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ML Journal April 2022

Engage Your Partners in a Digital Supply Chain

How manufacturers can help smaller supply chain partners embrace the changes needed for a successful digital supply chain.

By David McGraw, Kris Slozak, Tim Vadney

How manufacturers can help smaller supply chain partners embrace the changes needed for a successful digital supply chain.   

On a recent Manufacturing Leadership Council (MLC) call, member participants discussed their most pressing issues and priorities for supply networks in 2022. Strategies for helping smaller supply chain partners to embrace digitization wasn’t one of the top five topics ranked (it was slotted eighth), but it consumed a good part of the discussion. This wasn’t a surprise. It’s consistent with what we’re hearing from many of our manufacturing clients: Lack of digitization in the supply chain is hampering visibility and agility.

Increasing visibility into the supply chain was already a priority for manufacturers of all sizes before the pandemic, but it’s now become critical given the levels of volatility, instability, and unpredictability. In a Gartner study, 80% of respondents said they have insufficient supply chain visibility.

Pandemic May End, Instability Will Remain

We believe the supply chain issues brought on by the pandemic and recent geopolitical events will persist for some time. Companies that were in a steady state a year ago are seeing new challenges emerge.

Consider the example of a contract manufacturer that produces and packages beverages. The company’s customer buys packaging materials, orchestrates the logistics, and sends the materials. The company suddenly found it was having issues getting raw materials for cans on time. The materials were coming from a new supplier. While the raw material was in spec when the manufacturer put the material through its process, it found cans were tipping over due to small variances for which their machines were not optimized. This caused significant downtime. If the manufacturer had better visibility into its supply chain, it could plan better for the changes by qualifying the new cans and optimizing machine settings ahead of planned production runs. But because of the nature of the relationship, the contract manufacturer was in the dark. Many other manufacturers have similar stories.

Even when things do stabilize, there will continue to be new and unexpected challenges. Agility and resiliency will be key to reacting quickly: rerouting orders, developing distribution center bypass programs with high-volume customers, or switching plants or lines within the four walls of an existing plant, for instance. Consumer and industrial brand owners and their suppliers and other supply chain partners will need to advance digital capabilities to increase visibility and, thus, agility.

Brand Owners Must Take the Initiative

Many larger manufacturers are already on the journey toward developing a digital supply chain, but their Tier 1, 2, and 3 suppliers are medium-sized to smaller companies that may be in the early stages of embracing smart, digital technology — or have not even begun. When smaller suppliers do not have the technical footprint to manage data or enable the necessary interfaces — for example, APIs between ERPs or EDI between logistics partners, customers, and manufacturers — the relationship must rely on spreadsheets and manual processes, such as on-the-water reports. Manual processes are not just slower, but also prone to errors. In a survey conducted by Supply Chain Dive and West Monroe, nearly 75% of manufacturing and distribution executives said they are primarily using Microsoft Excel in their S&OP processes.

“The more mature trading partner needs to set the example and take the reins.”

 

 

Manufacturers whose efforts to increase supply chain visibility are limited by suppliers’ lack of digitization need to be proactive in guiding their suppliers — particularly smaller ones — toward M4.0 and digital transformation. In other words, the more mature trading partner needs to set the example and take the reins. If you are in this situation, what should you be thinking about? And what steps should you take?

What Good Supply Chain Visibility Looks Like

Ideally, a brand owner should have insight into key supply elements up and down the supply chain, including product development through sourcing, assembly, distribution, and logistics to the point of consumption. The seed of visibility starts with validated and released technical specifications for raw materials or subassembly components. Once validated and released, these should accompany the product through the supply chain because these technical specs are needed by multiple stakeholders: manufacturing, purchasing, warehousing, logistics, customers, regulators, and others.

Having common data enables an OEM and Tier 1 (and lower) suppliers to get ahead of potential specification or supply disruptions. For example, if a component will run out of supply in four weeks, the OEM can work with the supplier to find an appropriate substitute. Automotive manufacturing has had full supply chain visibility for several decades. Complete traceability back to the IGES file on the CAD tube allows OEMs to make last-minute engineering changes to prevent line stoppages — coordinating among purchasing, supplier, and logistics providers to time the change so it cuts into the manufacturing line on a specific date and shift.

Typically, the key to this level of visibility is extending the OEM’s ERP to the supply base and logistics partners through an Esker or Infor Nexus or similar P2P tool. The relatively simple act of presenting purchase orders for acceptance and editing through a browser can go a long way toward improving inbound visibility to raw materials or finished goods.

Understandably, the operating model will influence visibility and data needs. Some models present more risk of flying blind. For example, if a Tier 1 supplier manages other tiers below it, then there may not be visibility into or control of those tiers. If an OEM uses a nominated supplier list only, then there may not be adequate visibility into prices paid or rebate arrangements between suppliers. In such cases, emerging technology such as blockchain may allow the OEM to monitor such transactions. Another common practice is an invoice audit system to confirm process paid and rebates taken — assuming suppliers are willing to provide this level of transparency.

Why Aren’t Companies Farther Along?

The concept of a digital supply chain is still nebulous and means different things to different people. As a result, many manufacturers may not have a clear vision. When there isn’t a clear target, it’s easier to defer action.

Securing resources is a challenge — especially now. Developing better visibility across the supply chain requires investment in people, dollars, and time. But many organizations are still buried in the rubble of issues brought on by the pandemic. Some have taken action in fits and starts, but the volatility of the past two years has prevented sustained progress. Others have had to defer investments altogether due to the uncertainty of the market.

“If the goal is to become digital, you need to solve analog problems with a digital mindset.”

 

 

There is also the issue of trust. Partners must have confidence in each other’s security capabilities and a willingness to connect systems in a world where cybersecurity risks are growing at an exponential rate. Ransomware incidents are proliferating, particularly in manufacturing. In West Monroe’s third-quarter 2021 executive poll, cyberattacks represented the second-largest threat to conducting business, behind only hiring and retention of workforce.

Guiding Suppliers Toward a Digital Supply Chain

Although your approach will depend on your specific operating model and business needs, we believe there are some common denominators that apply in most situations. Some of these are low-cost or no-cost initiatives that can help you build traction, which can be especially valuable given the challenges involved with securing new technology investments.

Start with what you can control. If your backyard isn’t in order, then why reach over into the neighbor’s yard? Assess your supply chain processes to understand where you can drive improvement. An assessment should look for gaps in technology, processes, and people, and also measure the maturity of key capabilities that you need to be able to use data from your supply chain to make decisions. This should provide clarity around the most critical next steps and highlight the particular areas of the supply chain — and particular suppliers — where you should focus to increase collaboration, automation, and visibility.

Make this a multidisciplinary initiative. Increasing supply chain visibility is a complex effort that impacts and/or requires the participation of multiple functions, including procurement, finance, inventory management, distribution, production, sales, marketing, information technology, and more. A multidisciplinary team with representation from key functions and a clear mandate will make greater progress than an individual function trying to tackle this on its own.

Like any digital initiative, this will require skills in supply chain management, operations, inventory optimization, organizational resilience, data analytics, software development, and risk management. As you ramp up, focus on filling any key skill gaps necessary to establish an effective program for working with smaller suppliers to increase visibility.

Clarify what good visibility means for your organization. Analyze critical scenarios and determine the data required, as well as who needs it, and when. To participate in a digital supply chain, it is important to understand what data needs to be shared with customers and vendors and what data, in return, you need access to. For example, receiving up-to-date lead times on a specific part can be ingested into a production scheduling system to make necessary updates to the schedule which could trigger communication to the customer with updated delivery dates. Another example is receiving accurate inbound logistics estimated arrival (at port) times via EDI connections to vessel operators or freight forwarders.

Develop baseline metrics such as critical component lead times, days of supply, or quality conformance to inform stakeholders, enable goal setting and agile decision-making. Where possible, try to measure supply chain processes as a whole with suppliers and customers and not just as an individual company or buyer. This, of course, assumes some level of interconnectivity across the entire supply chain.

Engage your supply partners. If the goal is to become digital, you need to solve analog problems with a digital mindset. That starts with focusing on the end user, business stakeholders, and supply partners, and working to solve the problem from their perspectives.

