SUPPLY CHAIN DIGITIZATION - The Wait Is Over!

SUPPLY CHAIN DIGITIZATION THE WAIT IS OVER! BROUGHT TO YOU BY An Company 2 SUPPLY CHAIN DIGITIZATION SCM World’s Future Supply Chain Survey 2016 cited the cloud as one of the four top disruptive technologies dominating discussion in the field, with cost advantage identified as the driving force. That’s a huge jump from two years prior when survey respondents considered the impact of the cloud as largely irrelevant. The other top disruptive supply chain technologies, according to SCM, included the growth surge in big data analytics, the digital supply chain, and the Internet of Things. Cloud services now offer subscription- based systems that allow users to pick and choose what they’d like to include, rather than having to make high-cost, long-term investments in on-premise technology that may come up short a few years down the road, and that require extra expense along the way to maintain, upgrade, and potentially replace siloed software and equipment. Not to be overlooked in enabling transparency of communications and information across the entire supply chain is the ability to quickly and easily collect, sort, analyze, and digest a wealth of previously unobtainable data on customer needs, market trends, and sales opportunities, allowing for much quicker decision-making in the manufacturing process and increasing customer satisfaction. When information is shared simultaneously across all systems in the manufacturing chain, even rush orders can be accommodated, production levels increased, warehouse automation adjusted, and logistics coordinated so products are delivered on schedule. Unexpected delays and failures across logistics or changes in raw material supply levels can be caught and accommodated for assuring continued production and avoiding bottlenecks. Through digitization, the entire supply chain becomes a fully integrated ‘ecosystem’ transparent to all involved in the supply chain. According to a strategic trend analysis by PwC’s Strategy& consulting team: “With the advent of the digital supply chain, silos will dissolve and every link will have full visibility into the needs and challenges of the others. Supply and demand signals will originate at any point and travel immediately throughout the network. Low levels of a critical raw material, the shutdown of a major plant, a sudden increase in customer demand—all such information will be visible throughout the system, in real time. That in turn will allow all players—and most important, the customer—to plan accordingly.” When considering implementing supply chain digitization, it can be accomplished via a single process, or in stages according to needs and priorities, a very attractive option for mid-size manufacturing operations that prefer to begin by optimizing areas that will bring the most impact on day one, then expand out as efficiencies and cost-savings are recognized. This paper will show why now is the time to digitize the supply chain, take advantage of the exceptional efficiencies and cost benefits available, quickly recoup ROI, and advance into the future before the competition wakes up. THE TERM “DIGITIZATION” IS NO LONGER AN EXPENSIVE BUZZWORD RESERVED FOR LARGE AND MULTINATIONAL CORPORATIONS WITH BIG BUDGETS AND HIGH-PRICED TECHNICAL TEAMS. FOR MEDIUM- AND SMALLER-SIZE MANUFACTURERS, AS CLOUD-BASED SERVICES GROW INCREASINGLY COST EFFECTIVE, MANUFACTURERS OF ALL SIZES NOW CAN EASILY DIGITIZE THEIR ENTIRE SUPPLY CHAIN NETWORKS. FULLY CONNECTING THEIR CUSTOMERS, SUPPLIERS, RAW MATERIAL AND INVENTORY MANAGEMENT, PRODUCT DEVELOPMENT PLANNING, PRODUCTION OPERATIONS, MARKETING, SALES, LOGISTICS, AND DELIVERY INTO A SINGLE TRANSPARENT PLATFORM PROVIDES GREATER UNDERSTANDING OF CUSTOMER DEMAND AND REDUCES RISKS OF ADDED COSTS AND LOST SALES DUE TO SUPPLY CHAIN DISRUPTIONS. 3 SUPPLY CHAIN DIGITIZATION THE SILENCE OF THE SILO Manufacturing is in the midst of a transformation, not unlike that of retail when e-commerce giants changed consumer purchasing habits, catching many brick-and-mortar companies asleep at the wheel and scrambling to hold onto their customer bases. Several large manufacturers have been steadily adopting digital strategies over the last several years aimed at capturing and interpreting highly specific data, predicting and reacting to market trends well before they become widely noticed, and exceeding customer expectations with the latest supply chain technology. The same technology also can communicate with robotics in the automated warehouse to react to incoming customer orders, select the requisite products, prepare them for shipment, and drop them off at the loading dock for entry into the distribution channel— all triggered by an interconnected