Driving Efficiencies from the Supply Chain of the Future

WHITEPAPER

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01 Introduction

Contents

02 Supply Chain management matters

03 Risk Assessment

04 Technology - key part of the supply chain future

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The pressures on manufacturers managing and operating supply chains are becoming ever more intense. When it comes to scaling

their supply chains, manufacturers often

feel they are being pulled in different

directions. With Brexit imminent, some,

driven by a perceived need to more

precisely control the quality of the product

and to be more responsive to customers,

have focused on bringing their supply chain

closer to home. With the future economic

environment uncertain, many others,

attracted by lower production and labour

costs and the ease of accessing a skilled

talent pool, are feeling the need to build

out their approach globally.

Indeed, a recent survey conducted by

HSO, shows that expansion rather than

contraction is the predominant trend. The

study found that over one-third (35%) of

senior managers within the manufacturing

sector expected their business to expand

its supply chain over the next five years,

with just 13% believing it will become

minimised.

When supply chains expand, they become more complex and, without the latest technology in place, may even become unsustainable.

01 Introduction

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Supply chain management matters

When you consider the benefits that a

well-managed supply chain can bring to

manufacturers, this prioritisation is hardly

surprising. 61% of respondents referenced:

‘the need to manage the increasing cost of

raw materials’ when asked ‘what are the

most important market challenges that

you face today that your supply chain can

potentially help you to solve?‘ That was

followed by ‘growing customer demands,

especially around quality’ (referenced by

47%) and ‘customers expecting ever-faster

delivery times’ (43%).

Meeting ever-growing customer

requirements is certainly becoming an

increasingly tough challenge for almost

every manufacturer today. Customers

are getting more demanding and more

sophisticated in their needs. There is

a growing expectation, and indeed

requirement, that manufacturers provide

the right products at the right time. In line

with this, speed and reliability are the top

qualities that many manufacturers are

looking for their supply chain to help them

deliver. More than a third (38%) of the

sample (and by far the highest percentage

recorded) said: ‘ensure goods are always

delivered on time’ was the main business

objective they were looking for their supply

chain to help them to achieve. One quarter

(25%) stated: ‘improve flexibility and

responsiveness across the organisation’.

In line with this, fluctuations in supply

and demand were considered a ‘main risk

factor’ by more than a third (35%) of the

sample. Nearly half of the sample (44%)

noted that having ‘flexibility to adapt to

meet changing circumstances on future

growth and expansion’ was a key goal when

implementing supply chain technology.

Whether the focus is on expansion or contraction, however, supply chain management remains key for almost all manufacturers today. 85% of the total HSO survey sample regard it as among their most important priorities, with nearly a quarter of respondents (22%) saying it was their number one concern. Just 4% of the respondents said ‘its not much of a priority’.

02

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The survey identified ‘risks associated

with the broader political or economic

environment’, as the main risk factor

organisations today face in running their

supply chains. It was cited by 39% in total

(in what was a possible nod to Brexit).

Moreover, 39% also referenced ‘cross-border

standards and tariffs’ as a main regulatory

threat to their supply chain – again likely

to be a thinly-veiled reference to the future

challenges Brexit may present.

Manufacturers are already taking

pre-emptive action to address this,

however. It has been a regular item on

the news agenda that in order to avoid

major disruption to the supply chain, some

manufacturers are already stockpiling to

allow business to continue as usual.

But with limited capability to stock-pile

this isn’t a long-term solution. Stockpiling

is already getting harder as available

warehouse space diminishes. A nationwide

survey of UK Warehousing Association

(UKWA) members held in December

2018 revealed that 85% had received

Brexit-related enquiries. Approximately

three-quarters (75%) were unable to take on

more business from new customers.

Manufacturers also see many broader risk factors stemming from the wider macro-economic environment. Some

of these were environmental in nature. More than a third (36%) of manufacturers consider ‘environmental and

green regulations’ to be a major regulatory threat. In line with this, it seems clear that changes to environmental

regulations are set to have a major impact on the supply chain in the coming years. Green issues are more

prominent than ever and all industries are beginning to look at how they can minimise their impact on

the environment through reduced plastic consumption and recycling, for instance.

This is something that manufacturers are going to have to consider and factor

into the supply chain moving forward.

03 Risk assessment

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Technology - key part of the supply chain future

Interestingly, when respondents were

asked to name which technology - out

of a pre-configured list - would have

the greatest impact on transforming the

supply chain of the future, electric and

autonomous vehicles came top of the list,

referenced by 18% of the survey sample,

followed by machine learning with 16%.