Dialogue is key to increasing supply chain visibility, and the good news is that doesn’t require (much) investment. Establish monthly meetings with a clear agenda around goals and setting the strategy for sharing data. Start by understanding what is important to each party and plans for focus over the coming year. This discussion should work toward establishing data standards and governance — including the types of data that will and will not be shared and how that will happen.

Once a good dialogue has been established, this can proceed to an assessment of what is required to achieve the desired level of integration. A simple SWOT analysis may suffice, or in more complex relationships, it may be necessary to dedicate resources to dig into the issues and opportunities. This will involve detailed discussion around master data, APIs, EDI, integrations across multiple applications, and middleware layers and how exceptions are managed. These are essential points to making supply chain visibility happen.

“There is no going back to normal. There is only now, and managing in the now requires agility.”

 

 

Digital leaders also move fast — they fail fast, learn, adapt, and iterate. This is an area where it can be very helpful to start with a pilot program that allows you to test approaches, assess the results, see what works, and then expand effective practices.

Once the program is moving on multiple dimensions, it may be helpful to have a program management office that can manage the process of building integration capabilities relevant to various supply partners. As you implement changes, measure the ongoing output and use that insight to make additional improvements.

Determine the right supporting technology. Automation will be key to increasing supply chain visibility — and this will require investment. The good news is that today’s companies have access to increasingly effective technologies, and broader choices. Step one in this process is to understand those capabilities and how leading organizations are using them to increase visibility into their supply network.

Be prepared to facilitate the discussion around evaluating and selecting the right tools and applications to enable integration, particularly when working with smaller and less technology-enabled supply chain partners. Surviving the next significant supply chain disruption will require a level of flexibility that organizations cannot achieve with complex spreadsheet formulas. So, consider where you can use automation to share the necessary data and remove reliance on spreadsheets, particularly upstream where master data and feeder data originate. One common solution is to extend ERP access to partners so they can fill in data. Robotic process automation can also serve as a stop-gap measure or enhancement to existing manual processes for updating milestones.

“This is a journey, and the sooner you start, the sooner you will see results.”

 

 

Additionally, consider whether or how cost-sharing may be possible. For example, can one business provide market insight for all parties involved? This can help address some of the financial constraints of smaller suppliers.

Integrated operations management (IOM). It is important to look at how information flows within and between companies. The right people need to have the right information and conversations at the right time to effectively manage the business. Look at this holistically to ensure comprehensive long-, medium-, and short-range planning occurs. Ensure controls are in place to monitor the execution of processes and catch small problems before they grow. Most importantly, ensure data is integrated and behaviors are developed to review performance, action variance, and drive continuous improvement. Taking this action across supply chain participants extends transparency in the direction of the customer with better, faster updates related to completion dates and estimated deliver schedules to enhance service.

If you are a supply partner, what can you do? Foremost, be open to dialog with your OEM customer(s) and collaborate, collaborate, collaborate! But you don’t need to wait for a larger customer’s project to get going. Start with your own processes and suppliers first, and then think about managing upwards.

Manage for Now

As far as the pandemic and geopolitics are concerned, we are not out of the woods yet. Also, it is likely the structural changes brought on by the pandemic and other disruptive events over the past few years will be here to stay. There is no going back to normal. There is only now, and managing in the now requires agility. In our view, supply chains cannot be agile without being digital. Manufacturers need to stop deferring the need to be digital. Starting to tackle the transparency issue will drive tangible progress. There are steps you can take now — described above — but, you will eventually need to make some necessary investments to develop the level of visibility and transparency that creates an agile, resilient supply chain. This is a journey, and the sooner you start, the sooner you will see results.  M

About the authors:


David McGraw, Senior Manager, Consumer & Industrial Products, West Monroe

 

 


Kris Slozak
, Senior Principal, Consumer & Industrial Products, West Monroe

 

 


Tim Vadney
, Director, Operations Excellence, West Monroe

 

ML Journal April 2022

10 Steps to a Future-Proof Supply Chain

This pragmatic approach to building resilient M4.0 supply chains is essential for thriving in today’s new normal.

This pragmatic approach to building resilient M4.0 supply chains is essential for thriving in today’s new normal.   

Future proofing manufacturing supply chains, building resilience and the capability to proactively respond to disruption is no longer a case of if but when. Without exception, over the past two years, every manufacturing business has had its supply chains disrupted and most continue to face uncertainty, challenged by the impact of the COVID-19 pandemic, geopolitical instability, macro weather events, trade wars, and climate change. Developing a robust, resilient supply chain is a whole-of-business problem, a strategic imperative that must be treated with urgency.

The sales, production, and supply chain teams often participating in the gamesmanship of balancing supply with demand need to unite more than ever before and tackle both the tactical and strategic aspects of mitigating disruption and building resilience. This work must be done now, building on the initiatives that most companies commenced over the past two years. Here is a pragmatic, 10 -step process manufacturing businesses can follow on their journey to achieving now-essential resilient M4.0 supply chains.

Welcome to the New Normal

In the first quarter of 2020, as the world experienced the initial impacts of the COVID-19 pandemic, many considered the supply chain disruptions temporary as critical supply chains such as food bounced back, and the shopping aisles started to restock. However, as the year progressed it became apparent that we would not be returning to normal. In his book, The New (AB)Normal, published in October 2020, MIT Professor Yossi Sheffi described how we are entering an era of uncertainty which will reshape business and supply chain strategy. The Economist Intelligence Unit in an August 2020 briefing document commented that we have entered an era of turbulence and that companies that recover from the pandemic should seek to build resilience and adapt to a new normal.

“Tackling the supply chain risks in this new normal requires both a tactical and strategic approach.”

 

Fast forward to today and these predictions have been proven true, the pandemic continues to disrupt as new waves ripple around the globe, the long-term effects still significantly disrupting supply chains as the semiconductor shortages disrupt manufacturing, tens of thousands of containers remain stranded on ships waiting to be offloaded, and geopolitical tensions rise. Some manufacturing businesses that were unable to adapt to the normal did not survive, while others are just barely surviving. However, others that have been more agile and adaptable than their competition are thriving.

Tackling the supply chain risks in this new normal requires both a tactical and strategic approach. Manufacturing businesses need to build the capability to rapidly deal with unexpected supply chain disruption, have supply chain visibility and insights to enable rapid decision making while at the same time developing strategies to build long-term resilience.

10 Steps to Supply Chain Resilience

Over a decade ago, leading supply chain specialist Dr. John Gattorna, in his book Dynamic Supply Chains, delivering value through people, stressed the point that in supply chains, we are dealing with people everywhere. While the digitization of supply chains has increased significantly, even accelerating these past two years, people remain key to supply chain delivery and management. Supply chain team members rapidly became essential front-line workers as manufacturing businesses raced to obtain appropriate personal protective equipment, and later COVID testing kits, to ensure health and safety. As the focus shifts from these operational issues to the tactical and strategic challenges, people will continue to play an essential part. That’s why the need to ensure the right team is selected to lead this process is a critical first step in the journey to supply chain resilience.

Step 1: Select the Right Team  The first step to developing the required supply chain capability is to recognize that this is a comprehensive and strategic business transformation program and as such requires appropriate executive sponsorship, allocation of resources, change management, and laser focus. A siloed approach is most unwise as supply chain always has, and always will, impact all aspects of a manufacturing business.

To illustrate the comprehensive nature of this process, consider the example of a small specialist supplier of a key component in the following scenario: The supply chain team identifies the supplier as critical and requests that the procurement team assists in assuring that contracts are established to ensure future supply. The planning team works proactively with the supplier to provide updated forecasts and the supplier in turn provides regular delivery updates. However, unbeknownst to the supply chain team, the finance department decides to impose changes to accounts payable to improve cashflow, which ultimately impacts the supplier and its ability to deliver.

“While the digitization of supply chains has increased significantly…people remain key to supply chain delivery and management.”

