The challenges brought on by Covid, Brexit and the subsequent shortages of key commodities have been the catalyst for the acceleration and adoption of digital supply chain solutions, including Enterprise Resource Planning (ERP).
To drive the realisation of Industry 4.0, most enterprise processes must become more digitised. A critical element will be the evolution of traditional supply chains toward a connected, smart, and highly efficient supply chain ecosystem.
In today’s digital world, technological advancements combined with external market forces, the increasing influence of emerging economies, a growing skills gap in the manufacturing workforce, and complex regulations governing both products and markets have catapulted the manufacturing industry into a new era; where the path to profitability is changing.
If manufacturers are to build a digital supply chain ecosystem, they can’t just gather technologies and build capabilities. They must also find people with the right skills and manage the shift to a culture that’s willing to carry out the effort. In other words, they must transform their entire organisation.
So, what is digital manufacturing?
Here are five key elements to building a digital manufacturing operation:
1. Integrated planning and execution
The business goal of the digital supply chain is to deliver the right product, to the right people, at the right time; while increasing efficiency and cutting costs through automation. This goal cannot be achieved unless the supply chain is fully integrated, seamlessly connecting suppliers, manufacturing, logistics, warehousing and customers.
By integrating in this way, alerts can trigger events in the supply chain that can emanate from anywhere in the network, across multiple locations and alert all to issues affecting supply or demand; such as shortages of raw materials, components, finished goods, or spare parts.
2. Supply chain and logistics visibility
The key to success for any supply chain is the efficient exchange of information. Therefore, an overarching goal of digital manufacturing is to open the supply network for all to see. The key to visibility across the supply chain is having enriched internal and external data available in a ‘single view’. A ‘single source of truth’ helps manufacturers to optimise their choices under different conditions, using the information to alert factories, warehouses, and customers to endangered arrival times and engage in mitigation actions. Visibility into both transport status and expected external impacts on the lead time, and the ability to change plans, accordingly, will be instrumental for manufacturers looking to use their supply chains for competitive advantage and to manage more carefully the many risks associated with supply chain activities.
3. Smart procurement
Digitising procurement radically changes the tools and talents required, adds new categories to be sourced, and transforms the value proposition of the procurement function.
Efficient integration and management of suppliers of raw materials and parts is a critical building block in the digital manufacturing ecosystem. The digitisation of many traditional aspects of procurement is already underway as manufacturers use a variety of data tools, such as ERP systems; to connect more closely with suppliers, aid the planning process, improve sourcing, actively manage supplier risk and boost collaboration. The result is lower costs and faster delivery throughout the supply chain as it becomes increasingly automated.
4. Smart inventory management
The next link in the digital supply chain is inventory management, and it promises to become a strategic tool in how manufacturers operate and generate value for their customers. The aim is to improve efficiency and safety through the automation of virtually every inventory activity.
Inventory is closely linked to cash flow. The less inventory you have sitting in the warehouse the more cash you can have in the bank. This must be balanced with the difficult-to-measure metric of how many sales could be lost because of insufficient inventory.
You don’t want to have old, out-of-date inventory or too much inventory, and you need to be able to replenish the inventory in a timely and efficient manner and be able to understand and manage the costs of your inventory. Controlling the costs at source can improve your margins without needing to raise sales prices and becoming uncompetitive in the marketplace.
To achieve this goal, you need the visibility, flexibility and control delivered through a fully integrated ERP system, that can manage the inventory from procurement through manufacturing to delivery to the customer, giving visibility of quantity and cost at all stages.
5. Supply chain analytics
The goal of the digital supply chain is to fully integrate and make visible every aspect of the movement of goods. The key to this critical element of Industry 4.0 is data analytics.
Manufacturers need the tools to visualise the current state of their supply chains; where the goods are, where the demand for specific items is currently coming from, and when items are likely to be delivered.
Supply chain analytics systems, such as an ERP system, provide decision support to supply chain managers. To improve the quality and efficiency of such decisions, manufacturers need to be able to generate insight with data across multiple sources and create consistent analytical models. As the global economy recovers, manufacturing challenges remain. The above key elements are just a few examples that answer the significant ‘What is digital manufacturing?’ question.
Download our guide: Reimagining Manufacturing to find out more useful information on how to digitise your operations.