Post-pandemic, is planning dead?
Certainly not. Supply chain planning will continue, but the planning environment has changed dramatically. Intensified economic and geopolitical turmoil requires an expanded scope of supply chain planning and management that incorporates manufacturing. The two previously distinct disciplines must now be synchronized to flexibly meet the ever-changing circumstances.
When planning combines supply chain and manufacturing, the following five elements must be kept in mind.
1. The “new, never normal” of supply chain
What seemed normal a few years ago no longer exists. Yet consumers still expect their purchases to be delivered on time, and at an affordable cost. Reconciling these apparently opposing forces requires finding ways to adapt to a world in a continuous state of flux.
Not everything is in a state of chaos all the time, so it’s important to step back and recognize where change is most likely, and where it isn’t. For example, the push to return to more domestic manufacturing and sourcing won’t be all-encompassing. Screws, springs, hinges, and other basic hardware will be produced in low-cost economies for a long time to come.
Conversely, computer chip production seems to be inevitably moving into the Americas. This evolution will take time; one reason, government incentives led by the CHIPS Act will be complex to implement.
The transition to the “new, never normal” can be managed in phases and will require ever-more capable personnel. Fewer jobs will require manual labor, and more work will call for skilled analytical thinking with the ability to plan risk mitigation before the risk is real.
2. The missing link between supply chain and manufacturing
The acronym VUCA — Volatility, Uncertainty, Complexity, and Ambiguity — is a way of seeing the business management environment. During the pandemic, this concept quickly became a reality. Although the head-spinning rate of change has slowed a bit, VUCA is here to stay.
Until recently, communication between supply chain and manufacturing planners and managers was limited at best. Designers, project engineers and production managers assumed that materials would show up when needed. This is no longer a safe assumption, and the manufacturing community needs better communication with its supply chain providers.
At the same time, those who run supply chains in purchasing, sourcing, logistics and other areas need to have full visibility with their internal customers so they can accurately communicate with external suppliers. Communication must work in both directions, and it requires trust, along with performance that continuously reinforces it.
It’s time for those silos to finally come tumbling down.
3. The removal of silos to optimize production
Communication and collaboration must occur earlier in the process for the convergence of supply chains and manufacturing to succeed.
Typically, manufacturing brings engineers and product designers to develop the next group of products. Their focus is on product viability, operability, and Design for X (DfX). Many times, supply chain and logistics teams are not a part of these discussions. What’s needed is a “Shift-Left,” meaning that product design phase should include an analysis and full visibility into all the supply chain implications. All parties must work together to fully understand potential downstream costs, know with certainty that components will be available when and where needed, and achieve the sustainability goals that are becoming less of a “nice-to-have” and more a basic requirement.
For example, an automobile manufacturer had to work around a shortage of door handles because its supply chain suddenly couldn’t deliver — handles necessary to gain access to vehicles during assembly. Patched-together solutions might have included temporary installation of mismatched handles, replaced once the vehicle left the assembly line, or use of improvised devices to open doors.
That kind of failure is less likely to occur when manufacturing companies are integrated with their supply chain partners.
The use of technology and digital twins will be essential to developing an accurate virtual simulation of real-world consequences — before they become actual costs, production barriers and customer disappointments.
4. Achieving synchronization through collaboration and visibility
Traditional walls and silos are ultimately dissolved by developing a clear understanding of the interdependence between supply chain and manufacturing.
Open discussions with partners might be uncomfortable at first but are worth having. Much can be done virtually, but in-person discussions are the most effective way to plant seeds of trust.
A healthy relationship between suppliers and manufacturing is the foundation for a successful convergence between the two. When things don’t go as anticipated, trusted partners will more quickly report a potential problem and suggest mitigations to reduce the impact on all parties.
5. A comprehensive digital twin for perpetual supply chain improvements
Digital twin technology is essential for supply chains and manufacturing convergence to achieve broader supply chain improvements.
Manufacturing facilities, which repetitively produce a limited number of products, are inherently less complicated than supply chains, which can stretch around the globe and incorporate a wide range of variables. For this reason, many manufacturers are using digital twins, while many supply chains are not.
Because supply chain managers often have less digital twin experience than manufacturers, collaborative development of a digital twin in stages is more likely to succeed than attempting a systemic adoption of the technology across an entire network.
First, ask questions, and gather ideas from internal experts. Then, implement a digital twin incrementally, starting with a simple use case and building to more systemic applications.
A digital twin can provide significant benefits for the convergence of manufacturing and supply chains, including smarter decisions, faster decisions, more accurate forecasts, and significant operations improvements.
Though challenges for future planners are more complex when uncertainty is normal, technology has emerged that will support the development of plans based on much more accurate forecasting, continuously updated by digital twin modeling.
Planning is not dead. Rather, it’s ready to support a convergence between manufacturing and supply chain processes that are more efficient, flexible and sustainable.
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