It’s long been an open question in the world of business: which is a bigger hurdle, planning or execution? As the global supply chain has become more sophisticated, however, we’ve gotten a wealth of evidence that for the majority of companies, execution is the more frequent stumbling block. In an informal poll a few years ago, Dick Ruhe at Blanchard found that 76% of the more than 300 respondents said that the most common experience at their company was "good planning and poor execution" (compared to just 4% who said "good planning and good execution", 8% who said "bad planning and bad execution", and 13% who said "bad planning and good execution"). Though these statistics don’t speak to supply chain management in particular, they do give an accurate sense of how difficult it can be to put even a well-conceived business or production plan into action.
Imagine for a moment that you’re planning a camping trip with your friends. There are several of you, and the trip will last a few days, meaning that you’re going to have to take two cars and considerable volume of supplies. How do you decide how each car will be filled? Let’s say your friend already has tent poles and fire starting material, so it might fall to you to procure and transport sleeping bags and food supplies. If one car is more fuel efficient than the other, does that change your plans? How will you go about choosing the right route to your destination in order to find the right balance between toll roads and potentially less direct pathways?
In industrial, shipping, and freight forwarding sectors, equipment breakdowns are simply a fact of life. That said, unplanned machine outages or vehicle breakdowns can have wide-ranging impacts throughout a given company’s entire value stream, negatively impacting production schedules, transport routing, and capacity management. IndustryWeek estimates that across the world of manufacturing, as much as $55 billion is lost annually to unplanned maintenance time, with some businesses losing up to $22 thousand per minute of machine downtime—meaning that any solution that can decrease the number of unplanned outages represents a significant value added proposition with the ability to decrease overall supply chain volatility.
Industry 4.0 is already radically changing the global manufacturing landscape; so much so that Deloitte estimated that as many as half of the S&P 500 firms would be replaced by 2027 due to digital disruptions. Prognostications like this lend a sense of urgency to discussions of the adoption of Industry 4.0 principals like interoperability and cyber-physical integration. What many forget, however, is that it’s not technology alone that determines a company’s long-term staying power. Rather, it’s the customers who ultimately determine the success or failure of a given business.
Imagine you’re at the grocery buying cooking supplies for the coming week. You see that tomatoes are on sale if you buy them in quantities of ten. Hoping to make use of the savings, you do some quick calculations in your head: the ripe tomatoes will remain fresh for about a week; you cook roughly one meal a day; your favorite dish requires two tomatoes. You determine that you could easily utilize ten tomatoes before they go bad, but you would have to commit to making the same dish five nights out of seven, and you might not be in the mood for it later in the week.
In the past few years, supply chain digitization has evolved from a hypothetical into a reality for many manufacturing businesses. The digital supply chain has become in many ways a key component of the rise of Industry 4.0, pushing businesses to adopt increasingly digitized planning and reporting solutions cross-operationally in order to stay competitive. Going forward, digitization’s importance is likely to continue increasing as companies strive to build more integrated and transparent operations. Here are a few fascinating facts about digitization in the supply chain.
No matter how sophisticated your methods, or how intimate your knowledge of the field, no demand or sales forecast will ever be 100% accurate. Just as supply chain disruptions are simply a fact of life in the world of manufacturing, deviation from a your expected outcomes are unavoidable. Given this state of affairs, you may be wondering if it’s worth expending resources on improving forecast quality. This feeling is understandable, but while there will always be a gap between expectations and reality, the rise of Industry 4.0 has improved our ability to predict future outcomes. With modern IT solutions and business processes, it’s possible to escape the past-oriented planning models of yesteryear (which fail to account for future developments) and drive towards a more future-oriented approach.
With a name like “intelligent planning,” it’s hard to imagine that many companies would express a strong preference to do the opposite. And yet, despite intelligent planning’s status as a potential value-added proposition with the ability to smooth out production and transport workflows, many businesses have been slow to implement smarter scheduling and operational planning processes. The reason for this is simple: many modern manufacturers are stuck in the past when it comes to data visibility and planning workflows. Production plans created with pen and ink or Excel spreadsheets can never provide the level of agility, flexibility, or transparency that a lean supply chain requires, but many companies’ planning workflows are unable to evolve do to widespread planning silos and shadow IT.
Additive manufacturing (AM), otherwise referred to as 3D printing, has long been one of those technologies that seems to be just beyond our grasp. By many accounts, this will soon cease to be the case. Gartner estimates that by 2021, 20% of the world’s top consumer goods manufacturers will use 3D printing to produce custom products. Some businesses are already establishing internal start-ups with the intention of refining 3D printing techniques and best practices, and as the process gains speed and production quality it will soon become a viable method for mass production and a disruptive force across the manufacturing sector.
Imagine for a moment that you are the supply chain planner for a company that manufactures parts for automotive production with major clients overseas in Asia. To save money on shipping costs, you accept the long lead times associated with ocean shipping over air freight and send a large shipment of parts by boat. Once the parts have already been shipped, your demand planners revise their demand estimates and it becomes necessary to ship a large number of parts by air at great expense in order to meet the new demand estimate. By not assessing demand accurately before shipping, your company has left significant value on the table and incurred significant additional shipping costs.