STATE OF SMART
MANUFACTURING
REPORT
Smart Supply Chain
Planning Drives
Agility & Efficiency
Participants in a recent global survey of nearly 300 manufacturers* recognized the importance of smart manufacturing for agile decision making, process automation, and greater efficiency — especially related to supply chain planning.
This study from Plex Systems, in collaboration with Hanover Research, explores how manufacturers can use connected supply chain planning technology to address today’s challenges and take advantage of long-term opportunities.
• Smart manufacturing drives modern manufacturing by making processes faster, more automated, and more intelligent.
• Supply chain planning (SCP) uses technology to align customer demand with business requirements and constraints so leaders can make data-driven decisions.
The data reveals a clear need for consistent and connected supply chain planning technology in order to address current challenges, especially those created or heightened by the COVID-19 pandemic. While supply chain disruption inhibited growth for some companies, others experienced a surge in demand. Navigating and learning from these challenges will help manufacturers weather, or even prevent, future supply chain disruptions.
*Respondent demographics are shown in the Appendix.
INTRODUCTION
SMART MANUFACTURING:
G
The intelligent, real-time orchestration and optimization of business, physical, and digital processes within factories and across the entire value chain. Resources and processes are automated, integrated, monitored, and continuously evaluated based on all available information as close to real time as possible.
MESA International
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2
SUPPLY CHAIN PLANNING IS A VALUABLE SMART MANUFACTURING SOLUTION.
Smart manufacturing is supported by technology that addresses prioritized business challenges now and can be connected to grow value over time.
• Survey respondents ranked connecting people, systems, machines, and supply chains as the most important feature or capability of smart manufacturing.
• 79% say supply chain planning is a valuable or extremely valuable component of smart manufacturing.
While manufacturers recognize the importance of supply chain planning, barriers to adoption remain, including cost and lack of clarity around the value of supply chain planning.
CURRENT BUSINESS CHALLENGES CREATE GREATER NEED FOR SUPPLY CHAIN PLANNING.
Manufacturers face a variety of challenges in today’s global market, including security risks, supply chain disruption, and a shortage of skilled workers. The COVID-19 pandemic has exposed existing challenges and revealed an urgent need for smart technologies that enable manufacturers to be more nimble. Organizations that already utilized supply chain planning, especially with a connected solution, were better equipped to handle disruption from COVID-19.
SUPPLY CHAIN PLANNING DRIVES BROAD BUSINESS VALUE.
In addition to traditional ROI, a smart supply chain planning solution has a variety of benefits for the whole business. Notably, supply chain planning helps mitigate risk and maximize future opportunities. Many of the risk mitigation strategies manufacturers are already using—such as evaluating critical suppliers and developing business disruption plans—can be enhanced by a connected planning solution, using data to drive predictability while enabling the business to become more resilient and agile.
EXECUTIVE SUMMARY
of survey respondents believe smart manufacturing is a key to their organization’s future success.
80%
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TABLE OF CONTENTS
TABLE OF
CONTENTS
KEY FINDING 1: Supply chain planning is critical to smart manufacturing...............................5
Current approaches to supply chain planning...........................................................................................6 Opportunities for improvement.......................................................................................................................8 Benefits of connected planning......................................................................................................................8 Overcoming barriers to adoption...................................................................................................................9
KEY FINDING 2: Business challenges create greater need for supply chain planning.........10
Navigating supply chain disruption..............................................................................................................12 A catalyst for change.......................................................................................................................................13
KEY FINDING 3: Supply chain planning drives broad business value.....................................16
A holistic view....................................................................................................................................................17 Mitigating risk.....................................................................................................................................................18 Maximizing future opportunities...................................................................................................................19
The case for connected supply chain planning.............................................................................20
Addressing business challenges with smart manufacturing................................................................20 Connected planning to accelerate business growth..............................................................................21 Build on the business benefits of supply chain planning......................................................................22
Appendix..............................................................................................................................................23
Survey demographics......................................................................................................................................23
4
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KEY FINDING 1:
SUPPLY CHAIN
PLANNING IS
CRITICAL TO
SMART
MANUFACTURING
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5
CURRENT APPROACHES TO SUPPLY CHAIN PLANNING
Manufacturers are prioritizing new initiatives that enable greater visibility and control over their business and increase supply chain agility to respond to unexpected challenges.
of survey respondents currently perform supply chain planning in some capacity, although more than half of that group do so with homegrown software or manual tools.
plan to increase their investment in technology for supply chain planning.
97%
36%
To what extent is your organization performing supply chain planning?
Use a complete sales and operations planning
within our existing enterprise software solution
36%
Support it with internally developed systems (e.g., homegrown software solution)
Support it with one or more point solutions
Support it with manual tools (e.g., spreadsheets)
19%
My organization does not have this process in our business today
3%
6
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1.SUPPLYCHAINPLANNINGISCRITICALTOSMARTMANUFACTURING
1. SUPPLY CHAIN PLANNING IS CRITICAL TO SMART MANUFACTURING
EXECUTIVE SUMMARY
Why is your organization using supply chain planning software?
