How Smart Manufacturing is Revolutionizing Supply Chain Management

Janifha Evangeline | Sunday, 14 May 2023, 19:33 IST

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The logistics industry has undergone huge transformation in the last three decades. Right from a purely operational function which reported to either sales or manufacturing and was concerned in ensuring the supply of manufacturing lines as well as the delivery to clients, the industry has evolved into an independent supply chain management function. While the focus of the supply chain management role has shifted to sophisticated planning approaches like analytical demand planning or integrated S&OP, which are now standard business practises in many firms, operational logistics are commonly outsourced to third-party LSPs. The supply chain role ensures integrated operations between customers and suppliers.

Smart manufacturing software can leverage the thorough asset and resource data it gathers for testing warehouse scenarios to enhance inventory management procedures in addition to enabling quicker order fulfilment times. With the development of a "smart factory," manufacturers and supply chain managers would be able to choose which stock to reserve and which to maintain moving through particular workflows or channels in the most effective manner.

Some systems have the ability to model at higher scales, opening up possibilities for network optimisation. To assess the most effective and profitable arrangements, including whether strategic collaborations with outside vendors would be most advantageous, manufacturers and warehouses can simulate transportation systems and distribution centres.

The ability of these technologies to enable accurate, real-time visibility necessitates hardware and software infrastructures capable of supporting their projections, which may require a large investment for some businesses. It also necessitates the development of a virtual conceptual framework for the company. To ensure that businesses can access the business insights necessary to optimise operational performance, it may take several rounds of development to decide the combination of assets, resources, measurements, and other aspects to be stored.

The supply chain's digitalization enables businesses to manage the evolving customer demands, supply-side difficulties, and unmet efficiency improvement expectations. Supply Chain 4.0 - a result of digitization enables in revolutionizing the industry through the following advantages:

Faster Delivery:

High runners are now delivered in just a few hours thanks to innovative product distribution techniques. These services are based on advanced forecasting techniques that offer a much more accurate forecast of customer demand. These techniques include predictive analytics of internal (such as demand) and external (such as market trends, weather, school breaks, and construction indices) data as well as machine status data for spare-parts demand. Weekly and, in the case of very fast-moving products, even daily forecasts are provided. In the future, items will be delivered out in advance of the buyer purchasing them thanks to "predictive shipping," for which Amazon holds a patent. The shipment is then rerouted to the precise client location once a cargo that is already in the logistics network and travelling in the direction of the customer is subsequently matched with the customer order.

Increased Delivery Process Flexibility:

Ad-hoc and real-time planning enable a flexible response to shifting supply or demand conditions. Planning becomes a continuous process that may respond dynamically to changing requirements or restrictions, with the reduction of planning cycles and frozen periods (such as real-time production capacity feedback from machines). Increased delivery process flexibility after the products are shipped enables clients to reroute shipments to the most practical location.

The flexibility of the supply chain organisation is increased through new business models, such as Supply Chain as a Service for transport management tasks. Instead of having the resources and competencies in-house, supply chain can be purchased as a service and paid for per usage. Service providers can generate economies of scale, economies of scope, and appealing outsourcing options thanks to their specialisation and focus.

For instance, the "Uberization" of transport would involve crowd-sourced, adaptable transport capacity, which will greatly improve the agility of distribution networks.

More Granular & Customised products:

Customers are continually asking for products that are more and more customised. That gives micro segmentation a significant push, and mass customisation concepts will eventually be put into practise. Customers are managed in much smaller groups, and a wide range of appropriate products will be provided. Customers can now choose from a variety of "logistics menus" to choose the one that best suits their requirements. Companies may effectively manage the last mile for single and high-value dense packages thanks to new transport concepts like drone delivery.

More Accurate & Complete Supply Chain transparency:

The newest generation of performance management solutions offers real-time, complete supply chain transparency. The range of information includes very detailed process data, such as the precise location of vehicles in the network, as well as synthesised top-level KPIs, such as overall service level. This collection of information offers a common information foundation for all supply chain roles and degrees of seniority. All stakeholders may steer and make decisions based on the same information thanks to the "supply chain cloud's” integration of data from suppliers, service providers, etc.

Targets are automatically set using clean-sheet models for storage, delivery, or inventory in digital performance management systems. Systems will automatically reduce targets that can no longer be attained to a reasonable ambition level in order to maintain the aspiration of targets even in the event of supply chain disruptions. Performance management systems will "learn" to detect risks or anomalies automatically and will adjust supply chain parameters using a closed-loop learning strategy to reduce them. As a result, the control tower for automatic performance management is able to handle a wide range of exceptions without the need for human intervention and to only use the services of a human planner for novel or disruptive situations. As a result, a supply chain is constantly moving closer to its efficient frontier.

The transformation into a digital supply chain requires two key enablers - capabilities and environment. Capabilities regarding digitization need to be built in the organization (see the chapter on capability building) but typically also require targeted recruiting of specialist profiles. The second key prerequisite is the implementation of a two-speed architecture/organization. This means that while the organization and IT landscape are established, an innovation environment with a start-up culture has to be created.

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