The rising role of business networks in the era of manufacturing digitalisation

Posted on 2 Nov 2023 by The Manufacturer

Manufacturers have undergone a profound transformation in the past several years, as the industry looks to not only keep pace with disruptive forces but to endure them resiliently. Tony Harris, SVP & Chief Marketing and Solutions Officer, SAP Business Network, explains.

Against this backdrop, it has become pivotal for manufacturers to have greater foresight, transparency and flexibility so they can quickly address unforeseen disruptions. This is where digitalisation comes in.

Manufactures are increasingly relying on the integration of digital technologies to develop a connected, data-driven ecosystem that can help them in every step of their journey – from design to delivery and beyond, digitalisation helps manufacturers streamline operations, improve decision-making, enhance flexibility and increase productivity so they can adapt to the evolving business landscape and further drive innovation.

Building for digitalisation

In today’s fast-paced business environment, manufacturers are finding that tried-and-true efficiency-driven approaches are no longer enough to navigate the rapidly changing industry. As a result, companies are increasingly seeking greater supply chain transparency, requiring solutions that provide real-time tracking and tracing data to proactively manage disruptions and comply with growing sustainability regulations.

In addition, improved visibility into warehouse operations is key. By leveraging advancements in big data technologies, business leaders can gain valuable insights and optimise processes for better resource allocation and reduction of waste. For instance, by visualising movement patterns within the warehouse, companies can pinpoint and eliminate bottlenecks, showing the crucial role digitalisation plays in driving efficiency in manufacturing operations.

When it comes to manufacturing, sophisticated digital supply chain capabilities and greater connectedness can also help organisations increase shopfloor visibility and manage operations with greater agility. This, in turn, enables the evolution of intelligent factories where rigid production lines are transformed into flexible manufacturing cells, facilitating the shift from mass production to mass customisation. An intelligent factory is agile, adaptable and ready to support different production scenarios. Its elasticity allows it to seamlessly manage varying production volumes and manufacturing technologies.

Tapping into the power of business networks

For too long, the manufacturing industry relied on a reactive, ad-hoc approach to tackle disruption which often resulted in mismatched supply chain processes that offer little visibility and failed to keep up with the speed of change. Companies relied on convoluted, manual communication methods between suppliers and buyers, making critical collaboration untraceable and delayed.

In fact, a recent IDC study sponsored by SAP found that that most organisations are still using these ‘old-school’ methods to collaborate with suppliers, with 68% of respondents saying they use e-mail to transmit and receive documents and data relevant to procurement and supply chain collaboration. Other methods include telephone (44%), supplier/customer portals (38%) and electronic data interchange (EDI) (26%).

Digital services have certainly helped alleviate some of these challenges, helping digitalise processes for more seamless transactions with greater visibility and flexibility. However, in today’s dynamic economic landscape, collaborative partnerships are paramount – and this all starts with establishing ‘business networks’.

Defining business networks

To truly understand the role of business networks and how they enhance supplier and partner collaboration, let’s start by defining the concept.

Typically, the term ‘business network’ is used to describe conventional communication methods such as phone calls, fax messages, emails or EDI. However, these communication channels, which primarily facilitate one-way exchanges, do not constitute true networks. To remain competitive, businesses must establish connections between their internal digital systems and their external partners within a collaborative, many-to-many network.

This is precisely what business networks provide – a platform that enables businesses to collaborate with other businesses across various domains, including procurement, supply chain management, logistics, finance, human resources and asset management. Within these expansive networks, organisations can seamlessly exchange data, streamline their operational processes and leverage the collective intelligence of the network to enhance decision-making processes.

Best practices for implementing business networks into digitalisation strategies

Joining a business network is one of the most effective ways in which the manufacturing industry can reap the benefits of digitalisation. Business networks help manufacturers respond quickly to supply chain disruptions, trace components back through the supply chain effectively, improve asset utilisation and comply with sustainability regulations. Here are several ways in which joining a business network can help them achieve this:

Enhancing visibility

Being a part of a business network offers manufacturers the advantage of increased visibility, giving them access to a digital platform that connects a multitude of suppliers, logistics providers, equipment repair vendors and other business partners worldwide. Business networks can also provide track and trace solutions that deliver an added level of visibility, as they’re fully integrated in the overall planning, production and fulfilment processes of an organisation.

Making smarter decisions

Generating huge amounts of valuable data insights, business networks allow all participants to share information that facilitates better collaboration and more informed decision-making. These insights can enable manufacturers to monitor product demand in real-time and adapt production and supply to respond quickly to changes in demand. Moreover, business networks can also proactively raise alerts to users in case of any issues.

Improving the partner and customer experience

Digitalising and automating key pain points of the onboarding, order fulfilment and logistics management processes can significantly improve the customer experience and enhance supplier collaboration. By leveraging business networks, organisations can eliminate friction points within the buyer-supplier relationship, cultivating a more robust and profitable partnership with customers and partners. Moreover, they can connect business partners on a collaborative network, facilitating insights sharing across the value chain.

Improving proactive sourcing processes

Leveraging the visibility and connectivity offered by business networks, they enable manufacturers to take a more effective approach to assess risk and identify alternate sources proactively. For instance, business networks enable organisations to find new sources of supply quickly in times of disruption or in support of risk mitigation strategies like on-shoring or near-shoring. Additionally, these networks also enable buyers to onboard suppliers quickly.

Understanding supply and demand and anticipating customer needs

Business networks can provide manufacturers with a comprehensive overview of goods in motion, helping them identify bottlenecks and focus on areas that require attention. Through a business network, it also helps organisations identify important business trends such as top-selling products and overall sales performance. Additionally, they can share real-time updates on buyers’ orders, shipping information, stock availability, and other useful data that allows them to anticipate customer questions proactively.

Simplifying environmental, social and governance (ESG) compliance

As sustainability regulations increase, business networks can help manufacturers generate tangible value for customers in the areas of compliance and sustainability. Business leaders can gain transparency into the origins and movement of goods, facilitating compliance with regulations and ethical sourcing standards. And customers can start aggregating the data, reporting on it, and acting on the insights. This includes capturing carbon emissions data, gaining more details around material traceability, and making sure that vendors do not use child labour – all with audit-ready data. Compliance and sustainability will only gain increasing importance in the years to come, and the companies of tomorrow must equip themselves with the proper tools today.

In today’s uniquely volatile environment, disruption is a constant reality. Manufacturers must adopt an agile and adaptive approach to effectively navigate these disruptions, minimising their impacts and mitigating risks. By embracing digitalisation and business networks, suppliers will be able to diversify and expand their partner networks, preserve cash, optimise resilient supply chains and become more adaptive to unexpected changes in their market environment.

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