07 Sep Getting the most out of manufacturing data to raise Supply Chain profitability
Delivering perfect orders isn´t easy, but having the right technological tools will help your company to get the most value of manufacturing data and make you outperform, shaping the difference between failing and succeeding in Order Management, especially in highly vertically integrated industries.
Motivated by the very recent article published in the Financial Times, “Pandemic crisis: global economic recovery tracker” that demonstrates that the post Covid-19 economic recovery is beginning, I decided to write this blog post about who in the industrial sector will seize this moment.
The pandemic exposed many of the structural weaknesses of companies, having both the shock of falling demand – due to people’s insecurity or to their inability to provide the service, and the shock in supply chains – closed factories and interrupted supply chains, affected all sectors in one way or another.
It was also clear that some companies were more resilient to the shock, others more agile in looking for solutions and other companies that exploded. Much has been written about the catalytic role of technology in these cases, increasing their sales in an impressive way. And this is where I want to focus. It all came down to the fact that the companies managed or failed to realize their sales opportunity amid the shock of Covid-19.
How to position ourselves to surf the economic recovery wave?
Based on business cyclical data (fig. 1 and 2), the industrial sector has very high performance by tradition as soon as the first signs of recovery are dazzled, but how can companies perform above-average if so much has already been done in terms optimization of supply chains?
The concept of supply chain optimization is easy to explain: it involves an excellent communication between its elements, sharing visibility about themselves as well how element reacts to new information of their neighboring elements. However, there are so many factors in their management and so complex, that it entails a huge management effort to gain in efficiency or agility in the supply chain and translate into a competitive advantage.
How to get the most value from manufacturing data
Technology, namely Industry 4.0, will once again play a pivotal role both in deconstructing complexity and in the search for optimum performance that will allow greater profitability for the company. The argument for this statement relies on the emerging technological breakthroughs such as greater capacity for systems integration at different business levels – for instance vertically from the shop floor equipment to the Supply Management system – Big Data Analytics and further steps like Machine Learning and Artificial Intelligence will enable emergence of an integrated decision support platform. The result will be a greater integration of processes and a greater capacity to deal with uncertainty and at the same time trigger a constant search for optimization of the chain, because the only constant is change.
Ensuring Seamless Order Management
There is a concept known as the ‘perfect order,’ naturally linked to the sales cycle, that applies here very well. The Supply Chain Council describes ‘perfect order fulfilment’ as a discrete measurement defined as the percentage of orders delivered to the right place, with the right product, at the right time.
Manufacturing operations are a fundamental element in the supply chain because it is the only producer element, and its agility and efficiency will dictate the success in the search for perfect orders, and well, if the supply chains are complex, so are the manufacturing units. Most factories are an end-to-end hybrid environment with a mix of production orders resulting from customer orders, from the make-to-stock (MTS) orders, to make-to-order (MTO), engineer-to-order (ETO) and even orders to deal with reworks, order splits, market recalls, etc.
MES plays a critical role in the context of a ‘perfect order’ as it creates a manufacturing operations data platform, which is the very foundation of the digital transformation of a manufacturing supply chain.
In the most advanced industries, this complexity is now managed by MES that will have the responsibility to respond to events created by the business and to react quickly enough to reorganize production and respective Work in Process, minimizing the impact of the event in terms of profitability of the order and of the process itself.
Additionally, a modern MES not only captures process data pertaining to the manufacturing of a given order, it enriches the data with intelligence from external MES sources (PLCs, SCADA and/or equipment integration) aided by Machine Learning/Artificial Intelligence or through the information it receives from other corporative or external applications, such as the CRM, ERP, PLM, SCM and WMS.
From a business perspective, this integrated supply chain becomes the key in ensuring that there is end-to-end visibility and traceability for any order placed, exchanging valuable information back and forth with point of sales.
The MES, by virtue of its own manufacturing data platform, is a key contributor for the perfect order fulfillment, as it allows for all relevant data for an order to become available to all supply chain elements, through its integration with IT applications across that supply chain.
For our readers, the key takeaway here is that for Order Lifecycle Management to be performed at its very best in an Industry 4.0-enabled supply chain, all of the IT applications of the supply chain must be deeply integrated with the MES manufacturing data platform. In this way, all major events in an order’s lifecycle are captured and reported as needed in real-time, with the MES supplying the necessary information to create a knowledge base which will aid in future order placements and their subsequent flawless execution. The Industrials that already have this strategy in place shall have more odds to be the ones to recover faster from the current economic downturn.