Manufacturers Digitize to Compete with the Amazon Effect

In the wake of Amazon setting the bar for customer service and delivery, manufacturers are taking a cue from the retailer and embracing a retail-like role in which they cater to both consumer needs and the competitive direct-to-consumer space. OEMs are betting their technology dollars on that reality, according to the JDA 2018 Intelligent Manufacturing Survey released this week.

“The Amazon and Alibaba effect have significantly compressed consumer order fulfillment delivery time expectations. Now, more than ever, planning and execution processes must be more tightly coupled. Yet even while our data shows a portion of respondents understand the importance of prioritizing both short-term execution and strategic long-term planning, too often we see manufacturing companies focused on one and not the other and it’s limiting the value of their planning efforts,” said Fred Baumann, group vice president, industry strategy, JDA. “Incorporating real-time data inputs across both the planning and execution horizons can further bolster an integrated approach.”

Inventory optimization (43%) and integrated planning (41%) are key strategies to meeting increasingly stringent customer demands, according to the survey. More than half (51%) are working to enable both internal and external collaboration across the supply chain. Further, these organizations are working to improve demand forecasting through demand sensing (44%) and data science (33%).

“Supply chain digitalization is no longer a ‘nice to have.’ It’s a strategic mandate and a dramatic differentiator that drives revenue and market share growth,” said Baumann.  “The companies that are investing in their supply chain today, that have support from their leadership teams, and those that are positioning the supply chain function as a key point of differentiation – these are the companies that will excel and achieve profitable business growth.” said Baumann.

Supply chain digitalization delivers a variety of business benefits, including greater profitability (according to 49% of respondents), increased customer service levels (38%), reduced spend (38%), and increased competitive abilities (35%).  Combined with integrated sales and operations planning (S&OP) and sales and operations execution(S&OE) approaches, the benefits are greatly enhanced with respondents pointing to greater profitability (61%), increased customer service levels (49%) and reduced spend (48%), Baumann added. Unfortunately, two thirds of manufacturers haven’t achieved this goal, the survey found.

Manufacturers are still relatively early in the journey to a digital supply chain. In fact, about 18% of manufacturers are pre-digital, while the same number count themselves as digitally mature. About one third of those survey felt that they would achieve digital supply chain maturity in the next two to three years.

“We see 35%  of survey respondents aspiring to reach digital maturity in the next two to three years, but to achieve that goal and to be equipped to successfully go up against Amazon, these manufacturers will need to make digitalization a priority now,” Baumann said.

For this research, JDA polled 271 U.S.-based professionals across the manufacturing and wholesale/distribution industries in February 2018. Those surveyed held positions in IT (48%), manufacturing (37%) and operations (7%), and most are either managers (37%) or a director or above (28%) 

The infographic below from JDA outlines some more of the survey’s results.

— Hailey Lynne McKeefry, Editor in Chief, EBN Circle me on Google+ Follow me on Twitter Visit my LinkedIn page Friend me on Facebook

1 comment on “Manufacturers Digitize to Compete with the Amazon Effect

  1. Bringer
    October 12, 2018

    Thanks for the post. I really agree with you.

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