85%
Of those manufacturers using supply chain planning, 85% frequently use it to plan for future disruption.
67%
To optimize inventory
60%
To satisfy demand
59%
To improve customer
service
49%
To improve financial
position overall
43%
To mitigate risk, such as
stock outs or missed
deliveries
41%
To implement/improve
sustainable practices
40%
To plan product
portfolio
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7
BENEFITS OF CONNECTED PLANNING
Connected supply chain planning solutions that are cloud-based, scalable, and able to connect business and operational data have widespread benefits.
This technology enables organizations to maneuver with agility in the face of supply chain disruption, like that caused by the COVID-19 pandemic or other geopolitical events. This, in turn, informs business decisions and provides insights when pivoting may be prudent (e.g., supplying to grocery stores instead of restaurants).
OPPORTUNITIES FOR IMPROVEMENT
While most manufacturers are familiar with supply chain planning, relying on often antiquated homegrown software and error-prone manual tools puts them at extremely high risk for data inaccuracy and inefficiencies.
Manual or homegrown solutions often require management from company-specific experts. These individuals might take that expertise with them when they retire or move on, leaving knowledge gaps in the organization’s supply chain planning process.
Supply chain planning systems that are connected to other manufacturing data provide far more value for the organization, including real-time visibility and transparency across the business.
Automotive and Food & Beverage sectors are particularly likely to use internally developed systems for supply chain planning:
71%
Automotive
70%
Food & Beverage
52%
Manufacturers overall
1. SUPPLY CHAIN PLANNING IS CRITICAL TO SMART MANUFACTURING
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OVERCOMING BARRIERS TO ADOPTION
Despite the many benefits, many professionals still face barriers to modernizing their supply chain planning solutions — from lacking the technical skills required for implementation to the costs associated with adopting new technology.
What are the barriers to adopting supply chain planning?
With cloud architecture that enables scalability and connects a variety of data sources, leading modern supply chain planning solutions are relatively easy to adopt and intuitive to use.
Upgrading their supply chain planning technology can help manufacturers address critical business challenges, adding value that will help surmount any remaining barriers.
35% Lack of skill set to manage smart manufacturing implementation (i.e. skills gap)
32% Cost/expense
32% Difficult to replace/upgrade legacy system
28% Lack of clear definition of supply chain planning value
24% Current manual process works well enough
20% Employee resistance to technology adoption and change
16% Misalignment between business objectives and supply chain planning objectives
15% No sustained leadership support
1. SUPPLY CHAIN PLANNING IS CRITICAL TO SMART MANUFACTURING
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KEY FINDING 2:
BUSINESS
CHALLENGES
CREATE GREATER
NEED FOR
SUPPLY CHAIN
PLANNING
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10
CHALLENGES FACING MANUFACTURERS:
2. BUSINESS CHALLENGES CREATE GREATER NEED FOR SUPPLY CHAIN PLANNING
Poorly connected people and systems
Uncertainty in demand
Lack of data-driven decision making
Slow response to market shifts
Silos throughout the organization
Costly buffer stock or stockouts
Operational inefficiencies and missed business opportunities
Falling behind the competition
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NAVIGATING SUPPLY CHAIN DISRUPTION
Manufacturers have long faced complex challenges from an increasingly volatile global market. Unsurprisingly, the COVID-19 pandemic is the biggest obstacle facing manufacturers in recent years, bringing increased concern about supply chain disruption.
Supply chain disruption has inhibited growth for some companies, causing more than half to explore diversification through the industries they target or the products they will produce. Others have experienced a shift in demand that requires agility and visibility in order to meet customer needs.
2. BUSINESS CHALLENGES GREATER NEED FOR SUPPLY CHAIN PLANNING
SUPPLY CHAIN PLANNING
71% of manufacturers and 82% of those in the Food & Beverage sector say the pandemic has had at least a moderate negative impact on their supply chain.
SUPPLY CHAIN DISRUPTION:
A sudden breakdown in the production or distribution of a supply chain due to a drop or surge in demand, shortages, restrictions, or other factors.
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A CATALYST FOR CHANGE
The pandemic has revealed critical areas of weakness that were perhaps previously neglected, opening opportunities to address those areas through cloud-based supply chain planning technology.
How has the COVID-19 pandemic increased the need for smart manufacturing technology?
