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.
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.
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.
What happens when you’ve been doing the same job for many years? Even if you began your work with little or no expertise in your field—let’s say supply chain management—no doubt by the time you’ve spent a few years performing the same or a similar set of tasks you gain new skills and improve the ones that you already have. Because you understand the supply chain better than you did when you were more junior, you’re better able to predict how it will react to different disruptions, and you can more quickly and more easily make snap decisions to preserve your supply chain’s agility and maintain optimal performance and on-time deliveries. In short, you learn, and by learning you make relevant production and shipping processes run that much more smoothly, more efficiently, and more profitably.
At a recent event, renowned consulting firm Deloitte revealed the results of a survey showing that only 14% of C-level executives were highly confident in their readiness to utilize Industry 4.0 principles to their maximum advantage. While other surveys have shown similar anxieties to exist throughout many different spheres of global manufacturing, we at the flexis blog believe that the new changes surrounding so-called smart factories, though significant, become less daunting as one learns more about them. After all, this new technology is explicitly meant to make life easier for businesses. In the spirit of demystifying the new global technological landscape, here are a few things you might not know about Industry 4.0:
Imagine for a moment that you’re on a flight from London to New York. You probably take It for granted that someone has charted an appropriate route at an appropriate altitude based on weather and air traffic patterns, and that departure, arrival, and flight time have all been carefully calculated based on past flights and current conditions. At the same time, no matter how much planning has gone into a flight, you probably also take it for granted that there is a pilot in the cockpit, measuring real-time information with her instruments and communicating with air traffic control to make necessary adjustments and course corrections as new scenarios emerge.
Plenty has been written on the right way to choose the supply chain management technology that best fits your company’s needs, much of it focusing on broad organizational points like defining specific needs and long term business goals. Coming into the IT procurement process with intra-operational buy-in and a well-founded idea of how new technology should integrate into your workflows and key performance indicators (KPIs) is, of course, crucial to finding the right solution, but that’s not the end of the discussion. Once you’ve assessed your specific needs and your short- and long-term goals, how do you evaluate the technology itself?
In a recent piece offering predictions for the state of supply chain management (SCM) in 2018, Gartner asserted that SCM was going to become increasingly technology-centric, with market forces putting tremendous pressure on manufacturers to adopt new and emerging technologies. When companies search for areas where their IT might be modernized, many may look to transport as a business process that can be further optimized through the adoption of modern logistics software. Once a new solution is adopted, however, it’s crucial that companies understand their technology well enough to get the most out of it, so that they can improve workflows and add value. To that end, here is a quick guide to putting transport logistics to work within your organization.
Imagine you’re playing musical chairs. The music starts and stops and your instinct is to rush to the nearest seat before your competitors beat to you to it—but instead of a circle or a row of chairs, the chairs are scattered and hidden around the building at random. No one knows how many chairs there are, and no one is sure how to reset them before the next round begins. Surely this would be a confusing way to play the game, just as it would be a confusing way to run a business. And yet, many companies do just that, keeping real resource allocation hidden within planning siloes and mission critical data obscured by layers of disconnected IT infrastructure. The result is that long term cross-operational planning becomes impossible, with planners stuck in a reactive loop of constantly responding to roadblocks without the ability to be proactive. Integrated planning has long been touted as cost saving solution for complex businesses, one that specifically addresses the break-fix mentality that mires companies in minute-to-minute logistical snafus, but what is it, exactly, and how does it work?