It’s a popularly quoted statistic that supply chain inefficiencies can waste as much as 25% of operating costs, which only goes to show how much an impact you can have on your bottom line by working to reduce waste. This is, of course, easier said than done: supply chain waste comes in myriad forms and is notoriously difficult to root out. Why? Because every decision you make across the entire value stream has the potential to introduce unforeseen costs down the road.
You’ve all heard the saying, “the left hand doesn’t know what the right hand is doing.” This encapsulates many organizations' approach to sales and operations planning, or S&OP. Too often, companies fail to include all the relevant stakeholders and departments in their S&OP process, leading to major sections of the supply chain being left out. For a process that impacts every aspect of a manufacturing concern, this seems not only short-sighted but also like a potentially catastrophic oversight. On the other hand (no pun intended), when a company’s S&OP process is run by an integrated team that includes representatives from the C-suite, sales & marketing, production, inventory, all the way to logistics—the outcomes can improve drastically.
Sustainability is more than a buzzword. In a recent study reported in Forbes, a whopping 88% of those polled say they are more likely to support brands that they view as helping them lead more ethical and sustainable lives. What impact does this have on your supply chain? Well, the public is who ultimately buys your product, and they’ve spoken. They want companies to care as much as they do about leaving a better planet for the generations to come. As members of the global community, we need to step up and do what we can to support the goals laid out by nations the world over, to clean up sourcing, pollution, workforce conditions, and more. Just how to go about cleaning up an end-to-end supply chain is a complicated question, so here are some guidelines we hope will help set you on the right path.
Wouldn’t it be nice if supply chains could run themselves? Well, between automated scheduling, production machinery, and even logistics planning, you can achieve a fair approximation using the right tools. Even so, there are plenty of places along the value chain where things can go sideways. The headaches may be less frequent, but they are no less real. No matter how seemingly care-free your supply chain, there are aspects you’ll want to closely monitor to ensure that smooth running continues. Crucial to each of these is the visibility into your processes that comes with Industry 4.0 technology and a solid supply chain management solution.
As of a 2017 survey, just 6% of companies felt they had reached supply chain visibility. Elsewhere, nearly a fifth of companies listed visibility as their number one operational challenge (it ranks the third highest priority overall), but more than 60% admitted that they didn’t use any technology for monitoring their supply chains. By the same token, more than 90% of businesses have listed digital transformation as a huge driving force in the evolution of the modern supply chain, but fewer than half of those businesses have an actual plan in place for managing that evolution.
Whether you're creating a more synergistic relationship with a supplier of raw materials as an auto manufacturer or developing special relationships with retailers to improve the performance of your packaged consumer goods, collaborative supply chain partnerships often feel like the holy grails of the modern value stream. This is with good reason: a strong partnership in which information, risk, and benefits are shared equitably can add real value on both sides of the relationship in the form of reduced costs, smarter forecasting, or any number of other benefits. It's easy to see why people are willing to devote time and mental energy to it.
Remember that one part of The Wizard of Oz? The one where the wiz comes out from behind the curtains? How was that one little guy able to control everything from his perch back there, without anyone being any the wiser? That I can’t tell you, but I can tell you we’re getting closer to a 21st-century version with the continuing maturation of the Internet of Things (IoT). The emerging technology that powers the 4th industrial revolution, Industry 4.0, is giving us a glimpse of what it would have been like sitting back there, with a view into all the goings-on of our realm.
Let’s say you’re a homebrewer, and you’ve just finished drafting your recipe for a dry-hopped pale ale that you plan to brew in the coming weeks. If you’re like most people, you go to a homebrew supply site and order your hops, malt, and yeast all at once, plus some clean bottles for your brew to wind up in. This strategy works perfectly well, but as you go, you find that it leaves something to be desired. While your beer is fermenting, you have a bunch of bottles taking up unnecessary space on your floor; and by the time you’re ready to dry-hop (which involves adding more hops during the fermentation period), the ones you bought from the homebrew site are a little stale.
Industry 4.0 is making waves in the manufacturing and supply chain sectors. But what about logistics? How are these same technological advances helping move those products faster and more efficiently? The goal remains unchanged: to use connected workflows and technologies to give people the tools and freedom they need to adapt and pivot with the changing environment and to seek creative solutions to increasingly complex problems. Logistics 4.0 is here, and one of the primary drivers of this revolution is the Internet of Things (IoT). IoT refers to devices of all sorts, be they tablet computers, sensors monitoring machinery or vehicles, or even wearables that track biometrics to ensure the health and well-being of the workforce, that are all connected to the network.
Imagine for a second that your factory is essentially a black box. Materials go in, and finished products come out, but what happens in between is fundamentally mysterious. What challenges would this present from an advanced planning and scheduling perspective? Sure, in this environment you can get a small sense of the correlation between raw material volumes and finished product volumes—you might even be able to gain a sense of which raw materials loosely correspond to which products. But surely there’s a lot of information you’d really like to have: how do different products differ in resource usage? What are the most common causes of delays and disruptions? How can you more effectively align your capacity with emerging demand levels?