Industry Renaissance and the supply chain

At the recent Farnborough Airshow 2018, companies did more than $190bn worth of deals, a spectacular 50% increase on the previous year.

During the course of the show, senior executives from some of Britain’s top aerospace and other manufacturing companies gathered for a private dinner at the nearby Four Seasons Hotel, to discuss a topic at the core of manufacturing’s future: whether technology alone is enough to deliver a seamlessly connected supply chain.

Editorial director, Nick Peters was there. 

Industry Renaissance - Digital value chain of wireless connected devices and objects. IOT (internet of things concept background) - image courtesy of Depositphotos.
The key to making the digital supply chain a success is being prepared to alter your fundamental systems, rather than just applying new technology to legacy processes – image courtesy of Depositphotos.

There is a commonly held belief among manufacturers that the more seamless the supply chain, the smoother business will be, and it is hard to argue with that; it feels self-evident.

It should follow automatically that any technology that can assist in making supply chains smoother and faster – more connected – must therefore be universally welcomed.  

Listening to the senior executives at this latest The Manufacturer Director’s Forum dinner, which was kindly hosted by Dassault Systèmes, it was clear that not everyone does agree with this core premise.

Indeed John Kitchingman, Managing Director EuroNorth at Dassault Systèmes, acknowledged in his welcoming remarks that there is a wide array of factors that have to be considered inside companies, and between companies, when digitalisation of the supply chain is undertaken.

These included employee engagement and training, putting in place the right skills, installing best-in-field cybersecurity across all systems and nodes, and knowing what to do with the data that flows from them. 

A further warning was sounded by one executive whose company supplies some of the biggest names in UK aerospace that there is a danger that OEMs and Tier Ones can become ‘preachy’ and ‘arrogant’ in laying down the rules for supply chain upgrades to their suppliers.

He argued that those at the top of the chain have an institutional ‘What is mine is mine, and what is yours is mine’ approach to their suppliers, particularly at the procurement level.

If this attitude is carried through into an increasingly transparent supply chain where costs and pricing become visible, then suppliers could find themselves terminally squeezed.

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Guests agreed that to preserve trust, the larger companies must ensure that it is a process that works for all, not just them. 

Getting the whole process right is vital, one delegate said, because if you apply OEE (operational equipment effectiveness) metrics to connected supply chains they are often not delivering the benefits they promised.

He said in aerospace alone supply chains are achieving a lowly 40% OEE, leaving close to £8bn of value on the table, because of less than perfect implementation. 

The key to making the digital supply chain a success, John Kitchingman added, is that companies must be prepared to alter their fundamental systems, and not just apply new technology to legacy processes.

“It is not about digitising the past!” he told fellow guests, concluding that Industrial Renaissance – powered by new digital tools –  is a goal that is worth striving for, so long as companies understand the complex change and reform they must undertake to achieve it. 

Director’s Forum Dinners are exclusive gatherings of senior executives invited by The Manufacturer and generously supported by our sponsors.

In a confidential ‘Chatham House Rules’ setting, they give executives the opportunity to discuss topical issues freely, anonymously and sometimes controversially, to provide a true sense of how manufacturers are feeling. 

We would like to thank Dassault Systèmes for their generous support. For more about what they offer manufacturers, please click here.

To learn more about The Manufacturer Director’s Forum Dinners or to join us at future events, please email events@hennikgroup.com