Digital Supply Chain in Manufacturing

 A 2016 study of international industry executives indicates that 48% still handle transactions with their supply chain partners using telephone, fax and email. 70% are attempting to change this to gain more visibility and better real-time communications and approximately 90% feel that they need new tools that provide better data and analytics as well as the ability to do simulations.

Our March blog on the Internet of Things summarized the advantages of a fully integrated manufacturing environment: “IoT transforms the manufacturing process from a complex of isolated silos into a seamless production environment.” Furthermore, integrated manufacturing must involve and improve upon supply chain management.

Supply Chain Types

Supply chains come in several different types. An organization may be vertically integrated where one part of the organization supplies components to another department. A supply chain could involve outside companies that may number from just a few to hundreds. Occasionally, an organization may determine that subcontracting part of the manufacturing process makes more sense than bringing specialized equipment in-house. That subcontractor then becomes part of the supply chain. In all of these cases, without transparency, planners will lose oversight of a crucial part of the manufacturing process.

Proactive Planning with APS

ERP systems can assist in tracking supply chain transactions, reactively. But to provide visibility to an entire organization regarding supply chain deliveries, orders, lead times, etc., an Advanced Planning and Scheduling (APS) system needs to assist in providing proactive control of the process. Planners require forward visibility to adequately respond to changes in the environment. Modifying a schedule is a daily occurrence when faced with real-time situations. A robust tool that empowers a planner to anticipate needed changes is invaluable. For example, a change-order could arrive that demands additional raw materials quickly to keep the plant running on schedule. A supplier could become hampered in making a delivery of needed parts by a container caught in customs bureaucracy. A hurricane, flood, winter storm, or earthquake might mean a scramble to find alternate suppliers. These realistic scenarios can all hinder efficient supply chain performance.

When supply chain entities share information with the end manufacturer seamlessly, everyone can stay informed and make wise decisions. If, for example, a supplier is known to need longer lead times, planners can, proactively, manage the orders to that supplier by building in buffers such as earlier ordering. If a supplier has visibility that a production schedule requires parts at a particular time, they are in a stronger position to make that happen.

Digitally connecting all parts of the process, including the supply chain, just makes sense. It can benefit the supplier, too. Some organizations require their suppliers to increase inventory of crucial parts which, in turn, requires storage and waste costs. With visibility into the manufacturer's planning, that supplier can better manage their own production and run leaner, balancing shortages and oversupply.

The Future is Here

A world in which smart, automated manufacturing provides planners full visibility and tools to run alternate supplier scenarios easily is here and is becoming more robust. APS systems offer this modeling tool and only require accurate data, timely input, and cooperation between all members of the team. The positive impact on manufacturing is striking when all players in the process work in harmony.