Since the onset of the pandemic, industrial manufacturing has come a long way and continues to build for similar unforeseen future triggers. This was the topic addressed on day one of Manufacturing Leaders’ Summit by SAP’s Director, Industry Value Advisory - Manufacturing Industries, Ashutosh Apte. Later on in the day we caught up with his colleague John McNiff, VP of Digital Supply Chain, to find out more.
What are the key lessons that UK manufacturers have learned from the last few years of upheaval?
John McNiff: The biggest buzzword in the manufacturing sector over the past couple years has been resilience. The key lesson learned is that disruption is now a constant, and business models have now accepted that uncertainty within the manufacturing landscape is not the sole domain of black swan events, but rather, there is now a constant stream of upheaval.
Everything we’ve been talking about over the last few years around how to cope, manage change and become more agile, is now becoming a key part of the business model for UK manufacturers. There’s a recognition of the need to be prepared to react to change, find different ways of responding and dealing with suppliers and logistics partners, and being able to alter a plant quickly. Organisations have now accepted that they must embed those elements into their business processes. The only constant is change – that’s very much the modern-day reality.
What is now in place to mitigate against future uncertainty?
There is without doubt pros and cons of the upheaval we’ve gone through. The companies that performed particularly well through the COVID pandemic were those who already had a process in place or were on a journey to digitise their supply chain; whether that be through integrated business planning or looking at more agile operations.
We could cite many cases where customers continued their service levels and coped very well, due to the fact processes were already in place and the company was ready to react. On the negative side, we conducted a survey earlier in the year of UK manufacturers and supply chain officers, and more than 84% talked about moving from a business model of just-in-time to just-in-case. That typically means more inventory, which can be great for service levels, but bad for waste and carbon footprints. It also has a financial implication.
Can you discuss the key areas of investment that are driving a different approach?
From a technology perspective, around 93% of supply chain executives were saying that they needed to improve their resilience prior to the pandemic, yet less than half had any visibility of their entire supply chain. Agility has become a big investment topic, and that starts with visibility.
Another key area is labour issues; productivity is very much back on the agenda. I read recently that around 85% of today’s jobs could disappear through the use of technology within 15-20 years. That’s frightening for some and there are currently not enough people who understand that business pain, but also how to apply the technology. So it’s important that we understand how to use technology – both through equipment but also aiding decision making.
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