Almost 97% of industrial companies registered a negative effect of the COVID-19 pandemic, and to this day, the manufacturing supply chain is still sputtering, disrupting and adjusting to the newfound needs.
Although agility has become the fundamental need of the supply chain, it remains extremely difficult to stay responsive to market change. Here’s the four biggest issues of manufacturing planning in 2022 and how to solve them.
1. Supply chain visibility
The supply chain depends on separate yet interconnected processes to achieve a dynamic balance between supply and demand. The success of an end-to-end strategy relies on both the upstream transactions to suppliers and the downstream proceedings with customers. Any weak link within the process can put the entire chain at risk.
Limited visibility over the supply chain leaves companies with little to no room for action in the case of unforeseen events. A supply chain disruption in the process only presents itself when it is too late to perform any remediating measure. Without proper supply chain visibility, companies usually resort to costly special handling to meet demands. This further exacerbates inventory costs and diminishes profit margins.
Cloud solutions offer features that significantly improve visibility to these disruptions and open up opportunities to increase adaptability amid unforeseen scenarios. By leveraging interconnected systems, companies can monitor current inventory levels more easily, with a forecast of incoming stock. Automating purchase orders to generate just in time ensures stock availability while decreasing the risk of surplus inventory. As for orders in transit, batch tracking features provide an outlook on adherence to schedules and accountability for product handling.
2. Offshoring issues
Globalization makes modern-day companies dependent on international business transactions to meet high-volume demand. Vulnerabilities in this highly-complex system cause significant disruptions on a global scale. We learned that the hard way with the pandemic and the tensions arising from the Russian-Ukrainian war.
Lockdowns due to the pandemic cause labor and spare part shortages for many manufacturers, bringing their plants to a standstill. When the spares finally arrive, managers are under immense pressure to resume manufacturing and deliver the finished product as soon as humanly possible.
Another major issue is the closure of international borders, which obstructs the flow of goods. In addition to raw materials and supplies shortage, distributors and retailers face finished goods deficiency — inventories are drying up.
As a result, reshoring is becoming the focal point for infusing resilience into the supply chain. More manufacturers are beginning to look for accessibility to their warehouses, plants and suppliers and almost 83% of the manufacturers are likely to reshore.
Companies need to take immediate action in looking for locally available alternatives for business continuity. Aside from stock security, such investments open opportunities for better lead times and negotiable prices. One positive side effect is that when you partner with local suppliers, it is easier to avoid global economic and political issues.
Well-known automotive companies are already implementing a reshoring strategy. The United States will become the home for a few of their new factories, helping them avoid the aforementioned disruptions.
3. Increased pressure for sustainability
One-fifth of the carbon footprint comes from the manufacturing industry, which consumes about 54% of the energy resources. The chemical and plastic manufacturing supply chain alone contributes about 80% of the total emission. The need to reduce this percentage has led to increased costs in the supply chain.
C-suite executives across the manufacturing industry need to be careful with the choice of raw material sources, the energy that powers their factories, the packaging materials they use and the disposal of their production surplus.
Digital transformation in manufacturing helps track these data points and implement the necessary control. It enables manufacturers to:
- design products with sustainability in mind,
- make factories of the future,
- use renewable energy across a plant,
- source ethical materials,
- make a supply chain that reduces wastes and addresses recycling.
More sophisticated systems may also be capable of sending alerts in case of excess consumption to take prompt and corrective actions.
With the rise of innovation and available technology, sustainability no longer needs to be simply an outgoing cost. Instead, it can deliver ways for resource optimization that contribute to longer-term savings.
4. Lack of a strong collaboration network
Manufacturing planning must include interconnected teams across the value chain. The unpredictability of supply and demand can easily skew negotiations towards a more established company. Instead, it is in the best interest of all parties to take a more objective approach in evaluating costs and benefits throughout transactions.
For instance, a smaller-sized consumer might feel pressured to shell out higher rates for a sought-after product. However, a more thoughtful and practical procurement schedule can open opportunities for longer-term negotiations, repeat transactions and improved prices.
By having relevant, reliable and updated data, teams can make data-backed, prompt decisions that empower them for the long haul. Following the previous scenario, a facility will benefit greatly from looking into a broader horizon for their demands. By tapping into features of current systems and employing data science technologies, they can forecast requirements across internal functions and schedule upcoming work with higher precision.
On top of the increased capability to break silos within internal teams, a collaborative network also expands its applications to external stakeholders. With a strong foundation in streamlined internal systems, companies can further improve efficiency by sharing forecasts and improving communications with partner vendors.
Manufacturing giants rely on specialized suppliers to meet their end goals of delivering quality. However, establishing strong partnerships with external suppliers requires transparency and reliable data. Digital maturity that allows facilities to make informed decisions and accurate forecasts enables them to build relationships with key suppliers.
The manufacturing industry supply chain has always been complex, and the COVID-19 pandemic made it even more tangled. High dependency on various functions, along with the demands of today's customers, is making it more difficult to stay afloat.
Digital technology adoption at various stages and Industry 4.0 help overcome these challenges. From enhancing output quality to developing sustainable products, digital transformation has become the go-to solution for many manufacturers.