 

As this example shows, the process requires a unified cross-functional business approach. Moreover the executive should make it clear that this is a strategic, mission-critical program that is key to competitive positioning of the business. Because transformation in time of supply chain disruption and crisis is a major challenge, the right program leader must be selected. That person must be a team member who has the authority to get things done, the trust of cross-functional leadership,and sufficient knowledge and experience in the business’s supply chain, and also is able to step away from daily operations to remain focused on the resilience program. Seconded team members should include supply chain analyst, business analyst, IT, procurement, production, finance, and sales representatives. This team becomes the core Supply Chain Resilience Team.

Step 2: Establish the Right Team Space   The right team space is one that can be occupied for the duration of the program, with consideration that it could also be the permanent space once the program is operationalized. This supply chain control room must have a couple of large display screens as well as space for brainstorming and action planning. There also must be an appropriate virtual space — a shared place where all current supply chain data and information can be accessed. This central repository of supply chain data will later become a key component of the digital supply chain control tower for monitoring and controlling the supply chain as explained in Step 7.

Step 3: Supply Chain Visibility   The first action of the Supply Chain Resilience Team is to create supply chain visibility. Supply chains have become complex and, in many cases, have evolved into networks to provide visibility to both the cross-functional team members as well as the broader stakeholder group, mapping of the key supply chains using a collaborative mapping tool creates a single reference point for the business’s supply chains as well as having a high probability of surprising many.

This starting point will ultimately lead to near real-time visibility of key supply chains. It is also the step where the team should determine whether they have full visibility of the supply chain, establishing whether they have sufficient information on their supplier’s supply. If not, the team should arrange discussions with suppliers to address this information gap. Once the completed supply chain maps are published in the central repository and displayed in the Control Room, you can establish a common understanding, which is fundamental to the analysis steps.

Step 4: Quantify Risk   Key supply chain performance attributes include reliability, responsiveness, agility, cost, and asset management. Each of these attributes has its own metrics; for example perfect order fulfillment and overall value at risk. While the calculation of these metrics is recommended for each supply chain, a cross-functional team can expedite the identification of risk. Having the benefit of a visible supply chain map, the production team member can, for example, highlight critical components which could disrupt production and delivery, while the planning and procurement team members could provide deeper insights into supply risk. In addition, finance can assist with providing historical costs for expediting or substituting the components. All of this can be rapidly annotated and shared on the collaborative supply chain map. When the quantification of risk iscomplete, the team can prioritize the supply chains according to risk, making it possible to provide the appropriate focus for the subsequent steps.

Step 5: Risk Identification and Alerting    In this step, the team focuses on the high-risk supply chains with the objective of identifying the causes of risk. As a starting point, the collaborative supply chain maps can be used to annotate areas of concern, with particular focus on identifying risk indicators and possible measures and alerts for these indicators. Are there systems or sensor data that can be integrated into a dashboard for alerting should one of these risk indicators reach a trigger point? Could tracker and condition monitoring sensors be used to track critical components or products? Examples include weather monitoring and ingestion of weather forecast data along routes that are sensitive to extreme weather events. Alerting and even predicting weather-related supply chain disruptions would enable the team to take proactive risk mitigation steps such as alternative routing or early delivery of the products. Deployment of GPS trackers, including more advanced temperature monitoring capability, could alert when time- and temperature-sensitive consignments are at risk. The first stages of developing a digitized supply chain risk dashboard can present such alerts in near real time.

Step 6: Tactical Risk Mitigation    Identifying or predicting risk enables the team to take proactive risk mitigation measures. The power of the cross-functional team come as it engages in a series of scenario planning and what-if analysis. Much can be achieved with the trusty collaborative supply chain map; however, a skilled supply chain or business analyst may also provide a simulation of the supply chains using one of the several commercially available solutions, which will add a further layer of robustness to the planning sessions. The key question being tackled is “what can be done to mitigate the risks identified or predicted in Step 5?” As the team discusses each risk scenario and debates, assesses and selects potential mitigations, it develops a risk mitigation playbook. The intent is that the playbook provides the detailed steps for initiating Plan B, be it an alternative routing, alternative supply, or even substitution of a component and the various supporting business processes. As with Step 5, digitization opportunities exist for this mitigation such as preconfigured workflows and plans that can be automatically triggered after a risk alert is detected.

Step 7: Monitor and Control    Having completed the first six steps, the Supply Chain Resilience Team will have established a base Supply Chain Control Center with a digital dashboard enabled to provide risk alerts and prediction. A risk mitigation playbook is available for the team to rapidly initiate a Plan B with the opportunity to further automate this process. This center could be operationalized at this stage, used for proactive monitoring of the supply chains and as a hub for decisive decision-making and control in times of disruption.

Step 8: Strategic Supply Chain Resilience    Having developed a program for proactively responding to tactical risk mitigation, the team must also consider longer term strategic supply chain resilience. This is preparing for the new normal discussed in the introduction. The team needs to expand as it works on identifying longer term risks and working through the mitigation strategies. This requires deeper engagement with the executive to get insights into the future direction of the company, and subject matter experts should be consulted in areas such as sustainability.

Step 9: Simulation and Digital Twins    With longer term risks including sustainability and scope 3 carbon emission reporting, trade wars, and geopolitical tensions, identifying the risks and quantifying the various scenarios, which could include complete network redesign, becomes a complex exercise. The use of commercially available simulation and digital twin solutions provide the team with the ability to rapidly access multiple scenarios once the supply chain is configured and populated with the business data. Once established and validated, these solutions become a key source of reference for the business, facilitating the planning and management of the strategic supply chain resilience plan.

“These 10 practical steps will help manufacturers progress along the journey to resilient M4.0 supply chains.”

 

Step 10: Establishing the Supply Chain Control Tower    Having deeply analyzed the business’s supply chains, established the key risk areas, and developed playbooks for risk mitigation as well as longer term risk identification and the resilience plan, the team is well-positioned to integrate these solutions into a Supply Chain Control Tower. Such a system can automatically monitor for risk, and provide alerts and predictions, as well as recommend mitigations both from coding the playbooks from Step 6 into decision models and workflows as well as through machine learning. With increased supply chain complexity, automation of monitoring and control becomes a necessity.

These 10 practical steps will help manufacturers progress along the journey to resilient M4.0 supply chains. As with all M4.0 processes, automation is a key enabler; however much can be achieved by following the foundational steps, which are crucial to a successful overall implementation. People are key to supply chains, ensuring the team members and stakeholders are fully engaged leads to trust and ultimately trust and commitment lead to long-term resilience and sustainability.   M

About the author:
Owen Keates
is Industry Executive, Hitachi Vantara Manufacturing Practice, where he leads the development of Hitachi Vantara’s digital supply chain solutions. With over 25 years of experience in supply chain management including global supply chain manager – logistics company and vice president of a supply chain consultancy, he has led many digital transformation programs across a range of industries.

ML Journal April 2022

The Coming Distributed Enterprise: Local, Customized, and Flexible

Additive manufacturing, distributed production networks, and blockchain will combine to create a new manufacturing enterprise model by 2030.   

Predicting what manufacturing will look like in 2030 requires that we look beyond the near horizon and factor in how technology will enable the enterprise. The pace of digital transformation is unprecedented today, and manufacturing is about to experience a sea change. Keep in mind that as technology accelerates, it combines in new ways to further this acceleration. Ray Kurzweil famously describes this as Singularity, where systems are governed by the law of accelerating returns and where intelligent machines live in intelligent networks, and can work autonomously. To better understand the coming revolution, it is useful to first consider how technology has driven production systems in the past.

The industrial revolution ignited economies of scale production that has driven manufacturing organizations for the past two centuries. In the Industrial Revolution, water and steam enabled mechanization to replace artisan manual production. Frederick Taylor and Henry Ford further perfected this by creating the notion of a perfect way to do a job and by having an individual perform the same job over and over on an assembly line. These mass production systems were further enabled by electricity. The cadence of change accelerated.

By 2030, distributed networks of smaller companies will be able to successfully compete.

 

 

Later, we introduced electronics and digital tools to remove some of the more difficult, but still repeatable tasks from production operations. Now, AI is enabling the beginning of thinking machines and systems. But electronics and digital technologies didn’t just impact the production floor. They also began to reformulate enterprise operations. Internally, enterprises began to look toward ERP systems to capture and manage production data and to put that data into the context of enterprise needs.

