According to Oden’s 2021 State of Manufacturing report, the supply chain is top-of-mind for most manufacturing executives. One of the primary reasons for this are the major disruptions supply chains have undergone recently, with a significant impact on manufacturing operations.
Changing supply chain and trending characteristics
Digitization of the supply chain has enabled monitoring operations beyond the shop floor. It has empowered purchasing managers and warehouse managers to buy, ship, and store inventory exactly on time and stay lean to reduce overall cost.
Additionally, the impact of the Covid-19 pandemic has made manufacturers rethink the concept of offshoring. It has forced them to become more resilient and transparent, and their supply chain to adopt some noteworthy characteristics:
- lean manufacturing approach
- robust decision processes
- agile and circular growth
- responsive to demands
- preparedness for the future.
These characteristics are driving major disruptions across the supply chain that would be difficult to respond to with manual processes. At this juncture, a centralized database that coordinates the supply chain with other departments can give actionable insights. For instance, platforms such as Enterprise Asset Management (EAM) software help purchasing and shop managers to place orders based on data-driven insights and keep disruption on the shop floor at bay. However, responding to these changes in the supply chain requires fundamental shifts in the manufacturing approach.
Major changes that new supply chain trends will enforce
1. Reactive changes to respond to an adjusting supply chain
In Oden’s report, about 67% of manufacturers responded that they faced challenges to certify new suppliers, and approximately 57% said they could not bring new suppliers onboard easily. While manufacturers deal with this situation, on the other end of the spectrum, there is fluctuating demand.
Many manufacturers have made regional changes to normalize the effects of these disruptions. Almost 45% are bringing their manufacturing units back to the US. This will allow the manufacturers to keep production houses closer and minimize the risks in the supply chain.
As per McKinsey, this could also result in lower costs and increased productivity, and trade worth $4.6 trillion may be rebalanced. We are witnessing the supply chain being driven by non-economic factors and by control over exports, which lowers any major, sudden changes in manufacturing.
2. Investments in micro-factories for future-proofing
By bringing back production to the U.S., manufacturers are adopting reshoring and establishing micro-factories. This requires heavy investments but empowers manufacturers to stay closer to their customers. Manufacturers can deploy appropriate skills to scale up smaller manufacturing operations to run at full capacity.
Such a practice is also called flexible manufacturing. It offers high value but low volume. As the approach is complex and expensive, it demands a significant budget allocation well in advance. Back in October of 2020, the British EV developer Arrival announced its first micro-factory in the U.S. with an investment of $46 million.
3. Mobilization and planning
With a fast-evolving supply chain, there are increasing financial and operational challenges too. Manufacturers must navigate these challenges by mitigating the risks of changing consumer buying trends, i.e. buying during the Covid-19 pandemic. One solution is leveraging Industrial Internet of Things (IIoT) and data-driven insights.
Increased data connectivity and real-time visibility can empower leaders to channelize their resources and build robust risk responses in the long run. Also, data collected from various sensors enables manufacturers to predict risks and mitigate them.
Furthermore, collating the same data on a central, visual, and interactive dashboard, backed by artificial intelligence and machine learning, gives insights into assets on the shop floor. Shop managers are empowered to tailor their processes and machine utilization.
4. Acquire talent and go digital
A digitized supply chain will only meet its full potential when the rest of the manufacturing functions are digitized. Design engineers and sales teams have leveraged digitization and automation using CPQ (Configure, Price, and Quote) solutions and accelerated time to market.
Likewise, when shop floor managers can use analytics-backed job allocation on machines, inventory management, and purchase and planning through a common digital platform, this brings real-time visibility across the organization to build transparency and responsiveness.
Conclusion
A 360-degree analysis of the current changes in the supply chain appears seemingly promising for establishing disruption-proof manufacturing. But at the same time, it is interesting to note that it requires several changes in standard manufacturing approaches and the supporting ecosystem.
Identifying and eliminating disruptions will not only change the approach to manufacturing methods but also increase overall efficiencies. Alongside digitization and advanced analytics, several other technologies boost overall efficiencies. Cloud for the supply chain is an excellent platform to enable accessing your central enterprise database from anywhere, on any device, at any time. Also, it is cost-effective.
As supply chains evolve to become agile and omni-channel, manufacturers are now able to leverage digitization to an extended platform. It will drive informed decision-making and ensure disruption-free manufacturing.
For more than 30 years, Eric Whitley has been a leader in the manufacturing space. In addition to the many publications and articles Eric has written on various manufacturing topics, you may know him from his efforts leading the Total Productive Maintenance effort at Autoliv ASP or from his involvement in the Management Certification programs at The Ohio State University, where he served as an adjunct faculty member. He currently serves as the director of smart manufacturing for L2L.
