Transforming supply chains through digitisation

Manufacturing firms are increasingly recognising the opportunities that digital technologies can provide both internally to their business and across the extended supply chains in which they operate.

Dr Jag Srai discusses how companies can evaluate these opportunities and take practical steps toward the digitisation of their operations and supply chains.

Dr Jag Srai, head of IfM’s Centre for International Manufacturing, The University of Cambridge
Dr Jag Srai, head of IfM’s Centre for International Manufacturing, The University of Cambridge

Today’s technologies hold out an alluring possibility of a world in which the end-to-end supply chain is utterly transformed – highly connected, flexible, efficient, resilient and truly responsive to customer needs.

Each of these attributes sounds attractive, but put them together and you have a completely new way of doing business.

One of the main challenges with developing a digital supply chain vision is evaluating the many potential digital technology opportunities within a given operational context. Connecting previously discrete operations and businesses, suppliers and customers, and evaluating new production technologies is complex enough.

Equally, there are many challenges and risks, not least the increasing skill gaps as technology developments outpace our ability to embrace and implement. The opportunity space is therefore quite specific to each company. But how do you identify what areas in your supply chain will deliver the most value, eliminate deficits and create unique opportunities?

At the Institute for Manufacturing, we have conceptualised what a future digital supply chain might look like. As part of this we are breaking down digitisation possibilities into key areas or ‘scenarios’ to help companies understand the ways in which digitalisation could impact their organisation.

We have identified 10 future digital supply chain transformations (DSCT), summarised in the box below.

What scenarios will benefit your company?

By breaking down the digital supply chain into distinct but connected scenarios, against which companies can measure their performance and aspirations, we have developed a powerful framework that will help manufacturers develop their digital supply chain strategy and capabilities.

The scenarios help to shape thinking on the most promising opportunities and develop a more strategic approach to digitisation that is both deliverable and will create value for the company.

A good example of this is the pharmaceutical sector. We are leading the research component of a major UK project headed up by GlaxoSmithKline to address some of the challenges the pharmaceutical sector faces, such as the hundreds of days of inventory sitting in the supply chain and the vast quantities of waste caused by patients not taking the drugs they are prescribed.

IfM - 10 future digital supply chain transformations (DSCT)

Using digital technologies and data-rich systems to make the pharmaceutical supply chain much more efficient is one thing, but we are also mapping an entirely new business model in which drugs can potentially be manufactured to order closer to the point of consumption – possibly at the local pharmacy or clinic.

The move to more customised products or indeed personalised medicines will require new production technologies that can offer volume flexibility as well as product variety. Continuous production technologies may provide a route away from the traditional large-scale centralised batch operations of today and enable this digital transformation.

IfM - digital supply chain digitisation PQ - April 2017For other companies, the benefits gained by digitalising may be in other scenarios. For example, in a company where product consistency is an issue, digital product quality management systems (DSCT 8) may resolve product quality issues and extended supply chain real-time monitoring (DSCT 7) may help resolve supply disruptions.

For another company that is losing competitive advantage through poor customer service, e-commerce (DSCT 6) may offer solutions through customer-connected supply chains where there is constant monitoring of product usage and consumer experience and tailoring the offering to individual customers.

Application of our framework across multiple industry and product sectors is leading to some emerging patterns in terms of which transformation scenarios, and scenario combinations, are having the most impact.

Industries with a significant production asset base for example, have focused on digital factory design (DSCT 2), real-time scheduling (DSCT 3) and automation (DSCT 4). In contrast, manufacturers of plant process equipment involving servicing may also want to consider product lifecycle management systems (DSCT 10).

Business to Consumer companies with multiple production and/or retail sites may benefit from focusing on a combination of three areas that most enhance supplier to customer connections –automated e-sourcing (DSCT 1), e-commerce (DSCT 6) and digital supply network design (DSCT 9).

Sharing experience

The IfM has used the 10 digitisation scenarios as a framework for thinking about digitisation with some of the world’s leading manufacturers. A pre-competitive consortium is now facilitating the sharing of experience and best practice among like-minded organisations.

As part of the consortium, companies are setting out approaches to capability development in digital supply chain technologies and skills. Member companies will also have an opportunity to undertake pilot ‘deep dive’ projects to develop and embed those capabilities to enable rapid digital supply chains transformation with real business impact.

Further details

For more details about the consortium contact:

Jag Srai: jss46@cam.ac.uk

Paul Christodoulou: pac46@cam.ac.uk

10 future digital supply chain transformations (DSCT)

  1. Automated e-sourcing

Increasingly, the sourcing bottlenecks and materials vulnerable to supply disruption are further back in the chain. Digitisation can give enhanced visibility through seamlessly connected automated replenishment in line with real-time KPI monitoring and predictive disruption analytics.

  1. Digital factory design

Digital 3D modelling systems, coupled with flexible manufacturing systems and data connectivity, will deliver a new paradigm for factory layout design, process and material flow. Factories need to be easily reconfigurable to respond to change, but an organisation will need to analyse if it is cost-effective and whether it will create and capture the most value.

  1. Real-time factory scheduling

Advanced factory execution systems with sensor-enabled smart devices, real-time data KPI monitoring and predictive maintenance could lead to increased productivity and improved delivery service. However, this needs careful navigation to maximise business gains and avoid costs and complexity.

  1. Flexible factory automation

Cheaper technology is now available for advanced manufacturing plant/machine reconfiguration involving varied levels of human-robot collaboration and machine learning. While automation can deliver lower cost for variety, increased customisation, labour saving, quality assurance, closer to market and improved health and safety, it also needs to support necessary economies and enable flexible reconfiguration.

  1. Digital production processes

Application of digital production processes (e.g. additive manufacturing and continuous processing) with advanced process analytics will enable new product designs and enhanced customisation. It also has the potential to disrupt entire supply chains and industry sectors, so it is an area that companies need to be continuously horizon scanning.

  1. E-commerce fulfilment

Web-based order management (configuration, pricing) and inventory deployment to multiple points of sale, covering last-mile and direct delivery should be a foundational aspiration for most companies. The additional value comes from looking beyond this to customer-connected supply chains involving constant monitoring of usage and experience, and tailoring the offering to suit.

  1. Extended supply chain (near) real-time monitoring

Looking at the entire network and using data, predictive analytics, real-time risk management and dynamic resource optimisation, companies could potentially create visualisation ‘watch towers’ over the end-to-end supply chain. This could help firms to optimise integration, predict disruptions and support dynamic decision making.

  1. Digital product quality

Companies can create powerful digital product quality management systems by connecting back from customers to suppliers. This could result in problem prevention and faster resolution, higher customer satisfaction, better performance, compliance verification and avoided warranties.

  1. Digital supply network design

Digital network design modeling and visualisation tools can be used to redesign the total supply network configuration. This could lead to totally new network designs and changes in supply collaboration, site location, capacity, inventory and customer response.

  1. Product lifecycle management

There is a growing need to integrate product-based data systems with supply chain-based systems. Next-gen PLM (product lifecycle management) systems will provide accurate, up to-date product information accessible throughout the value chain and product lifecycle. This will allow cross-function and cross-organisational involvement in design and innovation with potentially quicker time-to-market and improved portfolio management.

IfM network courses

The IfM is running two upcoming one-day courses focusing on production and supply networks.

The first course on 10 May explores how companies should reconfigure their international footprint to deliver real business impact. The second course, on 13 June, is on developing end-to-end supply chain capability, including how to utilise digitalisation to drive improvements.

More details at: www.ifm.eng.cam.ac.uk/events/