The Rise of E-Commerce

The hub and spoke type models with OEMs at the center have been governed by transaction-based contracts between individual companies. Electronic data interchanges in the 1970s eventually morphed into internet-based e-commerce in the 1990s, with an explosion of business-to-consumer e-commerce emerging in the 2000s and beyond. Today, consumers take for granted the ability to order a product and have it delivered directly to their doors, ideally overnight or within a small, specified time window. Further, customers rely on ratings rather than brand names or supplier names. Clearly, the pace of change is further accelerating.

Supply chain globalization of the past four decades has helped define what the modern organization looks like.   Companies began to specialize. Production based on core competence encouraged the disaggregation of organizational conglomerates, with individual companies focusing on what they did best, driving down costs through lean and other production and quality management strategies. The China price became the price to beat, and companies around the world have continued to seek low-cost suppliers to meet the demand for products.

Some of the very technologies that enabled and drove the success of economies of scale production are going to change the competitive dynamics of the economies of scale model. And unlike past transformations, this will happen rapidly, certainly enabling the 2030 enterprise, which will be more localized, more customized, and more flexible.

Three Drivers of Change

How will the enterprise of 2030 be so different? There are three main drivers to this. First, additive manufacturing technologies will become more mainstream for a wider variety of products and materials. These products will be certified by a digital thread which captures the design and production parameters, layer-by-layer printer operations, and materials characteristics. These digital threads will act as a quality certification.  Additive manufacturing favors smaller lot sizes, and is the ultimate customization tool. Additive manufacturing will complement traditional manufacturing methods, expanding producer capabilities.

Second, the internet e-commerce tools that have driven business-to-consumer interactions, effectively divorcing makers from their customers through platforms such as Amazon, will enable platforms at the business-to-business interface level. This disaggregation of demand and supply is an essential ingredient to the distributed production networks of the future. Because of this, networks of companies will replace the traditional supply chain as we know it today. Active participants in the network at any given time will depend on the needs of the products ordered and can change over time as the production mix changes.

But there is one more technology driver needed.  We need a way to collect orders from one company, process the needs of those orders, and then parcel them out to suppliers in the network who can meet the production tolerances and feature demands – and we need to pay them. Enter blockchain or other smart contract technologies.

The blockchain captures distributed, decentralized activities in terms that become trusted by all members of the blockchain. This distributed ledger tracks contract details, production actions, and payments between members of the blockchain. Blockchain technology now in use in financial markets will come into the manufacturing world to replace and/or augment traditional transaction-based contracts.

The economies of scale model is about to undergo a technology-enabled transformation.

 

 

Now we have the three elements of the enterprise of 2030:  localized production capabilities anchored in additive manufacturing and supplemented by more traditional subtractive methods; distributed production network platforms acting as matchmakers between those who need something and those who produce it; and, finally, the means to digitally capture smart contract details and then match performance to payments. Of course, all of this will be orchestrated computationally from the edge to the cloud.

All three of these elements are present today, but not at deployable scale, nor with broad trust and acceptance.  In each of the prior manufacturing transformations described earlier, the precursors to change were evident and often overlapped with more traditional ways of doing things. By 2030, distributed networks of companies – many of which will be smaller – will be able to successfully compete with economies of scale production by emphasizing flexibility and customization which traditional large companies will find difficult to match.

As manufacturing leaders we will need to rethink what it means to be an enterprise, what it means to compete as an enterprise, and how to effectively manage – and thrive in – such a distributed production network environment. M

About the author:
Irene Petrick Ph.D is Senior Director of Industrial Innovation at Intel Corporation.

 

 

ML Journal April 2022

Fixing Broken Supply Chains

True supply chain resilience requires more than knee-jerk reactions. It requires a paradigm shift.   

Manufacturers have learned a bitter-tasting lesson: The global supply chain is highly vulnerable to prolonged disruption.

History has proven that single incidents, or so-called black swan events, can usually be absorbed without a lasting backlash. A hurricane, for example, will force cargo ships to be rerouted, and within a few weeks, normalcy returns.

A prolonged onslaught of multiple disruptive events, however, is debilitating. The current pandemic-related lockdowns, changes in consumer behavior, spikes in fuel costs, and tensions among global trading partners have uncovered deep fissures in supply networks. As a result, rethinking supply chain strategies is now a must do.

Only a Holistic Strategy Can Stop the Rippling Effects

From empty grocery shelves and sparse car dealership lots to clogged ocean ports and shortages of truck drivers and cargo pilots, evidence of the broken supply chain is all around—and deeply felt. Now, eager to patch systems and prevent further damage, enterprises are turning to technology to help fortify their supplier networks, hoping simultaneously to be more resilient, and more agile. Unfortunately, a quick bandage of new reporting tools won’t fix the underlying, systemic issues that are at the heart of today’s supply chain crises.

An entire paradigm shift – including strategy, customer alignment, inventory, product lifecycle management, and supply chain planning – is required to build a new supply chain model for the future.

“An entire paradigm shift – including strategy, customer alignment, inventory, product lifecycle management, and supply chain planning – is required to build a new supply chain model for the future.”

The need to improve supply chain resiliency is gaining in acceptance, yet nearly half of the manufacturers are still on the fence in deploying any type of solution. IDC’s FutureScape: Worldwide Supply Chain 2022 Predictions suggest that by the end of 2022, only about 50% of manufacturing supply chains will begin to see the benefits of greater supply chain resiliency.

While this is a move in the right direction, the remaining 50% of manufacturers need to take action too.

Understanding the Landscape of the New Norm

The World Economic Forum predicts uncertainty will remain high for supply chains in 2022. Most supply chain professionals agree that geo-political, natural disaster, and regulatory issues will continue to be hot topics in the new norm.  Some experts predict the volatility may become worse, pointing to rising shipping prices, spikes in fuel costs, and secondary forms of shipping, like air cargo, are now becoming backlogged too, as more and more manufactures try to forge new strategies for obtaining raw resources.

Amid this pessimism, there is some good news. “Digital mastery of supply chain technologies has been an important discussion point over the years but is now a mainstream requirement,” writes Tarek Sultan, Governor of the World Economic Forum’s Supply Chain and Transport Industry Community. “Supply chains have finally got C-suite attention and are now recognized as a critical driver for growth. The existential crisis brought on by the pandemic forced companies to shift the focus of innovation and restructuring efforts to ensuring business continuity by building resiliency and flexibility,” he adds.

Creative Thinking Helps

Other bold tactics for circumventing supply chain disruption are coming into play as companies refuse to let supply chain issues totally debilitate revenue and growth. Frustrated with the shortage of semiconductors impacting the ability to complete cars, Ford and General Motors have formed strategic agreements with chipmakers, and Tesla is going into the foundry business and making its own.

Retailers short on storage space are buying warehouses. The 25 largest retailers snapped up roughly 38 million square feet of new industrial space last year, The Wall Street Journal reported. That’s up from 18.8 million square feet acquired in 2019.

“It’s no longer enough to be familiar with just tier-one suppliers and any potential risk they may carry. According to a recent Bain survey, fewer than 15% of executives feel their current capabilities allow them to deliver traceability consistently.”

Shippers that can’t find containers are making their own, reports the Washington Post. Nearly 26 million 20-foot containers’ worth of goods are now expected to arrive in the United States this year, up 18% from a year ago, according to the National Retail Federation.

Fortifying the Supply Chain

Most manufacturing executives agree that they need to fortify their supply chain. The following seven suggestions should provide some clarification on actions to improve supply chain resiliency and protect against prolonged disruption.