and transparent digitized system interconnecting manufacturer, customer, supplier, and distributor. “Our ability to interact with customers electronically and with our suppliers and supply chain is much, much faster today, probably in order of magnitude,” Jon Bergman, Global Director, IT Transformation at Axalta Coating Systems, said. “Where it took days or weeks or months to do something (prior to implementing a digitization strategy), we can now do it in a much shorter time and that has been a great benefit to our business.” Axalta, a 150-year-old coatings company, is active in more than 130 countries, coordinates with some 4,000 distributors, and maintains 46 manufacturing facilities. The company, which spun off from DuPont a few years ago, has been digitizing in stages and has tied together data sharing, including among 430 carryover legacy systems, and has centralized 1,070 interfaces within a single platform providing interconnection across its supply chain. Moving forward, Axalta hopes to have a new master-data environment in place by year-end and plans an ERP upgrade project over the next two to three years. Meanwhile, many medium- and smaller- size manufacturers have largely continued to operate in a siloed environment where processes work in stages, but without communication capable of sharing data across all internal and, when appropriate, external platforms. In such cases, while legacy systems may have been upgraded and optimized for speed and reliability, manual steps are still required to gather data, implement each successive step, and systematically move ahead from product development and production to marketing, sales, and customer delivery—a time-consuming process. The siloed technology, while working well as standalone islands in the manufacturing environment, offers limited, if any, connectivity among the various units and forces data to be accumulated separately from each individual silo, combined manually, interpreted by different departments, and analyzed according to pre-set spreadsheet categories. Moreover, as the state of a given silo changes, the remaining stages do not adjust accordingly to ensure the overall process remains optimized. “Not only is this process time-consuming, but since it’s manual, it is also riddled with errors,” said Hamaad Chippa, Informatica’s Consumer Goods Industry Lead. “If a manufacturing organization were to automate integrating key data elements, including cleansing all the information that may be different or missing from each silo, this could save the company over 53% of resource time (Informatica benchmark). This would allow time to then invest in conducting higher value tasks, such as analyzing data for key insights or improving supply chain efficiency. “ COMPANY: Axalta COMPANY INFORMATION: • 150-year-old coatings company • active in more than 130 countries • coordinates with 4,000 distributors • maintains 46 manufacturing facilities UPDATES: • has been digitizing in stages • has tied together data sharing (including among 430 carryover legacy systems) • has centralized 1,070 interfaces in one platform RESULT: • interconnection across the supply chain CASE STUDY “ OUR ABILITY TO INTERACT WITH CUSTOMERS ELECTRONICALLY AND WITH OUR SUPPLIERS AND SUPPLY CHAIN IS MUCH, MUCH FASTER TODAY, PROBABLY IN ORDER OF MAGNITUDE.” — JON BERGMAN GLOBAL DIRECTOR, IT TRANSFORMATION AXALTA COATING SYSTEMS ... ONE OF THE BIGGEST AREAS OF IMPACT FOR MANUFACTURERS MOVING UP TO SUPPLY CHAIN TRANSPARENCY IS THE INCREASED ABILITY TO ATTRACT NEW CUSTOMERS AND ONBOARD THEM... NOW IT CAN BE DONE IN A MATTER OF MINUTES OR HOURS INSTEAD OF DAYS, WEEKS, OR MONTHS. 4 SUPPLY CHAIN DIGITIZATION It’s a system that has served the medium-size and smaller manufacturers for many years, but one that delivers little value during the current customer-centric transformation that is well underway in manufacturing. THE CONNECTED CUSTOMER IS THE HAPPY CUSTOMER While many in manufacturing still view customer focus as a marketing challenge, in today’s digital ecosystem, customer experiences and interactions are at the forefront of industry transformation. In fact, one of the biggest areas of impact for manufacturers moving up to supply chain transparency is their increased ability to attract new customers and onboard them, a process that in the past often took up to three months to complete successfully, creating customer friction and delaying time to revenue. Now it can be done in a matter of minutes or hours instead of days, weeks, or months. “If a potential new customer has a high volume and a high mix of different products, the manufacturer needs to be responsive and make it super easy to onboard and service that new customer,” Ian Matthews, Eccella’s