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Supply chain optimization has become an integral part of remaining competitive as a manufacturer. In an accelerating, globalized marketplace—producing increasingly complex and customized products—a manufacturer is only as effective as its ability to manage resources, anticipate changes, and get in front of events. There a thousand ways to optimize your supply chain—and supply chain optimization should be ongoing—but these five tips are a good place to start.
1. Use PLM software
Product Lifecycle Management (PLM) software traces every stage of a product’s journey from initial concept to final delivery. PLM makes it possible to create a centralized data repository that contains everything to do with a product—from CAD designs to the Bill of Materials (BOM) and CNC machine paths. Among other advantages, PLM can significantly mitigate against the ‘design change penalty’, as any alterations are immediately reflected in other systems. Crucially, that data repository also ensures there is an auditable record of what resources are required for any given product at any given time, under any given iteration.
2. Digitally track and manage inventory
Having gained a complete, real-time understanding of what resources are required for a given product, inventory management software can help to more effectively manage those resources. The software enables you to maintain a comprehensive record of what resources are available, where. It also encompasses the status of purchase orders—to understand the procurement pipeline—which can be set against sales. Put simply: do you have enough materials to meet these orders? Armed with this information, you can more effectively forecast how much you may need. The ultimate goal is to produce only as much as is ordered, and procure only as many resources as needed to do so.
3. Build a smart distribution network
If you can’t reliably get products to customers, every step before is irrelevant. A smart distribution network uses connected assets to track every individual batch and product from the factory to the final delivery. Usually, this will require barcode-based tracking—of the kind used by UPS, among others—combined with, for example, GPS tracking of delivery vehicles. With this information, you’ll know if an order is held up at a border, or stuck at a port, and can take appropriate measures; perhaps rerouting another order to meet a higher priority.
4. Integrate with your partners
Your supply chain optimization is only as powerful as your visibility. And yet, only 6% of respondents to Deloitte’s Global Chief Procurement Officer survey said they have full transparency of their supply chain. Businesses are increasingly including their partners and suppliers into their control tower or network to gain greater visibility of what’s happening up or downstream. Such integration enables you to know not only what orders you have with a supplier, but what that supplier’s lead time is—so you can have another on standby in the event of a demand surge, for example, and what blockages their suppliers may have.
5. Employ predictive analytics
The IoT data generated from each of the preceding steps—as well as ERP, EAM, MES and any other systems used—can be connected to a centralized analytics platform. Combined with data on externalities—such as markets and the weather—big data and machine learning techniques can be used to predict shifts in supply and demand that will affect your supply chain. With this information, you can anticipate potential disruption to the supply chain—which you can then plan for—and predict demand, adjusting procurement and production accordingly.
The key to supply chain optimization is data
Supply chain optimization isn’t a one-time exercise. It is a thousand different improvements made on a continuous basis. However, if there is one constant, it is information. The more you know, the more you can pivot and prepare. Digital manufacturing is opening radically new frontiers in the collection and analysis of all the data generated across the supply chain—empowering manufacturers at every step of the process.