  1. Prioritize business continuity and cashflow. Prior to the pandemic, few would have anticipated supply chain disruptions could be so devastating to the global economy, or that a shipping container shortage could cause a cascading domino effect spanning the globe. Now CEOs and their executive leadership teams are obligated to reexamine and prioritize business continuity strategies. Reliable financial analytics across the entire enterprise – including branches, plant assets, fleets, and inventory – are required. Disparate or siloed systems will make consolidating capital harder.
  2. Understand risks. Continuity plans should cover potential issues from employee safety and workforce accessibility to managing inventory of raw materials and the ability to deliver goods and services to customers. Communications and connectivity are two cornerstone elements to protect. Making such plans requires an integrated ERP solution for full visibility. Also, advanced analytics with artificial intelligence (AI) and machine learning (ML) built in provide valuable predictive capabilities. Such advanced tools, along with a supply chain digital twin, will help leaders explore “what if” scenarios and determine risk and potential impact, necessary for planning courses of action in the face of an emergency.
  3. Know your suppliers’ suppliers. It’s no longer enough to be familiar with just tier-one suppliers and any potential risk they may carry. Purchasing agents should have a complete picture of where and how resources originate and routes associated with each step in the progression. Less than 50% of the companies in a recent McKinsey survey say they understand the location of their tier-one suppliers and the key risks those suppliers face. Only 2% of those surveyed have visibility into the third tier and beyond. Sub tier supply visibility matters because many of today’s most pressing supply shortages, such as semiconductors, happen in these deeper supply-chain tiers. A modern digitally empowered supply chain solution helps track details multi-tier deep. A control tower which helps geo-track shipments and routes helps visualize movement of goods in real time.
  4. Traceability and accountability. Manufacturers should insist on relationships with shared information and accountability. According to a recent Bain survey, fewer than 15% of executives feel their current capabilities allow them to deliver traceability consistently. A majority of companies has started to build some traceability capabilities but struggle to integrate them or consistently create value. Resiliency is impossible unless buyers, suppliers, and other parties along a value chain are willing to share data and collaborate. Reuters report Where’s My Stuff?suggests businesses could share sensitive data with partners by creating safe rooms where joint teams can analyze data without the fear that competitive information can be accessed.
  5. Multiple suppliers or one? “Don’t put all of your eggs in one basket” is an old wives’ tale that has some parallels to today’s supply chain. A single supplier strategy provides opportunities to influence direction and receive preferential treatment. But sometimes, a single source can be disastrous if that relationship is interrupted. A more diverse and extended network of suppliers offers safety. Some experts advocate for building relationships with multiple suppliers, in various geographies. The disrupted supply chain has rekindled the interest in bringing suppliers, plants, and warehouses closer to the end consumer, investing in hometown economies. For many industry verticals this is a challenge that will play out over years with manufacturers needing to balance costs and reliability. When the supply chain planning tool is tightly integrated to the ERP and backend financials, understanding the financial impact of moving operations closer to the customer becomes easier to grasp.
  6. Throw out just-in-time delivery as the default strategy. This common lean concept has worked for decades. Unfortunately, the current disruption has proven that a just-in-time strategy for stocking the warehouse can leave manufacturers vulnerable. Safety stock that is set very low doesn’t consider the mass interruptions that can occur. Some auto makers, like Toyota, Volkswagen, Tesla, and others, are stockpiling batteries, chips and other key parts. This also ties up capital, though, and consumes warehouse space, creating other challenges. The ideal solution is yet to be determined. Manufacturers will need to evaluate each part and component for its availability, risk, and alternatives. This isn’t just a supply chain issue but is a C-level strategy issue. Like most top-level strategies, this one requires reliable analytics, easy-to-use reporting tools, and data-driven predictive insights.
  7. Back to the drawing board. In some extreme cases, manufacturers may need to look to engineering to alter designs, specifying parts which are more readily available and from multiple sources. Again, integrated software solutions make this type of strategic planning easier and more productive. Collaborative tools for communication between teams and advanced Product Lifecycle Management (PLM) solutions help manage this type of product development, tracking milestones and testing, while documenting decisions and the driving factor.

Final takeaways

The supply chain will continue to be in the spotlight as consumers, manufacturers, and suppliers continue to make compromises and adjust to disruptive times. The ideal answers may be slow to crystalize, and it’s clear that manufacturers must take action or risk being caught with stock-outs and cancelled shipments. While short term solutions may help with some immediate, dire needs, knee-jerk responses, like stockpiling, can be more detrimental than helpful. Thinking through a holistic strategy than analyzes customer retention risks, as well as the financial impact, will need to take place. C-level officers need to become engaged, helping to evaluate options, devise creative solutions, and plan long-term strategies.

The supply chain cannot be repaired overnight. Getting started is essential.  M


About the author:
Andrew Kinder
is Senior Vice President of Industry & Solution Strategy at Infor.

 

ML Journal April 2022

Building Resilient Supply Chains

Manufacturers can take a range of actions, including integrating their supply chains for visibility and using digital twins to model supply chain functions, in order to create resiliency.   

The COVID-19 pandemic significantly disrupted supply chains and drew attention to their inherent vulnerabilities. The continuing disruptions have underscored the need to further modernize the foundations of modern supply chains. Strengthening the foundations will not only help manage risk but also position enterprises to weather disruptions seamlessly and even gain advantage from them. Here we will look at two core concepts in successful supply chain transformation: resilience and agility.

The Pandemic’s Impact

The full scope of the pandemic’s disruptive impact on the supply chain is still taking shape, but some salient data points are already available. A cross-industry survey of executives by the World Economic Forum found 76% of respondents pointing to COVID-19 as a significant disruptor of their supply chains and their businesses. The disruptions manifest in numerous ways. For example, nearly two-thirds of manufacturing business and IT executives surveyed by Oxford Economics and NTT DATA said that pandemic-related disruptions were driving significant reductions in their technology investments.

At the same time, the International Labor Organization reported that pandemic-related disruptions to supply chains led to income losses exceeding $3.5 trillion. And the NTT DATA-sponsored 2022 26th Annual Third-Party Logistics Study saw almost one in three shippers and third-party logistics providers citing a net negative financial impact from the pandemic. Developing more resilient supply chains will help curb such impacts of supply chain disruptions going forward.

Resilience in supply chains is the degree to which the supply networks can withstand disruption.

The manufacturing supply chain encompasses all the activities required to turn raw materials into finished products, such as planning, sourcing, manufacturing, distribution, and returns. As such, resilience is the degree to which supply chain networks withstand disruption and minimize the impact on revenues, costs, and customers. Manufacturers must have the agility required to shift activities swiftly and the data needed to inform such shifts in service of meeting commitments to, and responding to changes in demand from, customers.

Gaps in today’s supply chain hinder the agility manufacturers need. These include:

  • Lack of end-to-end visibility in the supply network
  • Difficulty in forecasting demand
  • Insufficient data at the edge to enable informed decision-making
  • Sole-source contractual relationship with suppliers
  • Outdated inventory management strategies
  • Dependency on overseas manufacturing operations and suppliers
  • Logistics issues, and in particular port congestion issues
  • Changing consumer behaviors and the need to manage consumer expectations

Strategies to Build Resilience

While there is no universally applicable formula for increasing supply chain resilience, approaching the transformation with well-defined strategic objectives can help businesses stay on track. The overarching goal is to develop nimble and agile end-to-end supply chains, tailored to evolving environmental dynamics and market needs. Some of the strategies and techniques you should consider include:

Strategies to Build Resilience

  • Diversify manufacturing operations and sourcing – Reduce the risk of geographical dependencies by diversifying manufacturing operations and sourcing functions. Geopolitics must be a critical consideration for organizations before evaluating supply alternatives, with organizations qualifying suppliers in other countries based on sourcing and quality norms. Manufacturers must also consider manufacturing SKUs in multiple locations to build more resilience into distribution networks.
  • Establish multi-tier supplier relationships – Organizations often lack visibility to suppliers beyond tier one. Manufacturers should consider diversifying their supplier base with suppliers operating from different regions and geographies. Having multi-tier relationships with suppliers will help reduce risk. However, it is equally important to understand the risk of doing business with the Nth tier vendors.
  • Integrate supply chain networks for visibility – Collaborating with trading partners can reduce the impact of disruptions. This includes building collaboration and visibility through business commerce networks, enabling a logistics control tower, and establishing collaborative planning, forecasting, and replenishment. Investments in supply chain strategy, planning, and operations could serve organizations well in the future, beyond the current global pandemic.

