Supply chain managers to embrace digital transformation

14 April 2016 Consultancy.uk

Improvements to relationships between organisations and their suppliers has the potential to greatly improve efficiency, cost and transparency. One means of achieving improvements is through digital technologies. A new report, by Capgemini and GT Nexus, considers the digital transformation of the supply chain of large global corporates, as well as its current barriers and future prospects. 

Technology is being use to transform a range of business processes for a range of stakeholders. Digital transformation is cited to represent an important trend within a range of industries, although successful transformations remain difficult to achieve. The digital transformations landscape has a number of different areas of activity – those internal to an organisation, those that affect customers and those across the wider supply chain. Transformation of internal processes, through automation as well as ERP systems, Human Capital Management, etc., has been ongoing. Technologies that transform the types and effectiveness of relations with customers has too been on the rise, including Customer Relationship Management and Marketing Automation, among others. These two segments have garnered considerable attention in recent years, with more and more organisations investing in solutions. 

In a new study from Capgemini Consulting and GT Nexus, titled ‘The Current and Future State of Digital Supply Chain Transformation’, another area of transformation is studied that – according to the report – has seen less attention in recent years: digital transformation between organisations and all of their partners across the value chain. The study involved 337 executives from 20 different countries working across the largest global manufacturing and retail organisations.

The importance of creating a digital supply chain is not lost on the executives surveyed for the report. 75% say that supply chain transformation is important or very important. Many of the executives are also putting up, with 70% responding that they have begun formal digital supply chain transformation efforts.

The report finds, however, that considerable dissatisfaction exists surrounding the progress of their digital supply chain transformation. In total, 33% are very dissatisfied or somewhat dissatisfied, while 5% are very satisfied. The report finds that no organisation is somewhat satisfied with the transformation, while 62% are represented by a neutral stance on the matter.

The report notes that a number of obstacles stand in the path of successful digital transformation journeys. The report finds that 44% of executives report that there is a general lack of awareness within their own ranks about the transformation, and 39% say they lack the required skills to bring about a transformation. Since digital transformations in the supply chain are inter-organisational, barriers may also exist within external parties – 50% of respondents said that their supply chain partners lacked the necessary awareness, while 42% said their supply chain partners lacked the required skills, slowing the transition process.

The analysis further highlights that a number of specific technologies enable the kinds of relationships with suppliers that improve the overall supply chain across a range of metrics, including cost, transparency and efficiency. The top technology is supply chain visibility platform/tools, cited as important by 94% of respondents, followed by big data/analytics, at 90% of respondents. Simulation tools comes next at 81%, while cloud technology comes in at 80%.

To leverage many of these technologies, data from the wider supply chain is required. Yet, the research finds that, not only is there very little data sharing between supply chain partners, at 15% today, the data that is gathered is often not processed in a way that results in decision-making insights – at 23%.

The authors highlight that respondents do expect this to change in the coming four years. By 2020, 54% of organisations expect to have more information available from supply chain partners, while 68% are expect that their organisation will leverage that information by 2020 to generate insights.

According to the report, the next five years will see significant increases in collaboration within the supply chain as digital technologies create a range of ways for organisations to work together more efficiently. 5 years from now, the report suggests, organisations will share more data with suppliers than today (94% agreement), organisations will involve suppliers more closely into the planning process than today, (89% agreement), and organisations will have more real-time visibility into supplier processes than today (87% agreement).

The real-time visibility into supplier processes is particularly important, as the demand for more transparent and ethical supply chains increase: “Holding suppliers to higher standards will become more and more important, because as public pressure mounts for transparent, ethical and sustainable supply chains, the importance of collaborating tightly with suppliers goes beyond assuring supply and optimising costs. Crucially, this means that investments in Digital Transformation can’t just stop at the organisation, but needs to extend to every partner in the supply chain network.”

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Maine Pointe: How 3D printing will impact the global supply chain

21 March 2019 Consultancy.uk

3D printing is touted as one of the most disruptive developments in manufacturing and beyond. UK-based Simon Knowles, Chief Marketing Officer at Maine Pointe, reflects on the impact the innovative technology can have on supply chain management. He outlines potential benefits of the technology and five ways it will impact the supply chain. 

Also known as additive manufacturing, 3D printing is a process which uses a three-dimensional digital model to create a physical object by adding many thin layers of material in succession, subsequently lowering cost by cutting out waste. This is radically different from current, subtractive production methods where up to 90% of the original block of material can be wasted. Although we tend to think of it as a new technology, the first 3D printer was introduced nearly 30 years ago. 

So far, issues such as durability, speed and protection of intellectual property rights have prevented 3D printing from entering mainstream manufacturing. However, the industry is making rapid advancements and it’s only a matter of time before we see it significantly impacting global supply chains and operations. According to the Global Supply Chain Institute (GSCI), "some supply chain professionals predict 3D printing will eventually rival the impact of Henry Ford’s assembly line.” This technology has the power to help companies significantly reduce costs, overcome geopolitical risks / tariffs, improve customer service, reduce their carbon footprint and drive innovation for competitive advantage.

