital approach as a way to replace humans. It’s about bringing out the best in humans in collaboration with the machines and intelligence on the factory floor.”

 

Q: Looking forward, what do you think the biggest challenges and opportunities will be for manufacturing in the next five years?

A: The next five years will be about successfully adopting technologies that are important to manufacturing businesses and then implementing those at scale to drive transformation. That will be the game-changer.

Companies today need to build more supply chain resilience, create more agility, make sure they can customize to customer’s needs, meet environmental compliance standards, attract the right skills, watch out for cyber security, and continue to upgrade and integrate. If you think about all those things together, that’s a massive challenge. So, companies will need to adopt a lot of technologies and automate a lot more. I think we’ll see more recognition of how analytics can work at scale, more remotely controlled machines, more AR and digital twins deployed at scale, and we’ll see more collaborative robots.

Many companies are already embarking on this journey, of course, but the reality is that many have old machinery, completely different data IT infrastructures, and often lack the talent they need to drive transformation. There are also new disrupters entering the market that do not have legacy issues to overcome and can implement these technologies from the start. So, I think one of the biggest challenges is how companies make sure that they keep pace and are not too far behind because that will impact their competitiveness.

Yet we also see an urge in the industry today, a real need to start adopting these technologies to drive transformation. I think the future will be less about proving, “is it worth it?” It will be more a question of, “how do we get started and how do we accelerate the execution?”

Q: What kinds of skills will the next generation of manufacturing leaders need in that new era?

A: First, leadership needs to be able to drive and navigate change, which means building the right culture and fostering a platform for change. Leaders need to tell a positive, forward, exciting story on why change is needed and one that motivates people and drives new behaviors. That has to be combined with building a culture for constant growth and development to create an empowered mindset among their colleagues. I think that combination will be extremely important.

“Lewisville is now delivering 2.2 times more output compared to similar sites that don’t have the same degree of automation or technology in place.”

 

The second area is the ability to attract and develop talent, and talent with a much more diverse skill set than we have traditionally seen before. If leaders want to succeed and transform their organizations, they will need a mix of designers, process engineers, and data scientists. These are different people with different drivers, and companies need to be able to attract and motivate all of them.

Leaders must also continue to develop their understanding of technology and architecture. They need to complement their traditional management skills with an understanding of how these new technologies can be used and applied. It doesn’t mean they have to be experts, but they will need to understand and get more educated about what they can do with certain skills and certain technologies and how they can be applied across the business. An appetite for continuous learning, as a leader, is fundamental.

Q: Finally, if you had to focus on one thing as a watchword or catchphrase for the future of manufacturing, what would that be?

A: Empowered, smart, and sustainable – in production, in operations, and in manufacturing. Sometimes we talk about technology like it’s taking over, but it’s really about empowering humans, empowering customers, and empowering the world to develop better products and improve businesses. It will be smarter because we will have easier accessibility to the data insights and intelligence we will need. And we must make sure it’s sustainable, not just through the smarter use of resources and energy, but also in terms of security and privacy. These are all critical elements for the future of manufacturing.  M

*Ericsson Lewisville Plant Tour – October 2022: Learn more about Ericsson’s 5G digital native, double Lighthouse award-winning plant in Lewisville, Texas, on the MLC’s upcoming Plant Tour on October 4-5, 2022. Save the date and watch for more details.

FACT FILE: Ericsson
HQ: Stockholm, Sweden
Industry Sector: Communications and Networking
Revenues: $25.3 Billion (SEK 232.3 billion, 2021)
Net Income: $2.5 Billion (SEK 23.0 billion, 2021)
Employees: 100,000 Employees
Presence: 180+ Countries
Production Sites: 7 Production plants worldwide
Website: www.ericsson.com

EXECUTIVE PROFILE: Åsa Tamsons
Title:
Senior Vice President and Head of Business Area Technologies & New Businesses; Member, Ericsson Executive Team, Ericsson
Nationality: Swedish
Education: Master of Science degree in business administration from the Stockholm School of Economics, Sweden
Languages: Swedish, English, French
Previous Roles Include:
– Head, Ericsson Group Strategy, M&A, and Venture Investments
– Partner, McKinsey & Company: serving technology, telecoms and industrial companies worldwide
– Consultant, Advention Business Partners
– Strategic Purchasing & Business Controller, H&M
– Business Development, International Herald Tribune 

Other Industry Roles/Awards/Board Memberships:
– Independent Director and Member, CNH Industrials’ Board of Directors

Paul Tate

About the author:
Paul Tate is Co-founding Executive Editor and Senior Content Director of the NAM’s. Manufacturing Leadership Council.