2. BUSINESS CHALLENGES CREATE GREATER NEED FOR SUPPLY CHAIN PLANNING
45%
Need for increased efficiencies
40%
Need for more agile supply chains
40%
Need to perform functions while working remotely
39%
Need for more cloud technologies
38%
Empowering employees with new digital skills
38%
Need to update operational procedures
34%
Change in size of workforce
32% 33%
Need to pivot rapidly to make new products Need for increased transparency internally
31% New outlook on investment priorities
Redesigning plant layouts for social distancing 27%
13 | State of Smart Manufacturing Report
2. BUSINESS CHALLENGES CREATE GREATER NEED FOR SUPPLY CHAIN PLANNING
PROOF POINT: OLDE THOMPSON
Olde Thompson implemented the Plex DemandCaster Supply Chain Planning solution before the onset of the COVID-19 pandemic.
Olde Thompson makes spices for the consumer market, and demand rose significantly when the pandemic began as more people were cooking at home. As a result, Olde Thompson had the opposite experience of many other food and beverage companies, experiencing surging demand instead of suffering a drop-off.
Since they were using sales and operations planning (S&OP) and connected planning with regular reviews, Olde Thompson was able to course-correct to capitalize on the opportunity, ultimately leading to significant growth and savings early in the pandemic.
$10 MILLION
reduction in inventory costs due to initial implementation
40%
Exceeded previous monthly revenue record by 40% in March 2020
2X GROWTH
in sales volume at the onset of the pandemic
Plex has given us the visibility to know
exactly who’s ordering what, the status
of our supply chain and production, and
what it’s going to take for us to keep
service levels at 99% for a growing
customer base. It’s an essential platform
for the future of our business.”
Marcus Merchant
Director of IT at Olde Thompson
14
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SUPPLY CHAIN PLANNING
The pandemic will eventually wind down, but manufacturers need to make broad organizational changes to navigate future challenges. Technology will enable manufacturers to navigate business disruptions, develop a more agile supply chain, and make sound investment decisions.
• 83% of respondents agree that the COVID-19 pandemic has increased the need for smart manufacturing technologies and processes.
• Most organizations with plans to adopt smart manufacturing technology such as supply chain planning intend to begin within the next two years, with more than half in the next 12 months.
COVID-19 has had a moderate to high impact on internal operations, highlighting previously neglected business areas and causing manufacturers to change key areas of their operations:
COVID-19
Creating contingency
plans for widespread
business disruption
Developing a more
agile supply chain
Re-prioritizing
investments
Increasing workforce
efficiency
83%
2.BUSINESS CHALLENGES CREATE GREATER NEED FOR
SUPPLY CHAIN PLANNING
15
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NG
KEY FINDING 3:
SUPPLY CHAIN
PLANNING
DRIVES BROAD
BUSINESS
VALUE
16 | State of Smart Manufacturing Report
SUPPLY CHAIN PLANNING DRIVES BROAD BUSINESS VALUE
A HOLISTIC VIEW
The value of a connected supply chain planning solution delivers far beyond the traditional ROI model, with many important benefits:
Lower cost of carrying inventory
Short-term planning based on supply chain fluctuation
Producing the right products at the right time
A more collaborative and synchronized business operating without silos
Long-term portfolio planning informed by market data
PROOF POINT:
AARON THOMAS COMPANY
“There has been a tremendous surge in demand for packaged foods during the pandemic. Meeting this demand can create lead time challenges with our suppliers, so it’s crucial for us to plan for that risk and account for the additional time in order to fulfill our
orders. Through Plex, our inventory management capabilities have given us the visibility and planning we need to account for risk in the supply chain.”
Aaron Bacon
President of ATCO Corp. & Executive Vice President of Sales at Aaron Thomas Company
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17
3.SUPPLY CHAIN PLANNING DRIVES BROAD BUSINESS VALUE
MITIGATING RISK
The pandemic has highlighted the need for manufacturers to be more agile and adaptable in their supply chain planning. Supply chain disruptions extend beyond COVID-19, however, and are often just a natural disaster or escalating trade war away. In the next year or two, global political changes could affect trade relationships in the US, Asia, Mexico, and other countries, potentially changing the supply chain landscape further.
Manufacturers who recognize challenges and respond quickly can mitigate the risk of geopolitical events like these. Connected supply chain planning plays a crucial role in helping organizations navigate and overcome future risks and disruptions.
Businesses with the right supply chain planning technology at their disposal will be able to pivot to address disruption, allowing them to seize opportunities now and in the future.
52%
Adopting cloud
technologies
47%
Evaluating critical
suppliers
46%
Backing up data
45%
Developing a plan in case
of operational disruption
45%
Managing cyber
security risks
(e.g., ransomware,
phishing)
41%
Ensuring data
accuracy for reporting
and informed
decision making
38%
Isolating supply
chain problems
28%
Consulting with
experts on
regulatory
compliance
issues
26%
Refining organization
lean approach
(e.g., LEAN, Kanban)
26%
Restricting data
privileges within
the organization
11%
Nearshoring / reshoring
How is your organization mitigating risk?
