Manufacturers are increasingly facing short-run and customised production. This forces them to minimise inventories and maximise their efficiency. Real-time insight into information from the entire supply chain is vital for this. However, many manufacturers lack this insight.
This concludes supply chain technology provider Zetes based on research conducted by research firm Sapio Research. Senior executives from manufacturing sectors in both Europe and South Africa participated in the survey. Demand-driven production models have become essential to achieve the flexibility and efficiency manufacturers need to respond to changing customer demands, according to the research report. Demand for increased customisation and production in smaller runs, among others, has forced manufacturing companies to find a way to effectively manage volatility in the supply chain to minimise inventory while maximising efficiency. Real-time information insight and visibility into the entire supply chain are key to this, the report states.
Gap between operational objectives and reality
Zetes speaks of a worrying gap between organisations' operational goals in this area and the current state of affairs. For example, 80% of manufacturers surveyed cited it as vital to have an understanding of risks affecting the supply chain. 25% actually have this insight. In addition, three quarters want to have insight into all events affecting the inbound flow of goods from suppliers, something only 29% actually have.
80% want insight into product orders, while 34% have it. 89% also say it is very important to have information on order processing, while less than half (47%) have this information. Also has:
- 59% of manufacturers lack real-time visibility into inventory levels
- 68% no real-time visibility into production volumes of factories within the organisation;
- 65% no real-time overview of supplier production schedules.
Information sharing proves challenging
Information sharing is proving to be a key challenge that manufacturers face. For example, 67% say they struggle to share important information between different departments within their organisation. Only a third call collecting information in the supply chain easy. Of the manufacturers surveyed, :
- 70% to receive poor-quality or incomplete information from suppliers;
- 60% indicate that not all important data is collected;
- 60% indicate that getting information from non-integrated systems is a constraint;
- 60% to receive incomplete or poor information from customers.
Dated communication tools
Zetes points to the advent of the Internet of Things and many organisations' efforts to digitise their networks. Despite these trends, organisations still rely heavily on dated communication tools, such as the telephone, fax and e-mail, to share data. This leads to slow communication, silo operations and inconsistent information flows, warns Zetes.
As an example, the company cites a situation where a supplier has problems with the delivery of certain parts. If such problems are shared via e-mail, this can quickly lead to delays in mitigating the potential impact on production and delivery to customers. Zetes points out that without real-time communication of accurate and reliable information, it is very difficult to control the volatility of a supply chain.
In fact, Zetes also says that simply sharing raw, unprocessed information is not enough to create the flexibility needed to improve manufacturers' speed and accuracy. The company argues that this requires fast and accurate information that is 100% relevant to the specific part of the supply chain to which this data is delivered. Think of a real-time alert notification that a component shipment has been delayed and real-time insight into the implications of this for the manufacturer, rather than a long phone call explaining this delay. This real-time information enables decision-makers to mitigate the business impact of such a delay.
Four measures
To be prepared for the increasing demand for more customisation and short-run production, Zetes advises manufacturers to take four measures:
- Identify business-critical processes and map key sources of metric information.
- Create meaningful information from real-time data sources.
- Connect data across different internal and external silos.
- Harmonise data to make valid comparisons and support intelligence decision-making
More information and all the results of the study can be found in Zetes' research report, which can be requested here.
Author: Wouter Hoeffnagel
Source photo: Pixabay / marcin049
