Imagine for a moment that you’re planning to do some small renovations to expand your house. They’re straightforward enough that you can do all of the work yourself, but since you have a day job, you can only do the work at night. What’s the first thing you buy? If you answered floodlights, flashlights, or any other light-emitting piece of equipment, then you have the right mentality for success in the modern supply chain. After all, doing work on a house that you can’t see can be dangerous and inefficient. In the same way, trying to grow your business in spite of low visibility can prove not just difficult, but risky. To prove it, here are five way that end-to-end (E2E) supply chain visibility plays an important role in building a smarter, more efficient business.
In order to remain competitive in the world of modern manufacturing, production planners are constantly searching for new ways to derive more value from their operations. This impulse takes many forms, but one of the most common is striving to improve operational capacities, usually by either reducing makespan or improving machine utilization. Though the obvious benefits of increasing your throughput may seem tantalizing, the process of actually doing so is not as simple as ratcheting up production speed or buying new machines. Rather, it is a complex process that requires a high degree of visibility into your value stream. To help you tackle these complexities, here are 5 key strategies for improving operational capacities.
There’s no denying it: the pace of the global supply chain is getting quicker every day. Broad increases in connectivity have led to equally broad increases in customer expectations, meaning that when things inevitably diverge from expectations, it’s imperative that supply chain managers react swiftly and decisively. This growing need for lightning fast response times comes with increased pressure to build a value stream that is visible and connected enough to provide planners with the information that they need about existing operational plans and potential plan b’s—including inventory levels, transport routing information, and delivery requirements.
Imagine for a second that you’re an NFL quarterback: you have a plan to throw a forward pass to one of your wide receivers, to whom you’ve dictated a specific pass route. Unfortunately, you’ve neglected to inform any of your other teammates of what you plan to do. Even worse, you haven’t bothered to ask any of your fellow players if they have plans of their own and, if so, how they might conflict with the plan you’ve devised. As a result, when something goes awry, none of your teammates are able to make adjustments on the fly, and your plan has no way of overcoming whatever hurdles crop up.
Imagine you’re a trader on the floor of the New York Stock Exchange. Every morning, you check the prices of the stocks that you’re interested in, and you act on those numbers, not checking them again until the end of the day. Your competition, on the other hand, is using real-time information to inform their trading decisions. Which technique seems more likely to yield a profitable trading strategy? Your knee-jerk reaction is probably that you’re going to lose money virtually every day, because your competition has a more accurate picture of the real financial landscape while you’re using information that’s obsolete virtually as soon as you set foot on the trading floor.
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.
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.
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.
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: