The Great Supply Chain Inquisition
A greater sense of cooperation will be necessary as the manufacturing industry seeks to turn challenges into opportunities. Many argue that an ecosystem approach to manufacturing will empower companies to weather supply chain insecurities and adapt to rapidly evolving technology. Doing so may not just be a matter of good business, but could be critically important to economies and nations.
Supply Chain Challenges
In the last several years supply chain news has morphed from mundane, specialized fare consumed only by those directly involved into edge-of-your-seat-thrill-ride-page-turner material. This is not a good thing. Factory shutdowns, logistical bottlenecks, tariff wars, border protests, soaring shipping rates, and blocked canals have all contributed to the chaos. If ‘whatever doesn’t kill you makes you stronger’, let’s hope for the latter and not the former.
“Two years of pandemic-induced disruptions have laid bare the risks inherent to low-cost globalized supply chains,” writes Flex CEO Revathi Advaithi for the World Economic Forum. “It is clear that we urgently need to address the risks systemic to our global value chains and reshape them instead into more resilient, equitable and cost-effective systems.”1
The pandemic has contributed a healthy dose of ‘Murphy’s Law’ into the planning process. Just-in-case inventory is gaining favour over the just-in-time model employed previously, while domestic manufacturing is being talked about as a matter of national security. These models are not absolutes, but continuums, but momentum in supply chain management is toward prioritizing flexibility and robustness.
“2022 will be the year in which businesses of all sizes and across all industries will move from the firefighting era of the pandemic-response to an era of operational change and restructuring in the form of a post-pandemic strategy,” writes Jason Chester for Computer Weekly.2
Automation and Industry 4.0 in Manufacturing
As the need for secure supply chains motivates a reshoring of manufacturing, the future points to increased automation, reducing the relative weight of the labour cost dynamics that helped inspire international manufacturing in the first place.
Advances in manufacturing are owed to automated machines and modern materials, while the Internet of Things is enabling greater levels of data collection, ushering in an information-based economy.
“Industry 4.0 is a state in which manufacturing systems and the objects they create are not simply connected, drawing physical information into the digital realm, but also communicate, analyze, and use that information to drive further intelligent action back in the physical world to execute a physical-to-digital-to-physical transition,” proclaims Deloitte. “Simply put, this means that industrial production machinery no longer simply “processes” the product, but that the product communicates with the machinery to tell it exactly what to do.”3
Sharing information and expertise will allow companies to keep pace with the paradigm shift.
The Ecosystem Approach to Manufacturing
Challenges related to supply, process, marketing, and intelligence can be addressed collaboratively if stakeholders are able to effectively identify and provide meaningful mutual benefit.
“With manufacturing, the ecosystem consists of players all along the value chain—from vendors to suppliers—and, by working together, they can help minimize industry-wide disruption,” writes Deloitte’s Vincent Rutgers for Forbes.4
“Relevant information is what keeps the ecosystem’s heart pumping,” explains Kellie Auman for Logicbay.5 Auman believes that timely insights and the ability to share them seamlessly are keys to collective intelligence. According to a Accenture Strategy definition of the Manufacturing Ecosystem she quotes in her piece, “the power of an ecosystem is that no single player owns or operate all components of the solution, and the value the ecosystem generates is larger than the combined value each of the players could contribute individually.”5
Examples of shared resources could include applications, software, infrastructure, technology, products, services, search engines, business models, or promotional efforts. Of course companies are protective of proprietary information and are loath to give anything away for free, making mutual trust and benefit key ingredients. Shared learning and talent development programs are one way to utilize the model.
“The ecosystem’s collective knowledge can be harnessed and packaged via microlearning segments, periodic assessments, knowledge checks, and certifications, all delivered in a Learning Management System (LMS) to track progress against goals,” continues Auman. “These formal training and educational objectives are enhanced by the informal aspects of collaboration, networking, and information sharing.”5
Meeting the Challenges Ahead
It’s said that necessity is the mother of invention, and we live in an age of necessity. As manufacturers look to harness new technology and meet the challenges facing them, any tools available to them will be worth considering.
“Manufacturers can gain greater capacity to solve common problems by co-innovating with their ecosystem collaborators —especially important during times of massive disruption,” writes Rutgers. “With the post-pandemic world still an uncertainty, those who build their ecosystems are certain to be in a better position to face whatever the future brings.”4