Cautious manufacturers struggling with logistics of supply chain transformation
Conservative-minded manufacturing businesses are hobbled by their cultures and skills, and struggling to implement digital change in their supply chain networks. This is despite the fact most are enlightened about the opportunities afforded by new digital supply chain technologies.
A new study by Deloitte and the Manufacturers Alliance for Productivity and Innovation (MAPI) has found more than half of manufacturers (56 per cent) believe digital supply chain networks will provide significant benefits to their company, compared with traditional linear supply chains. In total, 51 per cent consider the digitalisation of their supply chains is at least “above average”. However, just 28 per cent have actually started to upgrade to digital supply chain solutions.
Manufacturers that fail to break free of cultural resistance will fail to modernize, said MAPI. “In the end, these companies risk being late to the game and implementing solutions whose value is hard to measure because of either the time it takes to show an improvement or the overall scale of the implementation,” said John Miller, council director at MAPI.
Deloitte and MAPI polled 200 manufacturing organizations in their research. The manufacturing industry is struggling to get to grips with new technologies, the pair concluded. “While manufacturers realize the benefits of digital supply networks, many struggle to identify the right technology landscape to provide the most value when they are approaching a digital shift,” remarked Stephen Laaper, principal at Deloitte Consulting and the study’s co-author.
“As a result, many hold off with key aspects of their transformation, which in turn puts their transformation at too slow a place to avoid disruption.”
The changing nature of work in advanced manufacturing technology is impacting rollout of digital supply networks. Culture and skills are major barriers to digital transformation. Manufacturing businesses do not like change, the study confirmed; 37 per cent claim resistance to change poses the greatest challenge to their digital initiatives, and 33 per cent said the same of siloed operations and horizontal integration.
The twin tasks of finding and training employees were cited as the barriers by 30 per cent of respondents.
MAPI pointed to the intensely private struggle for manufacturers to come to terms with their own digital transformations. “There is no one way to deploy a digital supply network,” said Miller. “All companies operate differently, thus their implementations carry unique challenges based on the existing infrastructure, talent base, culture and technological requirements.”
The study found supply chain transparency is the top priority for manufacturers, as a way to drive efficiency gains. But only six per cent of respondents have visibility of the data of every member of their supply chain, and 17 per cent said cyber risk is the reason they are reluctant to share their data. Just 38 per cent have conducted an internal cyber risk assessment in the past year.
Deloitte said blockchain might alleviate security concerns by allowing authenticated communication but that it remains an outlier, drawing the attention of just 17 percent of respondents. “Blockchain can increase trust and transparency and reduce both the cost and risk of moving information across a supply network. As organizations develop a greater understanding of this relatively nascent technology, adoption rates should increase,” said Laaper.
The ‘internet of things’ (IoT) is having a huge impact on the way companies approach supply chain management. The deployment of sensors now allow companies to monitor the condition of products in shipment, and cloud platforms can optimize delivery routes. These are just some of the technologies disrupting the way supply chains are managed.
Digitalisation of supply chain and factory floor operations is a key growth area for the booming IoT. Enterprise IoT Insights chatted with Intel, Bosch Rexroth, and the Manufacturing Enterprise Solutions Association about best practices for stakeholders looking to leverage IoT solutions.