Considerable publicity has surrounded manufacturing as a “savior,” with the potential of bringing economies of entire countries back from the brink of the last financial crisis. Output and asset efficiency have increased while waste and response times have been reduced.
But what about the supply chain? Clearly its role is intertwined within the improved productivity and product proliferation now virtually expected by consumers in the automotive, consumer goods and life sciences industries. Yet most of the public discussion has focused on the “end producer” or the manufacturer that is delivering the final goods to each of their respective marketplaces. Look for this to change in 2014.
To start, the advances now being made with manufacturing intelligence and the real-time visibility now possible across the global plant floor will finally start to drive new investment in the supply chain. Look to hear about new supplier agreements whereby IT investments begin to actually deliver mutual visibility between a manufacturer and their extended supplier network. The intense drive to reduce waste and respond faster and faster to market changes is now spilling into the supply chain. Those initial suppliers that agree to start sharing inventory, output and performance specs will be rewarded with greater relations with their customers, the OEMs, resulting in more favorable working relationships and greater opportunities. This shift will not go unnoticed. Expect to see a few “seeds” planted in 2014, which will result in new levels of integration and collaboration between manufacturers and their suppliers – to a level we haven’t seen before.
As part of this general direction, here are five predictions I see as probable, all related to increasing the visibility and collaboration across the supply chain:
The pursuit of growth vs. the cutting of costs is a philosophy firmly in the minds of manufacturers, and has been for the past couple of years. Look to see this mentality drive more decisions by suppliers, and specifically, how can this growth be accomplished without adding staff to the management ranks? The labor shortage of new shop floor workers has also impacted suppliers, which must also focus on the challenge of finding enough skilled workers to grow their business. Look for greater collaboration, sharing of planning and scheduling tasks so as to operate with greater efficiency and avoiding the need for additional personnel. This is a big issue, and one that the industry leaders are now focusing on addressing with innovative new management techniques as well as the investment in IT systems to enable greater management efficiency across locations.
The pundits have forecast for many years that manufacturers will focus more on closing the loop between PLM and MES – connecting design to execution to operate with greater efficiency and to accelerate innovation. I believe this trend will come much closer to becoming a reality for more manufacturers in 2014. And, with this focus on creating closed loops between design and execution, the role of the supply chain in this process will only be increased. As the expectations of time-to-global launch timeframes continue to get shorter, the supply chain will – like it or not – become a more integrated part of this process, driving greater pressure for the sharing of information, including that of design parameters and ramp up schedules.
Manufacturers have gotten serious about embedding analytics measurement and feedback mechanisms directly within the actual business processes as they create. At the same time, this capability must adapt as processes are modified or improved. This level of scrutiny will be extended to the suppliers, through a growing expectation by the OEMs to better understand how to accelerate their supplier’s performance, throughput and output. The increasing integration and collaboration between suppliers and their end users – the manufacturers – will only continue to drive greater focus and scrutiny on metrics, analytics and other performance issues. This focus will drive new levels of investment in analytics products out into the supply chain.
By now, I am sure you are quite tired of all the discussion on Big Data, the Cloud, Mobility and Social / Collaboration, and how IT systems are redefining the impact that these trends are now having on our businesses. Well, guess what … everyone will still keep talking about these items in 2014. So, get over it. It isn't a passing fad, nor is it likely to go away soon. The bottom line is that the greater focus on improving collaboration between manufacturers and their supply chain will necessitate use of the cloud as a data repository to safely ensure the right data is available to the right partners, at the right time. Ditto to the discussion on Big Data – the more, the better, if it can lead to shaving waste out of response time to change, and can help accelerate a global new product launch.
Lastly, expect to see continued product proliferation and complexity, creating ever-increasing challenges with launching new products effectively, quickly and "right first time." The reason why this has become such a top-of-mind issue is simply because it is so difficult. Once the “low hanging fruit” has been picked, it is time to get out the ladder. Those organizations that can master this important capability stand to reap significant rewards, market share and profits. And, the supply chain is inextricably intertwined within this equation. New best practices will start to emerge in 2014, which will then be eagerly replicated to drive competitive differentiation.
Well, there you have it. From my perspective, I work with both manufacturers and suppliers, so I have visibility to both sides of the equation. I look back at the transformation that has occurred in manufacturing as the “silos” of plant IT systems have broken down and been replaced by global IT solutions; the same sort of transformation is coming for the supply chain. The continued need for greater visibility and performance will drive this supply chain transformation, with similar outcomes whereby the industry leaders get it first, reap the rewards, followed by a big rush by the others eager to catch up. Where do you plan to be as part of the pack?
Source: Dassault Systèmes
Keywords: supply chain management, supply chain solutions, SCM, supply chain IT, visibility, cloud, PLM, analytics, Big Data, Tom Comstock, Vice President, DELMIA Strategy & User Experience