  • Leverage scenario-based supply chain modeling with digital twins – Building digital twins for modeling supply chain scenarios enables organizations to run what-if conditions and assess supply network risks. A supply chain digital twin should analyze the supply chain interactions from macro changes in demand down to inside the four walls of an enterprise. It should enable functions such as the prediction of SKU flows, demand variability identification, and scenario testing, using live data such as incoming shipment schedules, vehicle locations, and inventory levels, to assess the supply chain’s current state and provide updated forecasts. The digital supply chain twin must simulate a model that integrates with the surrounding IT environment of databases and business intelligence tools.
  • Build reserves to absorb shock – Carrying excess inventory has an impact on working capital, but strategic reserves are intended to protect against “black swan” events that are rare but can cause an existential threat to the business. Organizations should consider having a buffer of safety stock in order to continue serving customer needs while dealing with disruptions.
  • Make data-driven decisions – Leveraging data and analytics will enable organizations to unlock opportunities and make better decisions. Supply chain analytics serve two main purposes. First, they allow businesses to identify risk and inefficiencies. Second, they enable businesses to use data to identify, prioritize, and address opportunities. Measuring and reporting on the correct metrics is key to creating resilience in supply chains. Some metrics can increase forecast accuracy, enable working capital improvement, improve risk management, reduce stock shortages, reduce lost sales, reduce inventory holding costs, and enable operating margin improvements.

Measuring Supply Chain Resilience

To better understand supply chain vulnerabilities and failure points,  organizations must consider utilizing supply chain resilience frameworks and supply chain digital twins to evaluate process areas within the network. The objective of this assessment is to evaluate an organization’s relative vulnerability in key supply chain areas, model them in a digital twin, and examine the results of the scenarios. For example, consider a case wherein a tier-one supplier is impacted. The model will provide visuals of and report on the number of pending purchase orders against the supplier waiting to be fulfilled, the impact of delayed shipment and customer commitments, the tier- two alternate source of supply the customer should look for, the risk of doing business with the second-tier suppliers, and other factors. The digital twin assigns weightage to the risk based on a predefined configuration.

Creating resilience in supply chains is not an optional exercise for manufacturers, but rather a fundamental necessity. It requires a multi-faceted approach that varies based on your organization, industry, customers, and role within your business network. The good news is that many companies have already started looking to improve their supply chain resilience. It’s just a matter of capturing the right data, contextualizing it, and determining how to deploy the data for the best results. M

About the author:
Baskar Radhakrishnan
is Strategic Advisor, Manufacturing Industry Solutions at NTT DATA. The company is a member of MLC.

Uncategorized

Engage Your Partners in a Digital Supply Chain

How manufacturers can help smaller supply chain partners embrace the changes needed for a successful digital supply chain.

How manufacturers can help smaller supply chain partners embrace the changes needed for a successful digital supply chain.   

On a recent Manufacturing Leadership Council (MLC) call, member participants discussed their most pressing issues and priorities for supply networks in 2022. Strategies for helping smaller supply chain partners to embrace digitization wasn’t one of the top five topics ranked (it was slotted eighth), but it consumed a good part of the discussion. This wasn’t a surprise. It’s consistent with what we’re hearing from many of our manufacturing clients: Lack of digitization in the supply chain is hampering visibility and agility.

Increasing visibility into the supply chain was already a priority for manufacturers of all sizes before the pandemic, but it’s now become critical given the levels of volatility, instability, and unpredictability. In a Gartner study, 80% of respondents said they have insufficient supply chain visibility.

Pandemic May End, Instability Will Remain

We believe the supply chain issues brought on by the pandemic and recent geopolitical events will persist for some time. Companies that were in a steady state a year ago are seeing new challenges emerge.

Consider the example of a contract manufacturer that produces and packages beverages. The company’s customer buys packaging materials, orchestrates the logistics, and sends the materials. The company suddenly found it was having issues getting raw materials for cans on time. The materials were coming from a new supplier. While the raw material was in spec when the manufacturer put the material through its process, it found cans were tipping over due to small variances for which their machines were not optimized. This caused significant downtime. If the manufacturer had better visibility into its supply chain, it could plan better for the changes by qualifying the new cans and optimizing machine settings ahead of planned production runs. But because of the nature of the relationship, the contract manufacturer was in the dark. Many other manufacturers have similar stories.

Even when things do stabilize, there will continue to be new and unexpected challenges. Agility and resiliency will be key to reacting quickly: rerouting orders, developing distribution center bypass programs with high-volume customers, or switching plants or lines within the four walls of an existing plant, for instance. Consumer and industrial brand owners and their suppliers and other supply chain partners will need to advance digital capabilities to increase visibility and, thus, agility.

Brand Owners Must Take the Initiative

Many larger manufacturers are already on the journey toward developing a digital supply chain, but their Tier 1, 2, and 3 suppliers are medium-sized to smaller companies that may be in the early stages of embracing smart, digital technology — or have not even begun. When smaller suppliers do not have the technical footprint to manage data or enable the necessary interfaces — for example, APIs between ERPs or EDI between logistics partners, customers, and manufacturers — the relationship must rely on spreadsheets and manual processes, such as on-the-water reports. Manual processes are not just slower, but also prone to errors. In a survey conducted by Supply Chain Dive and West Monroe, nearly 75% of manufacturing and distribution executives said they are primarily using Microsoft Excel in their S&OP processes.

“The more mature trading partner needs to set the example and take the reins.”

 

 

Manufacturers whose efforts to increase supply chain visibility are limited by suppliers’ lack of digitization need to be proactive in guiding their suppliers — particularly smaller ones — toward M4.0 and digital transformation. In other words, the more mature trading partner needs to set the example and take the reins. If you are in this situation, what should you be thinking about? And what steps should you take?

What Good Supply Chain Visibility Looks Like

Ideally, a brand owner should have insight into key supply elements up and down the supply chain, including product development through sourcing, assembly, distribution, and logistics to the point of consumption. The seed of visibility starts with validated and released technical specifications for raw materials or subassembly components. Once validated and released, these should accompany the product through the supply chain because these technical specs are needed by multiple stakeholders: manufacturing, purchasing, warehousing, logistics, customers, regulators, and others.

Having common data enables an OEM and Tier 1 (and lower) suppliers to get ahead of potential specification or supply disruptions. For example, if a component will run out of supply in four weeks, the OEM can work with the supplier to find an appropriate substitute. Automotive manufacturing has had full supply chain visibility for several decades. Complete traceability back to the IGES file on the CAD tube allows OEMs to make last-minute engineering changes to prevent line stoppages — coordinating among purchasing, supplier, and logistics providers to time the change so it cuts into the manufacturing line on a specific date and shift.

Typically, the key to this level of visibility is extending the OEM’s ERP to the supply base and logistics partners through an Esker or Infor Nexus or similar P2P tool. The relatively simple act of presenting purchase orders for acceptance and editing through a browser can go a long way toward improving inbound visibility to raw materials or finished goods.

Understandably, the operating model will influence visibility and data needs. Some models present more risk of flying blind. For example, if a Tier 1 supplier manages other tiers below it, then there may not be visibility into or control of those tiers. If an OEM uses a nominated supplier list only, then there may not be adequate visibility into prices paid or rebate arrangements between suppliers. In such cases, emerging technology such as blockchain may allow the OEM to monitor such transactions. Another common practice is an invoice audit system to confirm process paid and rebates taken — assuming suppliers are willing to provide this level of transparency.

Why Aren’t Companies Farther Along?

The concept of a digital supply chain is still nebulous and means different things to different people. As a result, many manufacturers may not have a clear vision. When there isn’t a clear target, it’s easier to defer action.

Securing resources is a challenge — especially now. Developing better visibility across the supply chain requires investment in people, dollars, and time. But many organizations are still buried in the rubble of issues brought on by the pandemic. Some have taken action in fits and starts, but the volatility of the past two years has prevented sustained progress. Others have had to defer investments altogether due to the uncertainty of the market.

“If the goal is to become digital, you need to solve analog problems with a digital mindset.”

