Industry 4.0 is here. Manufacturers need to transform their supply chain management if they want to keep up. In a 2018 Forrester survey, 58% of global decision makers at manufacturing firms said that they are undergoing digital transformation and 19% claim to have already completed that transformation.
The manufacturing industry is no stranger to the concept of continual change. It has often been at the forefront of new technologies and striving to do things more efficiently, such as leading the Six Sigma approach to business.
As trends and technology like Blockchain, IoT, AI and robots and robotic management software become the norm, manufacturers need to evolve their processes to keep up-to-date with new technology – and continually adapt to tomorrow’s trends. IDC predicts that the next few years will bring a myriad of new technologies for manufacturers to incorporate into their supply chain. But this isn’t easy when ERP systems were put in years ago and don’t have the adaptability to incorporate new technologies.
Connecting gaps in the chain and automating manual steps
Today’s supply chain management will likely involve an ERP system, possibly installed up to 30 years ago. But as new systems and apps have developed, gaps appear between new and legacy systems which means the process is disconnected or inefficient. These gaps are often filled with manual processes which take time to test, roll out and complete.
Manufacturers need to develop an adaptive toolset for continual change, but rather than taking a rip and replace approach to your ERP – you can converge the old and new systems and automate many of the human processes. An automated supply chain process can help to decrease the order-to-cash time.
According to Forrester, “Convergence is a key theme in the Warehouse Manufacturing Systems market. As the supply chain software market consolidates and vendor product portfolios grow, the primary players in the market own an array of supply chain management (SCM) software… The convergence and integration between the systems has the potential to dramatically accelerate SCM efficiency. “
By automating processes that involve spreadsheets and manual administrative tasks, you can increase operational efficiency and bridge the gaps between ERP and legacy systems, new IoT data, people and robots to perform tasks quicker and more effectively. You can then look to incorporate robotics to optimize the process even further. According to IDC, by 2019, robots will be in use in 50% of fulfillment centers, resulting in productivity gains of up to 30% and helping drive down the cost of operations and offset an increasing shortage of labor.
Using data to continually evolve the business
As new technology, such as robotic management and IoT is embraced and usage increases, so does the amount of data and new software. All this information is worthless unless it can be collected and interpreted. All the trends associated with Industry 4.0 incorporate data which need to be analyzed and made sense of as well as being linked to systems and processes.
According to IDC, by the end of 2020, one-third of all manufacturing supply chains will be using analytics-driven cognitive capabilities, thus increasing cost efficiency by 10% and service performance by 5%. For instance, GPS sensors can now be used to track products ‘from floor to store. Forrester cites an example where manufacturers, “use these sensors to gain granular data like the temperature at which an item was stored, how long it spent in cargo and even how long it took to fly off the shelf.” With all the sensors comes more data and this data needs to be linked to other data and to existing systems.
As one process begins, it often can rely on data collected from another process and system – from data about sensors in new apps and systems to valuable information stored in the legacy systems. Linking these processes and continually pulling and analyzing information helps to optimize the process, better connects the supply chain and improves the order-to-cash journey across multiple suppliers.
Connecting employees and suppliers for better supply chain management
Getting goods from order-to-cash involves many employees, multiple suppliers and a lot of products. You will need to connect different people (possibly in different countries) with external suppliers to help move things faster through supply chain management procedures such as PO changes, labeling, vendor onboarding, buying components from multiple suppliers.
Each process can take a long time, with many manual (often untraceable) steps involving people that are working in silos. Yet you need to improve relationships and processes with factories and suppliers, organize SLAs and remove internal silos if you want to increase productivity.
Adidas was able to reimagine their supply chain operations with Bizagi by enabling greater communications between their markets and factories. The manufacturer was looking to increase their operational efficiency by automating ad hoc and manual processes. They hoped that this automation would shorten their time to market while improving their business agility and customer service and improve relationships with factories and suppliers.
They integrated Bizagi with their ERP and SAP to launch 23 workflow projects in 2 years, with 7 live projected automating 25 processes, used actively by 3,99 internal employees. This resulted in reducing the trade vendor onboarding time by 50%, reducing operating costs by 60% and shortening the traditional supply chain development and delivery time by 75%.
If you’d like to find out more about how adidas optimized their processes, you can watch our on-demand webinar below, ‘How Does Adidas Automate and Integrate Digital Operations’.