For many discrete manufacturers, supply chain volatility is becoming the new normal. Manufacturers are facing a plethora of challenges, from raw material shortages to shipping container delays, so the need to create resilient supply chains is imperative.
In a post-Covid economy, manufacturers are trying to find more proactive and robust supply chain solutions that take them out of the “firefighting mode” that they experienced over the past 18 months. This was top of mind during the “Planning for recovery: Supply challenges facing discrete manufacturers” webinar, which included great insights from:
- Tobias Bloecher, Managing Director, Former Director Global SCM at Pepperl+Fuchs
- Dirk Lembregts, Former SC Executive at General Motors, Philips, and Marks & Spencer
- Philippe Wolff, Director of Industry Solutions at o9 Solutions
“We have to look at volatility as kind of a state of business,” says Lembregts. “In the past, we saw it as an inconvenient period between relatively stable periods. So I think what is sinking in is that the crisis-related changes we did last year, we’re still going to need them going forward.”
The time to build a resilient S&OP process is now
In discrete manufacturing, identifying and addressing supply chain challenges needs to happen at a faster pace, according to Bloecher. The Covid pandemic directly affected Pepperl+Fuchs’s industrial sensor and explosion protection divisions as the business faced compounding issues including sea freight delays, changes in automotive intake, and implementing safety protocols in factories. This was a catalyst for shrinking S&OP cycles and increasing the frequency of their planning processes. P+F also established a task force to open communication channels both internally and across their supply chain to ensure disruptions could be addressed effectively. Many of these processes will continue to be implemented because it’s creating a more resilient supply chain going forward. “While developing a S&OP across a business driven by a crisis situation, we realize quite fast how much value we can get from that by aligning a sales front end with a production back end, even reaching out to external suppliers in times like we saw last year,” Blocher says.
Embrace learning from other verticals and bring in external data to “learn and leapfrog”
Building a resilient supply chain is a journey and can be a multi-year process. Both Bloecher and Lembrehts believe that many supply chains across industries are converging. As such, B2B companies should take a cue from B2C companies by using external data points–especially to gain insights into sales, demands and supply–to help steer their supply chain and be ahead of the game. Gaining access to external data and advanced analytics allows a manufacturer to not only have visibility into their entire supply chain network, but also leverage intelligence on suppliers, markets and potential competitors to build a more resilient supply chain. “Using external data to get insights I think is good news for discrete manufacturers because you don’t have to go through a 10-year process. You can learn and leapfrog,” says Lembregts.
Key components to a future-proof supply chain
Another essential point discussed was the idea of the three pillars that are essential to building a resilient, future-proof supply chain. According to Lembregts this consists of:
- Visibility into external data
- Ability to quickly respond
- Sufficient response options
By using external data to have visibility into a supply chain network, companies become more prepared to handle disruption by being able to respond quickly (agility) with multiple options (resilience). From a more tactical standpoint, this can look like building capacity or inventory buffers, or finding additional sourcing for critical components.
See disruptions as an opportunity to re-evaluate technology used for planning
One of the silver linings of supply chain disruption is that it may show manufacturers the role that technology can play in becoming more responsive to market changes. Before Covid, Pepperl+Fuchs was already assessing planning capabilities and the types of software that could support this. The pandemic further accelerated this process and showed the need to react faster to supply chain disruptions. Throughout the process, a key takeaway for Bloecher was drilling down beyond current pain points to explore the company’s true supply chain planning structures, strategies and capabilities and how technology could support this process. “This was something that added value to us and brought back tons of questions that we thought to ourselves,” he says. “What is technically possible, what does the business actually need and put that through several iterations has certainly helped us.”
During the discovery process, it’s important to remember that it’s a joint collaboration between the business, the solution provider, and your people. In the process, everyone brings a different perspective. For example, the solutions architect will be highly technical, but won’t have a deep understanding of your business, whereas another team member may have a deep knowledge of your industry and business, but not be familiar with the AI/ML powering the software. Therefore, it’s necessary to have “people on your side with ‘translation’ skills who have deep knowledge of your business, but also technical literacy where they can draw the connections,” Lembregts says.
Building a resilient supply chain requires trust
Overall, one of the most critical aspects of developing a resilient supply chain is building trust throughout each component, not only with your vendors and suppliers, but also with the technology used. As planning software becomes more prevalent, Lembregts says planners need to trust that the machine learning algorithms are guiding them in the right direction and strike a balance between data insights and their personal knowledge in their decision making. “People can provide context to the models, so it’s important to understand both sides,” he says. “It’s about human and machine workflows.”