 

 

There is also the issue of trust. Partners must have confidence in each other’s security capabilities and a willingness to connect systems in a world where cybersecurity risks are growing at an exponential rate. Ransomware incidents are proliferating, particularly in manufacturing. In West Monroe’s third-quarter 2021 executive poll, cyberattacks represented the second-largest threat to conducting business, behind only hiring and retention of workforce.

Guiding Suppliers Toward a Digital Supply Chain

Although your approach will depend on your specific operating model and business needs, we believe there are some common denominators that apply in most situations. Some of these are low-cost or no-cost initiatives that can help you build traction, which can be especially valuable given the challenges involved with securing new technology investments.

Start with what you can control. If your backyard isn’t in order, then why reach over into the neighbor’s yard? Assess your supply chain processes to understand where you can drive improvement. An assessment should look for gaps in technology, processes, and people, and also measure the maturity of key capabilities that you need to be able to use data from your supply chain to make decisions. This should provide clarity around the most critical next steps and highlight the particular areas of the supply chain — and particular suppliers — where you should focus to increase collaboration, automation, and visibility.

Make this a multidisciplinary initiative. Increasing supply chain visibility is a complex effort that impacts and/or requires the participation of multiple functions, including procurement, finance, inventory management, distribution, production, sales, marketing, information technology, and more. A multidisciplinary team with representation from key functions and a clear mandate will make greater progress than an individual function trying to tackle this on its own.

Like any digital initiative, this will require skills in supply chain management, operations, inventory optimization, organizational resilience, data analytics, software development, and risk management. As you ramp up, focus on filling any key skill gaps necessary to establish an effective program for working with smaller suppliers to increase visibility.

Clarify what good visibility means for your organization. Analyze critical scenarios and determine the data required, as well as who needs it, and when. To participate in a digital supply chain, it is important to understand what data needs to be shared with customers and vendors and what data, in return, you need access to. For example, receiving up-to-date lead times on a specific part can be ingested into a production scheduling system to make necessary updates to the schedule which could trigger communication to the customer with updated delivery dates. Another example is receiving accurate inbound logistics estimated arrival (at port) times via EDI connections to vessel operators or freight forwarders.

Develop baseline metrics such as critical component lead times, days of supply, or quality conformance to inform stakeholders, enable goal setting and agile decision-making. Where possible, try to measure supply chain processes as a whole with suppliers and customers and not just as an individual company or buyer. This, of course, assumes some level of interconnectivity across the entire supply chain.

Engage your supply partners. If the goal is to become digital, you need to solve analog problems with a digital mindset. That starts with focusing on the end user, business stakeholders, and supply partners, and working to solve the problem from their perspectives.

Dialogue is key to increasing supply chain visibility, and the good news is that doesn’t require (much) investment. Establish monthly meetings with a clear agenda around goals and setting the strategy for sharing data. Start by understanding what is important to each party and plans for focus over the coming year. This discussion should work toward establishing data standards and governance — including the types of data that will and will not be shared and how that will happen.

Once a good dialogue has been established, this can proceed to an assessment of what is required to achieve the desired level of integration. A simple SWOT analysis may suffice, or in more complex relationships, it may be necessary to dedicate resources to dig into the issues and opportunities. This will involve detailed discussion around master data, APIs, EDI, integrations across multiple applications, and middleware layers and how exceptions are managed. These are essential points to making supply chain visibility happen.

“There is no going back to normal. There is only now, and managing in the now requires agility.”

 

 

Digital leaders also move fast — they fail fast, learn, adapt, and iterate. This is an area where it can be very helpful to start with a pilot program that allows you to test approaches, assess the results, see what works, and then expand effective practices.

Once the program is moving on multiple dimensions, it may be helpful to have a program management office that can manage the process of building integration capabilities relevant to various supply partners. As you implement changes, measure the ongoing output and use that insight to make additional improvements.

Determine the right supporting technology. Automation will be key to increasing supply chain visibility — and this will require investment. The good news is that today’s companies have access to increasingly effective technologies, and broader choices. Step one in this process is to understand those capabilities and how leading organizations are using them to increase visibility into their supply network.

Be prepared to facilitate the discussion around evaluating and selecting the right tools and applications to enable integration, particularly when working with smaller and less technology-enabled supply chain partners. Surviving the next significant supply chain disruption will require a level of flexibility that organizations cannot achieve with complex spreadsheet formulas. So, consider where you can use automation to share the necessary data and remove reliance on spreadsheets, particularly upstream where master data and feeder data originate. One common solution is to extend ERP access to partners so they can fill in data. Robotic process automation can also serve as a stop-gap measure or enhancement to existing manual processes for updating milestones.

“This is a journey, and the sooner you start, the sooner you will see results.”

 

 

Additionally, consider whether or how cost-sharing may be possible. For example, can one business provide market insight for all parties involved? This can help address some of the financial constraints of smaller suppliers.

Integrated operations management (IOM). It is important to look at how information flows within and between companies. The right people need to have the right information and conversations at the right time to effectively manage the business. Look at this holistically to ensure comprehensive long-, medium-, and short-range planning occurs. Ensure controls are in place to monitor the execution of processes and catch small problems before they grow. Most importantly, ensure data is integrated and behaviors are developed to review performance, action variance, and drive continuous improvement. Taking this action across supply chain participants extends transparency in the direction of the customer with better, faster updates related to completion dates and estimated deliver schedules to enhance service.

If you are a supply partner, what can you do? Foremost, be open to dialog with your OEM customer(s) and collaborate, collaborate, collaborate! But you don’t need to wait for a larger customer’s project to get going. Start with your own processes and suppliers first, and then think about managing upwards.

Manage for Now

As far as the pandemic and geopolitics are concerned, we are not out of the woods yet. Also, it is likely the structural changes brought on by the pandemic and other disruptive events over the past few years will be here to stay. There is no going back to normal. There is only now, and managing in the now requires agility. In our view, supply chains cannot be agile without being digital. Manufacturers need to stop deferring the need to be digital. Starting to tackle the transparency issue will drive tangible progress. There are steps you can take now — described above — but, you will eventually need to make some necessary investments to develop the level of visibility and transparency that creates an agile, resilient supply chain. This is a journey, and the sooner you start, the sooner you will see results.  M

About the authors:


David McGraw is Senior Manager, Consumer & Industrial Products.

 

 


Kris Slozak
is Senior Principal, Consumer & Industrial Products 

 

 


Tim Vadney
is Director, Operations Excellence, with West Monroe 

 

Policy and Legal

Manufacturers Gain a Competitive Edge with the NAM’s MLC

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Get involved

If you’re interested in Manufacturing 4.0, you should know about the Manufacturing Leadership Council. The MLC, the division of the NAM dedicated to digital transformation in manufacturing operation, aims to help manufacturing leaders understand the digital future and the technology, leadership and organizational structures necessary to improve competitiveness and operational excellence.

Critical issues focus: Every year, the MLC creates a Critical Issues agenda around topics determined by its membership of more than 2,600 industry leaders. These include transformative technologies, cybersecurity, sustainability, next-generation leadership and more. The MLC offers focused resources to help manufacturers assess the opportunities and challenges ahead.

Why it matters: Given the industry’s rapid pace of change, manufacturers need to innovate to stay competitive. The MLC helps manufacturers identify new technologies and discover best practices so they can keep up in the digital era.

Key resources: There are many ways manufacturers can tap into the MLC:

  • The Manufacturing in 2030 Project: This year-long initiative looks into the future of manufacturing and examines megatrends that will shape the world by 2030. The project helps manufacturers prepare for what lies ahead two, five and 10 years from now.
  • Manufacturing Leadership Journal: This web-based publication offers the latest industry news, case studies and best practices from manufacturers working on the front lines. Each bimonthly issue focuses on a theme, such as M4.0 cultures, sustainability or factories of the future.
  • Master Class Series: These virtual events explore new technologies, address manufacturer pain points and help those in the industry leverage opportunities by connecting with forward-thinking technology experts. Sessions in the series include interactive webinars, deep dives and tech talks.
  • Plant tours: In-person and virtual plant tours provide the opportunity to see advanced manufacturing technologies in action at some of the best-known companies in the industry. Tours offer an up-close look at technologies and processes, plus Q&As with the experts.
  • Rethink: The Manufacturing Leadership Council Summit: The MLC’s premier event for manufacturing leaders offers a unique blend of high-level content, interactive discussions and networking with industry peers. This year’s event takes place June 27–29 in Marco Island, Florida.
  • Manufacturing Leadership Awards: Each year, these prestigious industry awards recognize operational and leadership excellence from world-class manufacturing organizations and individual leaders.