Artificial intelligence (AI) trailed well

behind on 6%. The lack of enthusiasm for AI

demonstrated here is perhaps a reflection

that the term is still seen as too amorphous

today.

What the survey did more clearly illustrate

however was that many manufacturers

look to supply chain technology as a

means to drive efficiency or give them the

flexibility to grow more quickly. Nearly

half (49%) of respondents cited ‘improved

efficiency across all supply chain stages’

as among the key goals they were looking

to achieve from a supply chain technology

implementation. 44% cited ‘flexibility to

adapt to meet changing circumstances on

future growth and expansion’ among the

key goals they were looking to achieve

from the implementation. The next most

popular options were ‘reduced overheads

and operational costs’ (38%) and ‘better

customer service’ (34%).

Having complete end-to-end visibility

across their supply chain operations is a

key pre-requisite to achieving the above

goals. 83% of senior managers regard

this as important compared to just 2%

who see it as unimportant. Yet, there are

some concerns still in terms of the level of

visibility that manufacturers can currently

achieve across their supply chain. While

85% of the sample rated the quality of the

level of visibility at good or above, just 12%

in total said it was ‘excellent’.

It is clear that manufacturers face a raft of challenges with their supply chain today. In managing these, technology is likely to have a key role to play.

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In the current febrile economic and political environment, this

visibility will be especially key. The focus moving forwards needs

to be on ensuring information flows quickly from the supply

chain to manufacturing decision-makers, so that they can make

fast and accurate ‘flex-plans’ and best optimise operations to

deal with challenges arising.

Technology will be crucial in delivering this enhanced visibility

and operational flexibility. In line with this, we may see some

manufacturers redesigning the supply chain architecture, a

process likely to include the implementation and integration of

a range of new technologies, from data analytics to the Internet

of Things to enterprise resource planning (ERP).

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ERP is especially key, of course. The

technology has evolved to the point where

it can positively impact every single link

within the supply chain, including planning,

procurement, monitoring, measuring,

forecasting and logistics. From the planning

perspective, an ERP solution provides an

easy and flexible way to establish the

parameters within which the supply chain

operates. It can determine policies and

procedures to govern supply chain activities

including production as well as stock

and replenishment processes, and helps

manufacturers keep up with changes and

adjustments to daily or weekly schedules.

Added to this, ERP solutions provide an

effective way to handle the procurement

and supply of the materials and resources

needed across the supply chain. Moreover,

they offer the ability to review supply chain

activities in real-time, whether to identify

the status of individual activities or review

overall performance. Effectively, they can

deliver complete end-to-end visibility.

Equally, they can provide information

aggregation and organisation to ensure any

variances in the supply chain are identified

and promptly addressed; help optimise

inventory levels and tap into past and

present data to improve forecasting, and

help manufacturers navigate logistics to

ensure shipments arrive on time every time.

We are also seeing supplier collaboration

portals rise up the agenda. These provide

a single shared view of data, enabling

manufacturers to collaborate more closely

with supply chain partners and resolve

problems faster. Together with ERP and

general business software, they will be

especially important in keeping that crucial

conduit of information flowing across

the supply chain and providing enhanced

supply chain visibility to key supply chain

players.

The supply chain is a fundamental part of

a manufacturer’s business and it is vital

to have the correct processes in place to

ensure proper management and complete

end-to-end visibility. Without these,

manufacturers are leaving themselves at

risk of failing to have the correct supplies to

meet demand.

ERP can ultimately have a big role to play as part of this end solution.

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Is your supply chain ready for the future?

Contact us to speak to one of our manufacturing

supply chain experts to find out how you can future-

proof your supply chain with Microsoft Dynamics

365.

Contact HSO

Get in touch:

info-uk@hso.com

+44 (0)20 3128 7767

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1st Floor Enterprise Point, Altrincham Road | Manchester, M22 9AF | T +44 (0)20 3128 7767 | info-uk@hso.com

Since 1989, HSO has been a Microsoft Solution integrator and has become a successful ICT company with more than 650 employees and offices in Europe, North America and Asia. HSO supports local and international companies in retail, wholesale distribution, manufacturing and service with their digital transformation journey. The foundation for this is Microsoft Dynamics 365: A complete platform of CRM, ERP, Office 365 and BI software. HSO takes care of the implementation, optimisation and 24/7 support of these cloud solutions. HSO belongs to the Microsoft Dynamics Inner Circle and is proud to have been named the ‘most customer-oriented Microsoft partner’.

More information about HSO can be found at www.hso.com. Follow us on Twitter via @HSO_Tweets.

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