The next revolution in supply chain management is upon us. A dramatically empowered customer, a rapidly changing workforce and an unprecedented amount of technological innovation have ushered in an era of tremendous change for both manufacturing and wholesale distribution companies. Manufacturers and distributors that recognize future trends at an early stage, and implement intelligent strategies to capitalize on them, will realize a significant advantage over enterprises that stick to their old ways of doing business.
Advancements in digitization have redefined the procurement and shopping experience, fundamentally altering the relationship between a business, its customers and consumers. Given this confluence of changes in customer power, business paradigms and supply chain technologies, manufacturing planning is poised to undergo a radical transformation. Foundational processes such as order promising, factory planning and scheduling will have to be reimagined.
Digital supply chains are becoming a reality across almost every industry vertical. According to the 2016 SCDigest Supply Chain Digitization Benchmark Survey, 80 percent of companies are aggressively pursuing strategies and/or technologies for the digitization of the business; of those, 43 percent consider it a major initiative. Those that are not prepared to harness these technological advancements are likely to be left behind — and eventually go out of business.
Expect the following four trends to shape the supply chain over the next decade. Companies committed to adapting their supply chains to support these trends are likely to seize competitive advantage in the market, and emerge as winners.
1. Supply chains will evolve and operate as digitally connected grids.
New technology will enable dramatic changes to the former buy-make-move-store-deliver objective of supply chains. Over the coming decade, linear supply chains will be replaced by sophisticated, cross-enterprise networks or grids surrounding the customer — with a laser focus on serving each customer segment profitably. Massive amounts of pertinent information will be available across the entire supply chain grid much more readily, with little to no latency. The supply network will be dynamic and self-learning in nature, bringing together multiple participants in the end-to-end ecosystem to operate as a seamless virtual company serving the customer.
2. Younger and more technology-savvy professionals will create a transformation of the workforce, while supply chain processes and roles converge.
Millennials entering the workforce have much higher expectations from the technology used in manufacturing planning processes. This tech-savvy workforce will dramatically change manufacturing planning for the better. In general, information will need to be presented and consumed in a simple and engaging way, along the lines of “game-ification” and social media like presentation layers — and this information must be accessible anywhere, anytime.
As supply chain related information becomes more transparent and visible to all participants, functional silos will be lowered, leading to a convergence of supply chain processes and roles. Inefficient processes will be exposed and eliminated, and business users will be expected to know more about the big picture as everyone focuses on driving profitability.
3. IoT and Big Data will become routine, with little to no technology limitations around memory, computing and processing.
The Internet of Things (IoT) is poised to transform manufacturing planning processes, thanks to an abundance of real-time data. As a result, effective data management will continue to grow in strategic importance for every manufacturing and distribution company. These companies will also rely more heavily on technology to address and analyze complex supply chain problems. As the level of technology sophistication advances, users will become smarter about the micro-decisions they will be required to make. In fact, it’ll be expected that technology systems will store all human planning behaviors, and start predicting the likelihood of these behaviors for every micro-decision.
Keep a close eye on this trend, as 70 percent of survey respondents view the growing benefits of IoT as an opportunity to drive product innovation, while 85 percent view it as an opportunity to drive improved supply chain performance and reduce costs.
4. Mobility will become the norm, as the notion of being tethered to desktops and laptops disappears.
The proliferation of mobile devices, and the corresponding growth in network infrastructure, will continue to drive mobility as the first choice for future decision-support solutions in supply chain management. More and more supply chain applications with structured workflows will become available to help end users, and mobile platforms will allow two-way interaction, driving faster decisions and higher productivity. In this always-on, always accessible, hyper-connected world, mobile workforces will increase in number — and will require easy access to real-time supply chain planning and execution information.
As a result of the steady surge in computing power over the past 10 years, it is now possible to deploy many digitization technologies in a practical way. Advancements in machine learning and analytics can be used to process massive amounts of data in a very short amount of time. Not only can these technologies influence supply chain performance and profitability, but together with the volumes of accessible data regarding consumer preferences — if leveraged correctly — can create customers for life. Given the potential of digitization to transform the bottom line, it’s not surprising that adoption of these new technologies is top of mind for many executives.
However, despite the promise of digitization to transform supply chain operations, many companies are still burdened by legacy systems that are often expensive to maintain, not to mention update or replace. In fact, only 10 percent of respondents have a holistic digitization strategy in place. On the bright side, many companies have plans in place to change this; by 2020, 39 percent of respondents anticipate electronic integration with more than 80 percent of their suppliers.
For manufacturing and distribution companies looking to prepare for “what’s next” in supply chain management, often the simplest way to get started is by adopting and deploying a structured sales and operations planning (S&OP), or integrated business planning (IBP) process. Supported by leading supply chain planning technology and appropriate organizational structure, S&OP or IBP will break down silos and provide stakeholders with greater supply chain visibility and faster and more effective decision making ability. With this strong foundation in place, companies will be better positioned to take advantage of the advances in digitization, driving more revenue, profit and efficiencies across their end-to-end operations.
Puneet Saxena is Vice President of Industry Strategies at JDA Software.