Manufacturing Data Evangelist, explained. “That means for the customer to be able to change, give feedback, and easily process service requests.” It also requires the manufacturer to continue looking after that customer long after the product arrives. “Maintaining quality product and the ability to respond to customer needs quickly is the rule of the day,” Axalta’s Bergman said. “With some of what we now do we can do in days versus weeks. It’s a real benefit to interface with customers and connect with them in a much, much better way than we had been able to before the digital technology.” A key part of building customer confidence involves establishing a digitized transparent connection within the supply chain so that requests and feedback don’t just sit with a visiting sales representative, but actually feed directly back into the manufacturer’s relevant systems. “If you’re a big automotive customer and you’re suddenly seeing a need to fill a particular color or paint or performance component, what you don’t want to do is wait for the next time the rep is going to go on a sales call,” Matthews said. “Connectivity through digitization makes it super easy to tell your supplier, ‘I need more of these and need to ramp it up very quickly over the next couple of months.’ You don’t want that to be a very manual process. You want your system to communicate instantly with your supplier’s system regarding the need for more of the materials, and then build it straight into your schedule.” Those communication channels are enabled by connectivity through the cloud, which offers the ability to create flexible, scalable solutions that do not have to sit at expensive local infrastructure. Disparate internal and external systems and platforms can be connected easily without a high up-front cost, and solutions can be scaled based on needs rather than a large baseline infrastructure. “Another key benefit of the cloud is that it enables your customers to have rapid access to data that would traditionally be limited to internal systems, connecting them to self-service portals with real time information,” Matthews pointed out. Digitization gives the manufacturer’s customer a direct view into supply, logistical, and service information to confirm availability of products, secure the needed quantity, avoid back-order surprises, and receive timely delivery information. A technologically superior and extremely cost-effective digitized strategy connecting the entire supply chain is available right now, easily implemented, and offers the opportunity for a rapid return on investment. NOW IS THE FUTURE Turning siloed components of the supply chain into a single optimized interconnected system integrates all internal and external systems through next-gen data warehousing, visualization, and advanced analytics to enable clear insight into each component’s process, and the automation of key areas to improve operation efficiency and rapid decision making. “Centralizing on a common data interchange was definitely huge,” Bergman said. “That’s a big benefit to us and it occurs within our supply chain every day. We can monitor it, we can manage it, and see what’s going on and that’s a really positive benefit. Prior to that we had numerous different platforms to look at to be able to manage that.” Empowered with the efficiency and cost-effectiveness of cloud warehousing and backup, supply chain digitization enables a shift from a purely descriptive “ MAINTAINING QUALITY PRODUCT AND THE ABILITY TO RESPOND TO CUSTOMER NEEDS QUICKLY IS THE RULE OF THE DAY.” • gives the customer a direct view into supply, logistical, & service information • confirms availability of products • secures the needed quantity • avoids back-order surprises • offers timely delivery information DIGITIZATION BENEFITS — JON BERGMAN GLOBAL DIRECTOR, IT TRANSFORMATION AXALTA COATING SYSTEMS 5 SUPPLY CHAIN DIGITIZATION RAPID PATH TO ROI The entire process toward digitization may seem somewhat daunting at first, especially for mid-size manufacturers who have become comfortable operating with legacy systems that continue to perform well. To that end, it’s important to note that most solutions today actually involve a hybrid approach between legacy systems and the cloud, establishing the needed level of communication across platforms without requiring a complete transformation away from on-premise technology. The cost savings alone through the cloud are significant enough to place the mid-size manufacturers on a solid path toward ROI, especially when coupled with the potential for immediate gains in overall efficiency and increases in revenue following supply chain digitization. “It’s one of the driving technologies because you can keep your critical