Let’s say you’re trying to optimize your morning commute. Each day, you leave your house in the morning and walk to the train station, stopping by one of a few nearby coffee shops on the way to get your requisite dose of caffeine. This system works okay as it is, but because the coffee shops are sometimes crowded and the trains are sometimes late there is an overly-high level of variability in the length of time it takes to get from your front door to your office—meaning that you sometimes arrive earlier or later than you intended. To combat this variability, you download an app that gives you real-time notifications about train arrival times (so that you can adjust accordingly if a particular train is running late) and another app that approximates how crowded any given coffee shop is based on online check-ins. In this way, you can avoid the most crowded coffee shops and try to work around late trains, leading to a more stable commute time.
In February of 2018, popular fast food brand KFC was in the midst of making some big changes to its UK supply chain. They were in the process of switching from Bidvest Logistics to DHL as their primary distributor, while simultaneously streamlining their warehouse system from six facilities serving the country to only one. Anyone who keeps current with supply chain management likely knows what happened next: the restaurant was forced to temporarily close more than 700 of its 900 locations in Great Britain. The reason? Chicken supplies were not reaching the stores.
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.
In the autumn of 1999, Hershey’s was preparing for what they hoped would be a typical Halloween season. By the arrival of the holiday, it would prove to be anything but typical. In fact, the American candy giant would see an almost 10% drop in its stock price over the course of just one day. The reason? A failure to deliver more than $100 million dollars worth of Hershey’s Kisses and Jolly Ranchers candies to stores in time for Halloween. It turns out that Hershey’s had adopted a new order fulfillment system just weeks before their annual Halloween rush, and their IT hadn’t yet been successfully integrated into their value stream. The company would ultimately recover, but the incident still stands as one of history’s biggest supply chain snafus, proving that all supply chains are susceptible to risk and disruptions. Here is a ranking of some of the biggest supply chain disruptions:
It simply cannot be stated enough or more clearly: Success for manufacturing companies stems largely from the ability to control, mitigate, and reduce risk. While success can mean a number of things to any number of companies, the capacity to reduce the amount of uncertainty in operating a global supply stream is perhaps one of the most critical pain points across today’s manufacturing landscape. No matter how hard planners and managers work to contain risk, the sheer nature of a variant-rich supply network means risk in a variety of forms can plague companies across the entire value chain, everything from planning and procurement to production and transport logistics.
All this being said, there are a number of strategies, solutions, and principles manufacturing companies can deploy and integrate to reduce the level of risk in a cross-organizational manner that also helps to increase productivity and enhance efficiencies. One of the more integral tools in a manufacturing company’s toolchest is transport logistics. Or, put simply: the coordination of efforts, resources, and personnel to successfully moving products from the production floor to the customer’s front door. It sounds quite basic, yet in an era of varied partner networks and variant-rich production programs, it can actually be a significant challenge for manufacturing companies across an array of industries. But for companies that deploy a successful transport logistics strategy, there are a great many benefits to be experienced beyond simply delivering products during pre-defined delivery windows.
If there’s one fear shared by nearly all manufacturing supply chain planners and managers, it’s disruption. Small or large-scale breakdowns in the movement and flow of products or component parts from Point A to Point B. Every year, manufacturing companies dedicate thousands of man hours and resources to avoiding supply chain disruptions in an effort to maintain productivity, reliability, and on-time delivery for customers. But even with the amount of time and effort manufacturers put into combating the potential for disruptions, the nature of a global supply chain is that disruptions will happen at some point along a company’s value chain, and what will determine a company’s resiliency is how said company responds and adjusts to these disruptions.
No matter the size or impact of the disruption, the ability to react and correct disruptions at the production, inventory, or transportation level depends largely on understanding the kinds of disruptions and how at-risk a manufacturing company is to experiencing each type. Given the interconnected nature of today’s global supply chain and expansive network of production facilities, warehouses, and transportation hubs, it would appear there is more opportunity than ever before for manufacturing companies to encounter disruptions or breakdowns at more touch points across their supply network.
Planning. Replanning. Forecasting. What-if scenarios. Data gathering and analysis.
These are the tools, strategies, and methods modern manufacturing companies have at their disposal to ensure production facilities optimize their inventory, allocate jobs efficiently, pull component parts from containers, and move finished products from the production floor to the customer’s door on-time and within delivery windows. But while these safeguards in demand planning give manufacturing companies some level of insight and maneuverability in responding to alterations in rules or restraints in production programs, many of the most significant events or occurrences in today’s global manufacturing supply chain happen in the moment and without much warning or advance notice.