As a manufacturing leader, you’re faced with constant disruptions, labor shortages, and the threat of job loss — time is of the essence. The time is now to take action and invest in technology to optimize your operations, streamline your workflows, and enhance supply chain efficiency across the board.
An expert in the Gartner® Manufacturing Operations Primer for 2022 sighted optimizing operations within the manufacturing industry as one of the top technology investments needed, along with improving supply chain efficiency. If you’re one of the 67.4% of supply chain managers using Excel spreadsheets to manage your inventory and supply chain, it’s time to make a change.
In this article, we’ll discuss the importance of technology investment in manufacturing, highlighting the three areas where manufacturers need to invest. The consequences of sticking with outdated processes can be dire in today’s competitive market.
Global Economic Stability and Manufacturing Concerns
Manufacturers are facing concerns related to global economic stability unlike ever before. Massive layoffs, labor shortages, supply chain disruptions, and economic instability have rocked the industry to its core.
Pre-pandemic research by McKinsey found that companies experience disruptions every 3.7 years, lasting for one to two months on average. However, in today’s post-pandemic world, disruptions are happening much more frequently— making it even more important to remain agile to respond to the shifts in demand and supply.
To survive in this highly competitive landscape, manufacturers must protect margins, improve profitability, reduce operating costs, and enhance customer satisfaction. And the key to achieving these goals lies in investing in supply chain efficiency technology and using data analytics to address these challenges head-on. It’s no longer a “nice to have,” but a “must-have” in today’s economy.
That’s why it’s essential for manufacturers to have a holistic approach to improving their supply chain efficiency. By investing in technology and using data analytics to address these challenges, they can remain flexible in this turbulent economy and ultimately improve their bottom line.
3 Areas of Supply Chain Technology Investment in Manufacturing
Investing in technology is crucial for manufacturers to stay competitive and meet the market’s ever-changing demands. Failure to adopt the right technologies puts your job at risk and could lead to a disastrous outcome for your organization.
Here are three areas of technology to focus on to stay ahead:
Optimizing Factory & Production Operations
To stay ahead, manufacturers must optimize their factory and production operations for efficient production, cost reduction, and meeting service targets. With Logility’s manufacturing planning and optimization solution, manufacturers can respond quickly to demand changes, plan production down to the hour, and achieve rapid ROI. This leads to increased productivity, cost savings, and job security.
Monetizing Customer Service Needs with Connected Products
Connected products offer an opportunity to monetize customer service needs — a crucial aspect of modern manufacturing. By leveraging big data from edge devices, manufacturers can create better demand forecasts, leading to improved service levels, increased revenue, and better customer insight.
Using a causal forecasting solution, manufacturers can incorporate external demand signals to improve forecast accuracy, reduce lead times, and optimize inventory. This helps manufacturers anticipate demand, increase customer satisfaction, and drive revenue growth.
Improving Supply Chain Efficiency
In the face of increasing competition and rising customer expectations, improving supply chain efficiency has become a necessity for manufacturers, both for their bottom line and to maintain their headcount.
To do this, manufacturers need to focus on supply planning and future visibility of customer demands, product and material requirements, and the actions needed to efficiently satisfy market demand. By making informed decisions and leveraging supply chain efficiency technology, manufacturers can optimize sourcing and production schedules, reduce time-to-market, and mitigate supply risk.
Some factors to consider when developing a cost-effective supply chain strategy include:
Effective sourcing management involves identifying and qualifying suppliers quickly, automating order fulfillment in real time, and boosting delivery performance to enhance customer satisfaction. By developing a comprehensive strategy, manufacturers can reduce material costs, improve their margins and gain supply chain efficiency.
Multi-echelon inventory optimization (MEIO)
By understanding the key drivers of excess inventory and putting the right levels of stock at the right places, manufacturers can create the best balance between cost and service.
With MEIO, manufacturers can synchronize their strategic goals with tactical inventory targets, maximizing service levels and freeing up working capital. They can also evaluate inventory segmentation based on volume, velocity, and margin, along with other product and market attributes. This allows manufacturers to make informed decisions that support their business objectives.
Users can analyze “what-if” scenarios to examine the cost and service level impacts of alternative plans and business scenarios. This helps manufacturers to identify potential risks and opportunities, allowing them to adjust their strategy accordingly. By seamlessly integrating with common ERP and APS systems, manufacturers can streamline the management of large, dynamic product portfolios.
By developing a cost-effective supply chain strategy, maintaining high levels of customer service, increasing productivity, and enhancing collaboration across distribution networks, manufacturers can achieve their goals.
Transform Your Manufacturing Operations with an End-to-End Supply Chain Solution
These three manufacturing initiatives are only the tip of the iceberg when it comes to transforming manufacturing operations into dynamic, optimally functioning, and cost-efficient operations. Logility’s end-to-end supply chain solution offers manufacturers a comprehensive set of integrated solutions to create an agile, efficient, and responsive supply chain that can help them stay ahead of competition and customer demand.
With Logility’s solution, manufacturers can gain supply chain efficiency by creating a seamlessly connected supply chain with greater visibility into the entire process – from demand sensing and forecasting to inventory optimization, sourcing management, and analytics.