Manufacturers spent decades – and billions of dollars - adjusting to traditional Lean and Six Sigma ideals, only to realize the practices meant to optimize can actually make their supply chains too lean. This could leave them brittle and unable to flexibly adapt in the rapidly changing digital world.
The solution is a new era of Smart Operations, a revolution that is taking the manufacturing processes beyond the factory walls with pervasive data collection, advanced analytics, technology investments and deeper collaboration with partners. Knowing how to fix a broken pipe is one thing, but a pipe that can communicate its flow rate and alert the factory before it needs to be replaced is invaluable.
A recent survey of 100 manufacturing executives conducted by UPS and the International Data Corporation (IDC) found that many companies were moving slowly in this new world and rapidly losing their advantage, or just “surviving.” The other half of respondents were “thriving,” or employing smart operational changes to boost revenue and profit. Why aim to thrive? Research shows that companies aggressively pursuing the digital transformation of their operations earn profits 26% higher than those that have not.
If you want to thrive, take these steps:
- Team up with your logistics provider. If you do nothing else, do this because these companies will have the most direct impact on operational activities. Simply, third-party service providers can bring scale, process expertise and advanced technology knowledge to the transformation. If your company is a “survivor,” look particularly to the technology infrastructure to make up ground quickly. If you are a “thriver,” integrate your technology investments with the provider, but especially look to take advantage of the scale and expertise to accelerate the benefits of what you have already set in motion.
- Assess your company’s efforts to transform its operating model to support new smart operations strategies. Don’t worry if you’re in the early stages. Most companies still are and it isn’t too late to get smart.
- Invest in strategic areas. There are five activities worthy of monetary and time investment: connected products, connected assets, supply chain decision making and buy-side/sell-side value chain integration. Focus here. If you don’t make the decisions for your company, find the person who does and push this point.
- Thoroughly examine supply chain decision making. How does the decision-making process have to change to achieve new levels of excellence? Identifying 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.
- Set priorities for connecting products in the field and the assets in the value chain. Understanding the most important sources of data will assist here. The whole value chain doesn’t have to be instrumented all at once. Focus on the most critical areas for highest returns.
Manufacturers don’t have to do everything at once, but the time to start is now. Smart Operations are critical to the success of manufacturers as they work to serve their increasingly demanding customers fast and flexibly.
Is your company a survivor or thriver? Tweet your answers with #thrivenotsurvive.