systems close to where they need to be, but gives you lots of flexibility,” Matthews pointed out. “The interchange of information between your internal systems, as well as your supplier and customer systems, allows you to swap in and out different systems, customers, and suppliers very quickly and easily.” In addition, when built with the proper architecture, the entire setup can allow for swapping in different components along the way. “That means you can start small and connect systems that will bring value early on, then worry about the other systems later when you’ve got a more unified view of everything across your business, becoming even more valuable,” Matthews said. The cloud digitization platform helps streamline a variety of common procedures, such as the gathering of files and information from a number of separate systems for manual loading into other systems—a series of time- consuming steps that can cause delays, increase the risk of errors, and result in potential problems with customers and suppliers. That’s also where the benefit of tying together various legacy systems becomes a critical, but very practical step. By connecting rather than replacing several systems that continue to work well, significant cost savings can be realized along with the benefits of information and data transparency. “Rather than abandoning old systems, you can simply collect the key information gathered from your existing siloed systems and instantly combine all of it with data collected from throughout the entire supply chain,” Matthews said. “That transparency allows for immediate sharing of appropriate relevant information with internal and external departments, suppliers, customers, distributors, logistics providers, service, and other personnel.” Although the vast benefits of digitization are transforming the efficiency and effectiveness of the entire analytical approach to predictive and prescriptive analysis. It simultaneously factors in data gathered from throughout the entire supply chain, including industry, supplier, and customer feedback to predict and stay ahead of developing trends. “With predictive analytics, you can forecast in advance what your customers will be demanding and start planning for it in advance,” Matthews said. “If manufacturers know where the trend is going it allows them to negotiate earlier for the required raw materials and engage different suppliers in advance to meet the increasing demand for product.” That’s the “predictive” part of the newly available data gathering capability offered by digitization. “Prescriptive analytics allow you to guide your customers on a journey and suggest what else they may want to consider based on what other people in the industry are finding works well,” according to Matthews, who adds that it all comes back to the quality of data. Gathering, accessing, and compiling that quality, comprehensive data is the biggest challenge experienced in analytics for mid-size manufacturers around the world who remain on siloed technologies. “If you can’t get the data right, you’re never going to get the value from all the new technologies that are coming along, like machine learning capabilities,” Matthews said. “If you get everything in your functional supply chain areas linked through digitization, then you can apply the data analytics directly to those areas and ultimately to your business as a whole.” Using a whole new set of information to predict and prescribe insights allows manufacturers in the industrial sector to pursue new operating models. “Streaming data from products, machines, and other assets can provide a clear understanding of when a product will require service,” Chippa said. “Instead of selling a set of products, then disappearing until the next purchase order, manufacturers can offer services to ensure proper functionality, while staying engaged over a longer time period, strengthening trust in the relationship.” MOST SOLUTIONS TODAY ACTUALLY IN- VOLVE A HYBRID APPROACH BETWEEN LEGACY SYSTEMS AND THE CLOUD: • establishes the needed level of communication across platforms • doesn’t require a complete transformation • entire setup allows swapping in components along the way “ IT’S ONE OF THE DRIVING TECHNOLOGIES BECAUSE YOU CAN KEEP YOUR CRITICAL SYSTEMS CLOSE TO WHERE THEY NEED TO BE, BUT GIVES YOU LOTS OF FLEXIBILITY,” EASING FEARS — IAN MATTHEWS MANUFACTURING DATA EVANGELIST ECCELLA 6 SUPPLY CHAIN DIGITIZATION manufacturing supply chain, some hands- on owners still may feel a bit nervous over the prospect of moving in-house proprietary information into an outside cloud-based system, especially with today’s concerns over hacking and theft of intellectual property. The reality is that, with the right systems