18
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MAXIMIZING FUTURE OPPORTUNITIES
With the help of effective supply chain planning, businesses can remain agile in the midst of the next disruption, whatever it may be.
Leading manufacturers have been quick to adopt innovative technologies in recent years, driving an urgent and growing need to connect these technologies through a truly integrated smart manufacturing approach that allows:
Greater control over their business
Agility built into their supply chain to respond to unexpected challenges
Workforce with skills and technology to work from anywhere more efficiently
70%of manufacturers have begun to use technology to connect people, systems, machines, and supply chains.
Where do you plan to increase your technology investments in the future?
41% Cloud technology
38% Automation
36% Quality management
36% Supply chain planning (SCP)
34% Industrial Internet of Things (IIoT)
The broad business value of connected supply chain planning is within manufacturers’ reach, allowing them to finally pursue the technology they need to become more agile, resilient, and prepared to maximize future growth opportunities.
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19
3.SUPPLY CHAIN PLANNING DRIVES BROAD BUSINESS VALUE
70%
THE CASE FOR CONNECTED SUPPLY CHAIN PLANNING
THE CASE FOR
CONNECTED
SUPPLY CHAIN
PLANNING
ADDRESSING BUSINESS CHALLENGES
WITH SMART MANUFACTURING
Manufacturers were able to overcome significant challenges and drive their business forward in 2020 using smart manufacturing technology and processes:
Pivoted to meet rapidly changing market conditions
Enhanced visibility and agility across the enterprise
Enabled rapid remote work shift using cloud-based technology
Identified challenges and gaps that need to be addressed
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20
CONNECTED SUPPLY CHAIN PLANNING TO
ACCELERATE BUSINESS GROWTH
A connected supply chain planning solution enables manufacturers to navigate supply chain disruption, remain steady amidst a changing market, and use data to understand where and how to pivot their operations.
Almost half of respondents named software deployment a facilitator of future growth. Businesses are increasingly adopting smart manufacturing technology to develop more agile supply chains, track data across the organization, and automate processes. Connecting their supply chain planning as part of an integrated smart manufacturing approach enables manufacturers to truly optimize their operations across the board.
What is currently driving or facilitating growth within your organization?
THE CASE FOR CONNECTED SUPPLY CHAIN PLANNING
62%
59%
48%
New production initiatives
Organic (new customers, customer expansion)
New software deployment
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21
THE CASE FOR CONNECTED SUPPLY CHAIN PLANNING
ABOUT PLEX
DEMANDCASTER
BUILD ON THE BUSINESS BENEFITS
OF SUPPLY CHAIN PLANNING
Agile supply chain planning empowers organizations with data-driven decisions and higher visibility, leading to a range of positive impacts on the business.
Gain alignment
All key stakeholders should understand the total cost of operating the supply chain and be aligned around a common set of goals for the organization.
Drive accountability
Mature supply chain planning processes allow everyone on the team to hold each other accountable for meeting the organization’s goals.
Satisfy customers
Supply chain planning helps companies prepare to provide the right product, in the right quantity, to the right place, at the right time, for the lowest total cost.
Improve profitability
An accurate forecast of customer demand and required resources gives an organization what it needs to increase profitability.
Minimize costly mistakes
With the context provided by effective supply chain planning, companies have more information for decision making, which can help them avoid expensive mistakes.
Plex DemandCaster Supply Chain Planning helps manufacturers drive accelerated business growth with agile supply chain planning. Businesses can accurately forecast and solve inventory problems with data-driven decisions and higher visibility. Plex DemandCaster is purpose-built for manufacturers and is part of the Plex Smart Manufacturing Platform, which also includes MES, ERP, Industrial IoT, quality, and analytics. With Plex, manufacturers can drive true business transformation by connecting, automating, tracking, and analyzing every aspect of their business. Visit Plex.com/SCPforDummies for actionable guidance on how to use supply chain planning in your organization to improve inventory management, increase production rates, accelerate processes, reduce risks, and decrease costs.
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APPENDIX
APPENDIX
SURVEY DEMOGRAPHICS
290 manufacturing professionals participated in this survey.
Industries
Revenue
Title
Automotive Consumer packaged goods Aerospace Food & beverage Plastics/rubber Precision metalforming Industrial machinery
< $100 million $100–149 million $150–199 million $200–499 million $500–999 million $1 billion or more
Director Manager C-Suite Vice President Department Head
27% 10% 4% 4%
24% 19% 11%
25% 20% 14% 7%
15% 11% 15%
20% 14%
18% 8%
33% 34%
23
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APPENDIX
Department
Geography
44%
28%
7%
16%
6%
4%
15%
13%
72%
IT
Supply Chain/Operations
Manufacturing
Quality
Engineering
United States
Canada
Mexico
| State of Smart Manufacturing Report 24
24%
www.plex.com
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