The manufacturing industry may have a long way to go in applying advanced technologies and analytics to improve supply chain management.
UPS and IDC recently surveyed more than 100 manufacturing operations professionals to determine technology maturity levels throughout the industry — specifically if and how companies were applying the internet of things, big data and other technologies to enhance manufacturing processes. Applying these technologies is creating a new approach to manufacturing operations, what UPS and IDC called “smart operations,” in their report, “The Rise of Smart Operations: Reaching New Levels of Operational Excellence.”
UPS and IDC separated the companies they believed to be “thrivers” in the industry, those exceeding their peers at smart operations, from the rest of the survey population called “survivors” in the report.
According to the survey findings, about a quarter of “thrivers” had reached the highest level (stage 5) of supply chain decision-making maturity. This means these manufacturing companies were already applying real-time analysis to supply chain activities, giving the organization the ability to anticipate supply chain disruption and mitigate any risk. Slightly more, 27%, are at stage 4 maturity and have some level of ability to predict supply chain disruptions, thanks to the modern technology and analytic tools they have in place.
The majority of the leading manufacturing firms, however, fell somewhere in the middle, at stage 3. These manufacturing companies have the ability to analyze supply chain performance in real time or near real time, where corrective actions can be suggested in an automated way, according to the report.
Thirty-five percent of “survivors” were also at this level. Yet the majority of survivors are at a stage 2 of maturity, which means supply chain process performance is done but typically relies on historical data rather than real-time information. An additional 20% of survivors also were at the lowest “ad hoc” stage, where supply chain analysis occurs only when there is a pressing issue. Just 2% of survivors were at stage 4, and none was at stage 5.
As UPS and IDC pointed out in their report, applying advanced technologies makes for better supply chain management.
“Supply chain decision making may be the most pivotal element of smart operations; the ability to use available information to make fast decisions will be crucial to making Lean approaches more resilient and effective,” the report said.
Barriers to Operational Performance
While many manufacturing companies have room to improve their technology maturity, there are a number of challenges the industry faces in doing so. More than a quarter of manufacturing professionals surveyed said minimizing supply chain costs was a major challenge to improve operational performance. Effective forecasting, planning and scheduling, as well as finding qualified personnel and assuring product quality, were additional challenges manufacturing professionals pointed to.
For manufacturing companies looking to improve operational excellence, UPS and IDC said examining supply chain decision-making processes will be key. Consider how the process has to change to achieve new levels of excellence, the report said.
“Identifying the key decision points will highlight the most important sources of data, the most strategic value chain participants, and the scope of the role of third-party service providers.”