Global supply chains are becoming increasingly “digitized,” as companies improve business processes and operate more efficiently using new technologies. Suppliers are investing in more advanced technologies and buying organizations are implementing more advanced solutions to procure goods and services.
Manufacturers, specifically, are feeling the impacts of the growing digital world. A recent survey of manufacturers by the MAPI Foundation shows supply chain pressures are driving automation activity in the manufacturing industry. The report stated the main drivers of automation in the industry were the use of the technology by competitors, customers and suppliers. The positive impact on quality automation brought to the business, as well as the impact it has on workforce productivity, were additional top drivers.
When evaluating automation technology, 36% of manufacturers surveyed for the MAPI report consider how or if it will shorten supply chains and 44% consider if it will shorten time to market. Other areas of consideration are whether the technology will lower total production costs (56%) and improve product quality (52%).
Larger Manufacturers More Likely to Invest in Automation
Nearly 75% of smaller-sized manufacturers surveyed (those with average annual global sale revenues of less than $200 million) have engaged in automation investment activity in the past five years. Of these companies, 64% plan to automate in the next three years. Automation is even more popular among larger manufacturers, with 97% of these companies saying they have engaged in automation investment activity in the last five years. And, 90% of this group plans to automate some aspect of their product-producing process in the next three years, the report said.
Those that fail to implement advanced technologies will be at a disadvantage, according to the report. Seventeen percent of manufacturers surveyed had not engaged in some form of automation activity in the last five years. While many of these companies are likely small manufacturing firms that have a hard time seeing the return on investment from the technology, the MAPI report said, they are still missing out on potential growth.
“If these companies do not engage in automation investments in tandem with their customers, suppliers and competitors, they are going to find themselves at a competitive disadvantage in almost any supply chain of importance or potential importance to their profitability,” the report said.
What Does this Mean for Procurement?
Procurement organizations will need to understand how digital trends are impacting global supply chains and manufacturers. To learn more, join our webinar June 27 on how digital disruption will affect procurement, contract management and supplier relationships. Register here for the webinar, “No Buzzwords Allowed: Jason Busch and Pierre Mitchell on Digital Procurement (in Real Terms).”