How 3D printing will impact the global supply chain

Impacting the supply chain

Five ways 3D printing will have a massive impact on the supply chain and drive competitive advantage:

1. Decentralise production – The ‘portable’ nature of the technology will enable businesses to take production to local markets or customers faster. As a result, we will see a shift away from mass production in low-cost countries in favour of more local assembly hubs. Companies will have the capability to produce components closer to home rather than rely on imports. This is especially important during times of geopolitical tension, for example during a trade war, when the cost of purchasing components globally can increase rapidly.

2. Drive product customisation – As a tool-less process, 3D printing technology gives manufacturers unprecedented freedom to tailor offerings to clients’ specific requirements and enhance the customer experience. This will result in more agile supply chains which can rapidly adapt to changes in the market. Eventually, we could see design, production and distribution merge into one supply chain function with greater client involvement in the entire design and production process.

3. Reduce complexity and improve time-to-market – 3D printing technology consolidates the number of components and processes required for manufacturing. This will have a significant impact on global supply chains, decreasing complexities, saving on production costs, enhancing lead times and improving time-to-market.

4. Improve resource efficiency – 3D printing is a ‘greener,’ more energy-efficient and cost-efficient production method. It creates almost zero waste, lowers the risk of overproduction and excess inventory and reduces the carbon footprint. It takes ‘Just-in-Time’ manufacturing to a new level.

5. Rationalise inventory and logistics – As ‘on demand’ production becomes the norm, the need to transport physical goods across countries and continents will reduce. Combined with the lower number of SKUs required for production, this will have a major impact on warehousing and logistics and will have the potential to overcome tariffs. 

Tomorrow's technology, today

While 3D printing technology may sound like science fiction, it is actually science fact and it’s making its presence felt right now. Here are a few more real-world applications already a reality or just around the corner: 

Aerospace – It may surprise you to learn some non-critical 3D printed parts are already in use on aircraft. GE already have more than 300 3D printers and GE Aviation wants to produce 100,000 additive parts by 2020. The US Air Force has installed seventeen 3D printed parts on the C5 Super Galaxy, which could save tens of thousands of dollars. Other high-profile users of the technology include Airbus / EADS, Rolls-Royce and BAE Systems. Airbus is already talking about constructing entire airplanes with large scale 3D printers.

US Air Force has installed 17 3D printed parts on the C5 Super GalaxyMedical – The technology is already being applied to manufacture stock items, such as hip and knee implants, and bespoke patient-specific products, such as hearing aids, orthotic insoles for shoes, personalised prosthetics. Success stories include Open Bionics, a UK-based producer of 3D prosthetic arms which, in February 2019, secured a £4.6 million investment to take its business to the international market.

Automotive – Many automotive companies are already making use of 3D printing to help with prototyping. Ford has been using 3D printing technology since the 1980s. According to Ford's website, traditional methods would take four months and $500,000, but with 3D printing, the same process takes four days and $3,000. Future possibilities are almost limitless. In January 2019, 3D printer company BigRep unveiled the first 3D printed motorbike. The bike, which is not available on the market, took three days to print and cost just £2,000.

Construction – Although the technology is still in its infancy, significant advances have been made with the use of 3D printers in the construction industry as construction giants begin to see the potential of the technology. 3D concrete printing is developing rapidly, and the market is expected to reach $56.4M by 2021. More and more companies are starting up in the sector to create new, innovative projects. For example, Russian 3D printing manufacturer, Apis Cor printed an entire house in just 24 hours.§ 

Chemicals – There is an incredible opportunity for the chemical industry to innovate and drive new revenue streams using 3D printing technology. The industry could find itself at the heart of the manufacturing process as it works closely with 3D printer manufacturers to develop new materials specifically designed for additive manufacturing. Major chemical companies are already working directly with 3D printer manufacturers to invent new resins, polymers and powdered metals to take manufacturing into a new era. Chemical giant BASF is one of the companies leading the way with a dedicated 3D printing division and partnerships with a string of hardware OEMs, software vendors, and materials specialists.

Food – We could be seeing 3D printed food in restaurants or in our kitchen in the near future. Initiatives that mix 3D technologies and food are more and more numerous; this new manufacturing method would make it possible to create and mass produce food with more complex and original shapes and innovative recipes. It would also offer personalised meals to better adapt to the diversity of diets. Hershey's has already entered into partnership with 3D Systems to make a 3D printer for chocolate and other edible products though there is no word when the chocolate-making machine may be available.

Oil & Gas – Although adoption of additive manufacturing technology in the oil & gas industry is behind other industries, the technology has enormous potential in this industry. For example, 3D printing could allow organisations to access a bank of digital designs for on-site printing in the field. This will have a major impact on the speed and efficiency of equipment repairs and maintenance, reducing the necessity to either maintain physical inventories of spare parts on site or wait for them to be manufactured and transported to a facility. 

The market for additive manufacturing is predicted to reach $11,223 billion in 2019 and $41,587 billion by 2027. It’s an opportunity executives can’t afford to overlook.