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Even when your manufacturing supply chain is humming along, a little voice tells you that smooth operations aren’t enough these days. Technology and data have made it possible to perform on a much higher plane–more knowledgeably, faster and less expensively. And, deep down, you’re worried that your competitors are already working on that.
A lot of disruption has happened in the years since your former state-of-the-art supply chain configuration was put into place. Getting buy-in on massive changes most certainly seems a long shot. Still, it’s possible to make meaningful supply chain improvements without wholesale change. Here are some thought-starters for taking your supply chain to the next level.
Data isn’t the answer for everything, but the dynamic duo of advancing technologies and big data can indeed be a great equalizer. “Cloud-based technologies have leveled the playing field for companies regardless of size or location,” says Cathy Morrow Roberson, Founder and Head Analyst of Logistics Trends and Insights, LLC. One of the benefits of cloud-based analytics software, according to Roberson, is how quickly companies can integrate them.
Alan Amling, Vice President, Corporate Strategy, UPS, notes that “data analytics not only helps us make decisions faster, because we get information faster – it also helps us use predictive analytics to understand when things are going to happen. As an example, if I know that a machine is starting to get hot and it's going to break down, I can take a corrective action before that actually happens and it shuts down my production line.”
Amling suggests getting experience by starting small. “Right now, there are a lot of sophisticated applications that help monitor machinery, but it's at an aggregate level. You can also focus on specific parts within a machine. If it's a fuel filter, for example, I can affordably put a sensor on it and track that information as well.”
No matter how successful Lean-Sigma methodologies have been, new customer and market demands mean that companies still need more rapid supply chain optimization. And, so, operators are seeking ways to work smarter, by connecting more of the supply chain and more actively managing the data.
But that kind of ramp-up takes time, as shown in UPS’s recently published white paper, The Rise of Smart Operations. Fifty-four percent of the manufacturing professionals surveyed said their company’s level of “smart operations” is either at par with their peers (27%) or lagging them (27%). Only 6% rated their capabilities as best in class.
The UPS study suggests that companies should combine their Lean Sigma disciplines with modern technologies, in order to satisfy ever-demanding customers. Another suggestion is to leverage trusted suppliers and logistics providers who can bring scale, process expertise, and advanced technologies to the table.
Roberson adds that a supply chain that’s fully visible across channels, with all partners on the same page, will help a business be more agile. “Instead of reacting, it is allowing you to be proactive and utilizing data in the most visible way, while maintaining customer service levels.”
Amling says “the starting point for any company is to look at the relationships that they have right now in their ecosystem, with buyers and suppliers. Look at where they can be improved with better communication, better collaboration, better information. Then start looking at how these new technologies might be able to assist with that, because what we're talking about is a more streamlined supply chain between those suppliers all the way through to the buyer.”
Connectedness, data and sophisticated analysis are important, of course. Equally important are metrics that provide the most accurate picture of on what’s going on. In short, newfound knowledge is only helpful if the story is told in context of the entire supply chain. For instance, what’s the real reason behind slow inventory turns? Do the numbers account for seasonality? Do they factor in delays in inbound shipments? What about competitive actions?
Data insights are important, but Roberson believes they must be combined with an understanding of the specific environment, competition, and economy a company is operating in to achieve true perspective. “Supply chains need to monitor on a regular basis for external and internal performance,” Roberson says. “If you’re operating in an emerging market, you’ll need to monitor the identified potential risks in the market—political, economic, infrastructure.”
While executives understand why the company needs an efficient supply chain, they are less likely to see the perilous gap between your current configuration and the one needed to remain competitive–or, perhaps, to remain in business–into the future.
“It’s vital to share supply chain issues in terms that management deals in every day, like competition, costs and customer satisfaction,” says Charlie Covert, Vice President, UPS Customer Solutions. “Instead of explaining why something is going wrong, bring forward proactive plans that demonstrate why change is needed urgently, and the bottom-line implications of not making the changes.”
Covert adds that the need to change can’t entirely be quantified in an ROI, as positioning for competiveness in a disruptive marketplace is often the paramount concern.
“Digitization of supply chains is happening, for some faster than others,” Covert says. “Those in supply chain operations and management owe it to their companies to speak up about what it will take to stay competitive.”
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