Get involved: Visit www.manufacturingleadershipcouncil.com to learn more or contact [email protected] to start the discussion on whether the MLC is right for you.  

Business Operations

“A Driver Rather Than a ‘Retirer’ of Employment”: Technology Supports Workers

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Get involved

Manufacturers largely agree that technology will help workers, not displace them, speakers said at the Manufacturing Leadership Council’s recent virtual event, “M2030 Visions of the Future: Reflections on New Orleans.”

New Orleans readout: The webinar, which featured a panel of technology experts, was a recap of highlights from the MLC’s December 2021 Manufacturing in 2030 project event in New Orleans, which hundreds of manufacturers attended.

What the future holds: The recent online discussion was primarily about future technological trends in manufacturing, and three major themes emerged: Completely “lights-out” manufacturing (i.e., totally automated) is not a likely near-term reality for manufacturing; upskilling and reskilling will be crucial in attaining syncopation between employees and robots; and most manufacturers have some ways to go to achieve digital maturity.

Lights out? Try lights dimmed: There is a misconception that robotics, artificial intelligence and machine learning will replace human employees on the shop floor. The reality is that they all do best together.

  • “I view it more as a ‘dimmer switch’ than ‘lights out,’ and the level to which you can dim depends on the kind of manufacturing you do,” said West Monroe Senior Manager of Consumer and Industrial Practice Alex Jay. Particularly when it comes to “complex materials, [manufacturers will] need a nuanced touch,” which will require more, not less, human interaction.
  • “There will be a dimmer switch, a natural limit to how far you would automate,” said Infor Senior Vice President of International Strategy Andrew Kinder. “In the next eight years, we will see more use of technology on the plant floor. Is this a concern for employment? I think the World Economic Forum put that to bed when they said … technology will create 12 million more jobs than it will ever destroy.”
  • EY Principal of Strategy and Transactions Rosco Newsom agreed. “[Manufacturers] don’t see ‘lights out’ happening in the near future.”

Upskilling and reskilling: The increased use of Manufacturing 4.0 technologies on the shop floor will only increase the need for skilled talent, the panelists agreed.

  • First, “there is reskilling and upskilling required even to make those ‘lights out’” changes, said NTT Data Senior Director of Manufacturing Industry Solutions Baskar Radhakrishnan.
  • Complex materials that need nuanced touch and geometric dimensioning and tolerancing “will need more human interaction,” not less, Jay said.

Maturity not yet reached: As was evidenced by questions from the webinar audience and comments from manufacturers during the New Orleans event, many manufacturers could use guidance when it comes to using more technology.

  • For smaller manufacturers wondering where to start implementing Manufacturing 4.0, look to “labor-intensive, repetitive tasks,” Radhakrishnan said. “That’s where you start.”

The last word: Robotics aren’t going to put anyone out of a job. As Kinder said, “Tech seems to be a driver rather than a ‘retirer’ of employment.”

Blogs

Disrupt the Disruption in Manufacturing Supply Chains

Track and trace can improve resiliency and response

The past two years will get plenty of blame for supply chain disruption, but disruption — from human and technology error to weather and other crises — has always been a challenge. Manufacturers are using dashboards to visualize performance measurements and gain deeper diagnostics for uses like preventative maintenance and process optimization. But while they are a critical starting point, supply chain dashboards are not enough. Today’s manufacturers need a way to move from data collection through the supply chain to decision support and actionable insights.

In his supply chain management research, MIT Professor Yossi Sheffi noted that those companies that thrive and survive amid supply chain disruption bring people together in control centers creating a “plan B” for when disruption occurs, and a centralized area of focus for data and insights. Track and trace solutions build on the control tower concept to bring manufacturers the insights needed to improve responsiveness and build supply chain resilience.

The goal is to evolve beyond what typical control towers offer, delivering the ability to autonomously alert or trigger workflows and provide decision support.  Tracking and tracing key components and products all through the supply chain provides the core data for eventual autonomous management and control from supplier to the factory and the factory to the customer. In larger factories there is a growing need to apply the same level of tracking and tracing.

Track and Trace in Manufacturing

In a nutshell, a proven track and trace approach will allow you to use the same infrastructure to track multiple sources: materials, products in production, assets, and people. Specifically, the track and trace solution the technology you’re looking for can:

Track and trace the order through the plant by mounting tags and dynamically associating the work order with the tags. This approach supports seamless tracking throughout production, even when the material moves into a different zone or is transferred to a different holding device or tag, or the source of data changes (RFID to GPS to BLE).

Manage events in the zone by monitoring how the movable assets go in and out of areas of production and shipping and sending alerts to managers as needed. For example, an alert is generated if an operator moves a specially calibrated tool from one zone to another, where it might disrupt the production process.

Make assets easy to configure and visualize. Typically, when managers and operators encounter a problem, they don’t want to get bogged down creating or waiting for code. They just want to fix it. A successful track and trace solution will operate via an intuitive administrative interface. For example, it may allow upload of JPG or PNG images of technical factory drawings to provide the image needed to designate zones (production line, workspace, machine) and associate appropriate tracker readers (RFID, BLE and QR).

Use cases for track and trace range from in-production and location or work-in-progress tracking to finished goods and in-transit tracking: The solution will produce alerts if your materials are in the wrong location, inadequate or haven’t reached assembly station. It will report the absence of qualified people at specific station, receipt, and placement of a shipment, and how much of your product is on hand and ready to ship, as well as on the journey from factory to warehouse.

A caveat to the track and trace solution proposition is that your people must be ready for it. As you put the solution together it is important to involve your people in the journey so that they are ready for change.

The value proposition for the control tower with track and trace technologies is the extensiveness of the solution. Going beyond just visualization of the activity in your supply chain, track and trace enables the complex analytics involving materials, people, and assets, that produce actionable insights. It brings autonomous capabilities to tracking, identifying deviations, and predicting where issues may occur — disrupting any disruption in your manufacturing supply chain.

Owen Keates is Industry Executive Asia-Pacific Manufacturing Practice for Hitachi Vantara.

Business Operations

Manufacturers Explore New Tech and Best Practices at MLC Master Class Series Events

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To help manufacturers navigate Manufacturing 4.0, the NAM’s Manufacturing Leadership Council launched the MLC Master Class Series. This series includes regular virtual events designed to explore new technologies, address pain points and showcase opportunities—all while connecting forward-thinking manufacturing leaders. Sessions in the series include interactive webinars, Technology Deep Dives and Tech Talks.

Webinars: With formats such as panel discussions, use cases and executive interviews, the Master Class webinars are especially beneficial to manufacturers who want to learn about the innovative technologies that have the potential to enhance their operations. These virtual sessions are a chance to hear directly from the digital manufacturing experts moving our industry forward. Content and discussions during these sessions provide insights on identifying, evaluating and implementing new technologies as well as providing strategies for leadership in the age of digital progress.

Deep dives: Deep dives are 60-minute interactive sessions that continue and expand the learning necessary to be successful with new technologies. They provide a more in-depth understanding of specific technologies, where they can be applied and how they can lead to new competitive advantages. Each deep dive also features short breakout sessions focused on either “How Do I Get Started?” or “How Do I Further Leverage?”

Tech talks: Tech talks are 30-minute candid conversations with subject-matter experts who provide insights into how specific technologies are designed to accelerate and drive the journey to Manufacturing 4.0. From purpose and adoption, to challenges with implementation and best practices on operations, MLC’s tech talks will enable you to stay abreast of new and evolving manufacturing technologies within the marketplace.

Master Class events take place throughout the year. Manufacturers at all stages of digital transformation are invited to participate in the entire series or choose individual events based on their needs and interests. To see upcoming classes and access recordings of past sessions, click here.

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