 

 

ML Journal April 2022

Congratulations to the 2022 Manufacturing Leadership Award Winners

An outstanding group of high-performing manufacturing companies and exceptional individual leaders have been selected as winners for the 2022 Manufacturing Leadership Awards. A record 121 projects and 23 individuals were bestowed the honor by this year’s panel of judges. This year’s program included nine project categories and two individual categories.

The projects that were awarded this year represent cost savings of millions of dollars and the elimination of untold hours lost to inefficiencies, breakdowns, redundancies, and repetitive or paper-based processes. They were the engine driving new product lines, new markets, and improved customer experiences. The individuals among this year’s winners have demonstrated a dedication to furthering the mission of digital manufacturing and a more collaborative, data-driven future both within their own organizations and throughout the greater industry.

Since the program’s inception in 2005, more than 1,000 of these awards have been given in recognition of achievement in digital manufacturing. In the beginning, categories for awards included things like Business Model Mastery and Education and Training Mastery. Today, those categories have evolved to things such as Artificial Intelligence and Machine Learning and Sustainability and the Circular Economy.

The common thread between all winners is this: A commitment to creating the best possible future for manufacturing through digital innovation. For winners, Manufacturing 4.0 is not just a “nice to have”, but a must-do for competitiveness and future business growth.

“This year’s winners are exemplary for their compelling use of technology, innovative approach to problem solving, and overall commitment to furthering the movement of advanced manufacturing,” said David R. Brousell, Vice President, Co-Founder and Executive Director of the Manufacturing Leadership Council. “These achievements have helped manufacturers to boost their competitive position and realize significant performance improvements even in the most challenging business conditions.”

All winners will be recognized at the Manufacturing Leadership Awards Gala on June 29 at the JW Marriott Marco Island Beach Resort in Florida. Also revealed at the gala will be the High Achievers in each project category, the Manufacturing Leader of the Year, the Small/Medium Enterprise Manufacturer of the Year, and the Large Manufacturer of the Year. The 2023 season of the awards will open for entries in August.

Congratulations to all of this year’s winners on a job well done.

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Meet the 2022 Winners of the Manufacturing Leadership Awards

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A group of world-class manufacturers and their leaders have been recognized for their achievements by the 2022 Manufacturing Leadership Awards.

About the awards: Presented by the Manufacturing Leadership Council, a division of the NAM, the awards recognize excellence in digital manufacturing. Since the program’s founding in 2005, more than 1,000 high-performing projects and individual leaders have been honored with an award. Winners represent companies of varying sizes in a wide array of industries.

This year’s awards were given in nine project categories and two individual categories. Some project categories include AI and Machine Learning, Digital Supply Chains and Digital Network Connectivity. Judging is done by a panel of industry experts, many of whom are past winners themselves.

Why it matters: The movement toward smart factories allows manufacturers to leverage data to become more efficient, productive, sustainable and competitive. In the difficult business conditions that many are experiencing, data-driven operations can mitigate disruptions and even predict them before they happen.

“This year’s winners are exemplary for their compelling use of technology, innovative approach to problem solving and overall commitment to furthering the progress of Manufacturing 4.0,” said Manufacturing Leadership Council Co-Founder, Vice President and Executive Director David R. Brousell.

Gala coming in June: Winners will be honored at the Manufacturing Leadership Awards Gala on Wednesday, June 29, 2022, at the JW Marriott Marco Island Beach Resort in Florida. The gala will also feature the announcement of this year’s Large Enterprise Manufacturer of the Year, Small/Medium Enterprise Manufacturer of the Year and Manufacturing Leader of the Year.

Select winners will present their projects at Rethink: The Manufacturing Leadership Council Summit, the industry’s premier event focused on Manufacturing 4.0.

See the complete list of winners here.

ML Journal April 2022

The Shift to 4.0 Supply Chains

By Bart Huthwaite, Chris Zheng

Is Just-In-Time now DOA? Many manufacturers are now questioning whether JIT approaches are still valid in an era of continuing supply chain disruption.   