in place, the cloud infrastructure has become far more secure than internal legacy systems, even those that are up-to-date with the latest protections. Consider that multibillion-dollar companies like Amazon, Microsoft, and Google have made huge investments in cloud technology to keep the technology safe and secure, something that mid- sized and smaller manufacturers today can leverage for their operations without having to arrange for major expenditures on security. “I think security is better in the cloud,” Axalta’s Bergman said. “Nobody does security very well—not because people aren’t trying. You can’t keep up with it. The volume of work is significant. If you can depend on your providers to be able to provide that as an underlayment, I think companies that can do that as a service are going to do better than we’re going to do.” THE BOTTOM LINE When deciding to move forward on supply chain digitization, medium- or smaller-size manufacturing operations usually can draw value rapidly—often within 3 to 6 months with critical management participation and employee buy-in up and down the operation. It goes beyond involvement of the IT team, which still will play a major role in the process, but requires the hands-on knowledge of the business owners, those individuals who are deeply involved in the operations of different departments and different functions—production, sales, and marketing directors, among others. Managers should remain actively involved in the entire process, driving staff to operate more efficiently and continuing to implement steps along the way that help the company grow its business. By doing so, customers and suppliers, along with the company’s top and bottom lines, will benefit greatly from digitization and the limitless potential unleashed by implementing such high- end technological advancements. The same potential applies to companies that make lower-tech products, but often assume they can’t benefit from all of the new data gathering, analytical, and automation technology. “What we see is that the companies that often get the biggest benefit are high volume/high mix manufacturers—those that have different parts to their supply chains and have different customers,” Matthews said. “They’re trying to deal with growing their business, high volume, and they often need to adapt rapidly to customer demands. Sometimes such organizations don’t realize that they can very simply and easily adopt these new digitization technologies and take advantage of the benefits now.” For mid-size and smaller manufacturers, there’s plenty of new revenue, profit, efficiencies, and cost- savings to be gained right out of the box by starting to digitize their supply chains now. “Start with questions,” Bergman said, “asking fundamental questions to make business better. How do I sell more product in this region, how do I understand my competitors, how can I understand my costs profile, and how do I manage that? Those are really fundamental questions that sometimes have complex answers but you’ve got to start there.” Bergman said that asking questions upfront provided clarity for the Axalta executive team and helped them to identify where they should focus their energy. “Rather than say I need an e-commerce system, for example, it’s more, ‘I need to reduce my customer service costs because they’re going through the roof.’ What that really means is self-service. Then it’s how do we provide self-service, and into e-commerce and different vehicles to do that. That’s where we directed our energy versus, ‘We build it and this will be a great solution’.” WAITING TO SEE WHAT HAPPENS 10 YEARS FROM NOW WILL BE TOO LATE TO THE GAME. JUST ASK SOME OF THE PLAYERS IN THE BRICK-AND- MORTAR RETAIL SPACE. BUT, TIME IS RUNNING SHORT. ... MEDIUM- OR SMALLER-SIZE MANUFACTURING OPERATIONS USUALLY CAN DRAW VALUE RAPIDLY—OFTEN WITHIN 3 TO 6 MONTHS... ... THERE’S PLENTY OF NEW REVENUE, PROFIT, EFFICIENCIES, AND COST-SAVINGS TO BE GAINED RIGHT OUT OF THE BOX... ABOUT THIS REPORT This report was prepared by Advantage Business Media, a data-driven marketing solutions company serving industry professionals in the manufacturing, science, and design engineering markets. For more information, visit advantagemedia.com. ABOUT ECCELLA Eccella is a data management and analytics consulting firm, transforming the way manufacturers and other companies operate and make decisions. Formulating innovative and leading-edge solutions, Eccella helps build data-driven companies that make better, faster, and more informed decisions to support their business growth goals. Eccella, an NGDATA company, is headquartered in New York City with additional offices in London and Mumbai. For more information, visit eccellaconsulting.com.