The future of the manufacturing supply chain - Q&A with GT Nexus
Supply Chain Digital speaks to Diane Palmquist, Vice President of Manufacturing Industry Solutions at GT Nexus, who covers such diverse topics as sustainability, the Internet of Things, and re-shoring
SCD: How can manufacturers ensure that the improvements they make across their supply chains are sustainable?
Palmquist: Long term sustainable improvements require a long term strategy, rather than a bolt-on initiative. This means rewiring the connective tissue between trading partners and stakeholders to deploy a network for multi-enterprise visibility and collaboration.
Having ‘sight’ and certainty of what is going on in the supply chain and, ultimately, foresight is crucial. In today’s world of complex supply chains companies have to respond swiftly to sudden changes and unforeseen disruptions and transparency is critical in battling these challenges.
SCD: Could you expand on why it is important that demand-fulfilment is carried out in real time? How can manufacturers achieve this?
Palmquist: Manufacturing is becoming increasingly outsourced, while customer demands are increasing. In many cases, the challenge goes beyond fulfilling, but fulfilling profitably, hence the need for real-time demand fulfilment. Integrating supply chains, logistics, marketing and production are becoming increasingly important. With a single source of truth around orders, shipments, inventory and demand, organisations can make faster moves, driving agility to give competitive advantage. Segmentation strategies will become increasingly important in order to effectively achieve the right level of demand fulfilment. A one-size fits all supply chain does not work with for example, luxury goods should differ dramatically from those products requiring basic replenishment at the lowest possible cost.
The challenge is putting all of that data to use. The IoT and data are useless if they can’t be deployed for optimising decisions and strategies.
SCD: To what extent will there be a move to re-shore manufacturing?
Palmquist: As the cost of labour increases in offshoring hubs, many organisations are realising that re-shoring or near-shoring can have advantages. Often manufacturers will see around 49 to 50 percent reduction on delivery lead times, and about a 30 to 40 percent improvement in overall on-time delivery accuracy. Producing locally to sell locally better serves local markets while maintaining low costs, which means moving closer to home in 2016 will seem like a logical step
SCD: Could you provide examples of how IoT technology has benefitted manufacturers?
Palmquist: A company like General Electric (GE) used to only make stand-alone physical engineering equipment like MRI machines, airplane engines, and oil drills. It sold them, and sold support contracts for them. Now, GE has pushed its IoT initiative, the Industrial Internet, to sell outcomes-based services to its clients, guaranteeing that GE’s smart machines and big data analytics — delivered through its own cloud-aware software platform — will provide specific, measurable efficiencies. GE has evolved from a being more than just a physical asset company. It’s now a data company.
Macy’s recently deployed sensors throughout its flagship stores based on Apple’s iBeacon (Bluetooth low energy) technology. As customers walk around to different areas of the stores, the iBeacons present relevant deals on their smartphones. By seeing what sorts of deals and products provoke customers to respond, Macy’s can make changes to its assortment. In this way, IoT technologies like iBeacons can directly capture customer demand, and as they roll out, they’ll impact inventory and omnichannel strategy, which have their foundations all the way up the supply chain. Companies will need to focus on agility, and the ability to adjust on a dime to changing demand, in order to serve an IoT-equipped retail world.
SCD: What are the challenges facing today’s manufacturing supply chains?
Palmquist: For manufacturers, looking ahead to the IoT is a smart move that can inform the way they solve major problems today. IoT models can feed real-time data into predictive models, aligning production with actual demand. Often, getting ready for adopting a new technology is painful. But in this case, it doesn’t have to be. Preparing your manufacturing supply chain to take advantage of the IoT means getting your centralised visibility platform in place to handle the IoT’s big data. There are already well-established ways to do just that.
Manufacturing today is tough because demand is capricious. Markets saturate. Geopolitical events disrupt commerce. Emerging regions develop. Companies are discovering they need to stay on their toes to eke out a profit. Gone are the days of simply creating a good product and selling it. These days, process matters just as much as product. Supply chains need to be agile and adept in order to deal with volatile demand.