The supply chain disruptions of the last two years have led many manufacturing companies to question whether the pendulum has swung too far toward Just-in-Time (JIT) production processes, leading some to explore regional strategies enabled by expanding digital capabilities to improve agility and resiliency.

As part of these efforts, companies are now urgently reviewing their manufacturing and distribution footprints, analogous to the skeleton of their supply chain system. Similarly, they are also examining their sourcing strategies and rethinking where to source critical components and raw materials to improve supply continuity without sacrificing too much efficiency. Companies are also working to improve their supply chain processes, or the muscle of their supply chain system. Finally, companies are looking to better enable their supply chain strategies by investing in data, analytics, and information technologies to help improve decision making, comparable to the nervous system of a company’s supply chain system, constantly sending signals based on the latest information.

And just as in the human body, the connectivity between the skeleton, muscles, and nervous system of the supply chain is crucial to a company’s overall health and wellbeing. Developing more regional supply chain networks with more robust digital capabilities is now becoming critical for many manufacturers that want to stay nimble and responsive to today’s disruptive environment.

New Challenges, New Strategies

For more than 20 years, many companies followed the Toyota Way, identifying and eliminating waste wherever they could and moving as close to just-in-time production as possible. The past two years, however, have painfully highlighted the fact that this focus on efficiency has come at the expense of resiliency.

Since 2020, manufactures have gone from trying to minimize inventories to trying to increase buffers and find alternative suppliers for key components, all in an effort to meet agreed-upon service levels. Prior to globalization and the proliferation of the just-in-time approach, many manufacturers already had more regionally focused supply chain strategies that incorporated buffers across the supply chain, enabling companies to continue producing even if one region had been disrupted. There is now a shift back to that kind of approach.

“Many manufacturing companies are questioning whether the pendulum has swung too far toward Just-in-Time (JIT) production processes.”

Manufacturers now need to strengthen the process of executing on these supply chain shifts and explore how their strategies can enable them to do so. Here are some options for companies to consider as they reevaluate their approaches:

  • Mapping the supply chain: First and foremost, companies need to identify the critical components in their supply chain. Too often, many kinds of parts are treated equally when, in reality, a single part can shut down a plant, as far too many companies have recently experienced with semiconductors. This was exactly what Toyota, the innovator of the JIT method, did after a tsunami led to the nuclear disaster in Fukushima Japan in 2011. Amid that disaster, Toyota carefully mapped its supply chain and identified semiconductors as a weak link. This exercise led to Toyota increasing its semiconductor inventory, and the company was able to continue producing while their competitors’ vehicles stacked up in empty lots around assembly plants. Similar to the analysis of design and process failure mode effects, leading companies are now mapping their supply chains to identify failure modes and develop mitigation strategies.
  • Inventory segmentation: Concurrent to mapping their supply chains, leading companies are also rethinking their inventory management strategies. Historically, companies have sought to minimize inventory, especially focusing on removing slow-moving and obsolescent inventory. Today, though, companies struggling to meet agreed-upon customer service levels are rethinking their segmentation strategies to help address these problems.
  • Honing a plan for every part: With more clearly defined inventory segmentation strategies in place, manufactures are also developing more detailed replenishment strategies. While this has been going on for years, the disruptions of the pandemic have forced many companies to reassess product and process system parameters to improve planning accuracy.
  • Realigning the production footprint: Given that relocating production is a very difficult and capital-intensive affair, companies will more likely need to rethink their sourcing strategy, moving away from sole sourcing and just-in-time systems to having more inventory buffers and more regional suppliers. That might mean, for instance, that in addition to having suppliers in China, a manufacturer might also seek out suppliers in Mexico or in the United States closer to its North American markets. For companies using contractors, moving production may be easier, but it would likely still benefit them to diversify their partners geographically to reduce risk.

Central to all these efforts will be manufacturers’ ability to move and adapt with their suppliers because it’s unlikely that companies will ever again exist in their own vacuum. If the digital infrastructure represents the nervous system of a business, tech-enabled solutions will be essential to companies that want to develop the agility and adaptability necessary to thrive in this new landscape.

Digital Solutions

Leveraging digital technologies to drive visibility into supply chains is critical for nimble operations. Imagine being able to detect a risk event long before it becomes an issue. New and innovative technologies such as predicative analytics, big data, and digital twins have opened up new possibilities on this front.

Most companies only have clear visibility into their tier-one suppliers—that’s one of the many factors that led to original equipment manufacturers (OEMs) being caught off guard by the current semiconductor chip supply crisis, and one of the endless recent examples of why it’s crucial for manufacturers to understand the critical components in their value chain even if those components exist at a lower tier. Before the pandemic, some automotive manufacturers had zero visibility into the demand and supply dynamics of semiconductors they purchased as part of a larger sub-assembly.

While there have been major advances in analytics to help monitor supply chain risk across tiers, the analytics still hinge on having a good understanding of all the nodes in your supply chain and how they interact with one another. Once a supply chain has been mapped, analytics, new risk management and planning solutions can help to predict and mitigate risk through better scenario planning and optimization. More companies have begun to monitor and evaluate their suppliers with real-time data to assess their quality, on-time delivery, financial health, production capacity, and impacts from relevant geopolitical issues.

“Most companies only have clear visibility into their tier-one suppliers—that’s one of the many factors that led to OEMs being caught off guard by the current semiconductor chip supply crisis.”

Along with analytics, businesses are increasing the use of Internet of Things technologies to build digital twins of their manufacturing processes. These digital simulations can improve visibility, allowing for better management of shop floor operations and better engineering and manufacturing processes.

Improved warehouse management and transportation management systems are also helping manufacturers to improve supply and distribution visibility, providing the data necessary to make more informed business decisions. These solutions are also helping to automate the implementation of the optimal scenario through improved communications and workflow management.

Finally, but perhaps most importantly, companies are investing to improve their demand planning capabilities through improved customer collaboration and forecasting. While recent historic data has made forecasting more challenging, manufacturers are increasing the use of econometric variables and demand planning solutions in their models to improve forecast accuracy. More businesses are leveraging external data to build out complex machine learning and artificial intelligence models to predict demand not just based on history, which would vary wildly looking at just the past two years, but also using econometric information. As such investments become more widespread, those businesses that fall behind in this area will face even tougher competition.

The Path Forward

Especially for middle market or smaller manufacturers, determining how and where to implement these technologies can seem overwhelming. Here are a few actions companies can take to start their journey to developing more digitally enabled supply chain networks:

  • Launch a strategic review to evaluate where the company is positioned on the risk continuum
  • Conduct a supply chain failure mode effects analysis, and use it to develop a plan for every part/component
  • Develop specific considerations and adaptive sourcing strategies for key materials

Breaking the approach up into these manageable projects can help give business leaders a clearer vision of how to ensure that the bones, nerves, and muscles of their supply chain operations are able to work cohesively together, and to work more effectively by leveraging new digital technologies.  M


Bart Huthwaite
is a Principal at RSM US LLP.


Chris Zheng
is a Principal at RSM US LLP.

ML Journal April 2022

How to Economically Increase Supply Chain Resiliency

Industrial maintenance company ATS has adopted three transformational initiatives to advance supply chain visibility and optimization without excessive system investments.

All eyes are on supply chain digitalization these days as the answer to procurement agility and resilience. It is the natural extension of Manufacturing 4.0 (M4.0) initiatives already underway in industry.

But less widely understood is how an early phase of the long-term digitalization roadmap can circumvent large, upfront investment hurdles. ATS took this approach when pursuing indirect procurement optimization and not only avoided unnecessary costs and complexities, but also achieved higher ROI than originally conceived.

Compared to direct materials, which are built into the manufactured product, the processes and systems used to manage maintenance, repair, and operations (MRO) consumables tend to be far less mature. Most industrial organizations have quite sophisticated enterprise resource planning (ERP) systems supporting their production supply chain but lack comparable capabilities for their indirect materials, such as oil, adhesives, cleaning supplies, and disposable gloves. This seems counterintuitive considering the absence of such items can potentially put operations and maintenance continuity at risk.

ATS recognized this risk well before the pandemic made it worse, and in 2018 set out to correct it. Initially, it was assumed that a several-million-dollar system investment was the path forward to drive much-needed visibility and transparency into the indirect supply chain. But after some study, a simplified, three-pronged approach was chosen that enabled immediate improvements without any upfront capital investment.

“Widespread supplier product shortages, backlogged ports and freight terminals, and staffing shortages at all points in the supply chain have stretched procurement lead times to unprecedented levels”

This trio of early, low-risk initiatives can help any company starting the journey toward world-class digitization, while ensuring a linear ROI over the full scope of the roadmap. Accomplishing all three makes it possible to achieve a far greater degree of supply chain digitalization than expected, and potentially avoid large-scale system investments altogether.

Flying Blind is Costly

ATS focuses almost exclusively on indirect MRO spare parts and inventory to support our maintenance and storeroom services business and maximize customers’ operational continuity and output. The lessons learned four years ago, when we found ourselves challenged with the lack of visibility in the indirect MRO workflow, are applicable across a variety of industries.

At that time, we needed to better understand where critical replacement parts needed to support production were in the procure-to-pay workflow, how long it was taking them to be processed, and why. Due to the lack of basic visibility, traceability, and transparency of purchase requests in the indirect MRO supply space, after a requisition is entered, the requestor is often left in the dark about its status in the supply chain—including PO creation, supplier processing, shipping, and receipt at the dock. Without human intervention, that requestor won’t know if an item is out of stock, discontinued, on backorder, or if other delays or issues are affecting the workstream.

Lacking this insight makes it impossible to mitigate delays with timely workarounds, such as requesting alternative parts or authorizing expedited shipment strategies, and that absence of resilience can lengthen equipment downtime and hamper production goals. It also makes tracking indirect material purchases a people-dependent process instead of a systematic one when personal involvement is needed to monitor the status as the request works its way through the cycle.

Pandemic-induced global supply chain disruptions turned this challenge into a crisis. Widespread supplier product shortages, backlogged ports and freight terminals, and staffing shortages at all points in the supply chain have stretched procurement lead times to unprecedented levels, and laid bare the inherent risks of just-in-time inventory management and production practices.

“Everyone today expects an Amazon-type experience for order tracking and alerts, but building, customizing, or connecting systems to deliver that capability is unnecessarily complex and expensive.”

Today’s shop floor and maintenance personnel can find themselves unwittingly increasing demand on already overburdened suppliers and missing out on opportunities to adjust their plans accordingly. At the same time, the pressure for manual MRO purchase oversight is surging, resource availability is curtailed by sick leave, recruiting challenges, and increasing incidences of firefighting. Never has the need for supply chain resiliency been greater.

Simplified Digitalization Resolves Challenges

Everyone today expects an Amazon-type experience for order tracking and alerts, but building, customizing, or connecting systems to deliver that capability is unnecessarily complex and expensive. In fact, driving visibility and transparency into the supply chain to optimize procurement processes can be relatively uncomplicated.

We initially considered modifying our ERP system to drastically improve the procure-to-pay workflow to improve the customer experience, improve visibility, and improve reporting functionality. That investment alone would have cost roughly $1 million. But instead, we went through a rigorous exercise on the front end to understand the current state, what we wanted to build for the future, and set a strategy to make it as simple as possible to avoid the need for people to support the workflows.

It turned out the data and information we needed was already being captured in existing systems, so we simply needed to extract the data into a business analytics tool to provide the visibility to better manage each step of the process. Then, we embarked on the journey to digitalization, laying the groundwork with the following three key, low-risk initiatives to accelerate digitalization speed and efficiency and yield improved outcomes.

1  Leverage existing data and systems   Though new systems are the conventional path forward when seeking to automate workflows and reduce the dependency on people, the best way to minimize the upfront investment is to maximize the usefulness of current data sources and infrastructure. Leveraging the core competencies of existing systems and applying standard application interface (API) connections to key data from each will quickly and efficiently deliver the desired end result of achieving supply chain visibility and transparency.

First, take stock of the multitude of information and technology systems already utilized throughout the enterprise that contain data of any relevance to the MRO supply chain. Then, use standard extract, transform, and load (ETL) processes to copy the data to a central host for integration and supply chain analytics. The data ETL mechanism may be as simple as an Excel export repository or a purpose-built tool such as Power BI for data visualization and reporting.

“This approach of connecting data from a multitude of existing systems is far more economical than implementing and connecting a new system.”

This approach of connecting data from a multitude of existing systems is far more economical than implementing and connecting a new system. ETL can piece together data in real time from the ERP system, customer relationship management (CRM) system, material requirements planning (MRP) system, master demand schedules (MDS), and so forth. This enables reporting on underperforming metrics without a system overhaul.

2.  Optimize existing workflows  Deep diving into existing process and technology functionality will reveal the true needs for supply chain management optimization. It helps to ensure investments are tailored to high-impact, low-effort functional areas and provide a quantifiable return on a short horizon.

Rather than merely replicating existing workflows, which may be overly complex, or configuring how they are integrated and managed through each system (since all system providers have their own way of doing things), the first step should be to break down the workflows and figure out how to simplify them. With very lean, efficient workflows built to accomplish long-term objectives, there will be less dependence on human intervention and fewer workarounds in the future.

This may include automating previously manual processes, such as supporting digital signatures for electronic documents instead of waiting for paper-based approvals, or generating automatic notifications when materials are delivered and accepted to avoid manual follow-up time.

Transparency into where purchase requests are in the process allows work to be planned accordingly, and triggers to be executed internally when decisions about expediting or revising orders are needed to fulfill the requirements on time, or early.

3. Apply the newfound knowledge  Parallel to the above two initiatives, start making decisions on how to leverage the data to diversify the spend strategies. This walk-crawl-run initiative can occur well ahead of world class digitalization, because getting quick, early wins and reinvesting the benefits (e.g., cost savings, revenue growth, inventory/cash flow improvement) makes it possible to tackle many items on an IT roadmap without any capital outlay or added overhead.

Chances are that the existing system data already has the insights needed to enable adaptive strategies for demand planning, warehousing, and fulfillment in a highly volatile environment. It is also likely that this system data is underutilized. Understanding the data hierarchy, KPIs, and resulting actions that come from best practices can help ensure existing systems achieve the full extent of their usefulness.

First and foremost, think about what you want the data to tell you and the decisions you want to make based off that data—not just now, but 5-10 years from now. Do you want to know who the primary supplier is and their product price and lead time? Do you want the same for secondary and tertiary suppliers? Do you want to know more about their parts so you can build out part descriptions that can be better leveraged across the organization?

By amassing data like this and learning from it, users can set up different sources of supply that meet cost and production planning requirements, both domestically or globally, and adjust as needed based on real, accurate information. This improves the ability to respond to any crisis by automating workflows that alleviate the dependency on individuals with specific product expertise, while ensuring items are purchased efficiently and at the best cost.

“Proving that a clear ROI exists for optimizing existing data, systems, and workflows helps to build confidence in, and pay for, larger investments that make procurement processes even more systematic.”

Another example is mimicking direct purchase processing. Manufacturers know the sub-assemblies that comprise the end product, the components that go in those sub-assemblies, the suppliers of the components and their cost and lead time, and they have management-of-change (MOC) procedures in effect so that when the drawings change, a process exists to update the systems internally and also externally with their supply base.

On the indirect side, that line of thinking must be the way of the future, because the fact of the matter is being able to leverage this information internally and across the supply base facilitates decisions that support the long-term vision of resilience across the indirect supply chain.

 Start Small and Think Big

Proving that a clear ROI exists for optimizing existing data, systems, and workflows helps to build confidence in, and pay for, larger investments that make procurement processes even more systematic. Based on our own experience with indirect materials, we would recommend the following steps:

  • Identify industry standard KPIs you want to produce
  • Identify the customized KPIs you want to produce
  • Identify what metrics are currently available through out-of-the-box reporting mechanisms from existing systems
  • Identify what process changes can be made to capture the data necessary with use of existing systems
  • Evaluate the effort level required for each process change identified
  • Identify what KPIs cannot be produced through existing systems, regardless of process, and their potential ROI
  • Determine whether the potential ROI justifies the system investment

By formulating a deep understanding of what needs to be accomplished in this manner, leveraging available data, information, and systems, and streamlining relevant workflows, the ability to craft improved supply chain strategies comes naturally. Taking these foundational steps not only helps to increase supply network effectiveness and resiliency, but also helps accelerate further digitalization initiatives in a highly economical manner.  M

About the author:
Mike Waltrip is Vice President of Operations at Advanced Technology Services, Inc.

 

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