The Key to Resilience in Manufacturing Supply Chains: Digitalization

Importance of Resilience in Supply Chains

Digital solutions provide the foundation for resilience as just-in-case replaces just-in-time within manufacturing supply chains

We may only be in 2023 but the unprecedented series of crises that have followed in quick succession since the start of the decade mean that resilience within manufacturing supply chains has become an even greater priority than before. As stated in “Operating Without Borders – Building Global Resilient Supply Chains”, a report from the manufacturers’ association Make UK, “Supply chain resilience is currently top of the agenda for policy makers, government, and business leaders alike.

“External business factors such as the pandemic, Brexit, and large-scale geopolitical shifts such as the Russian invasion of Ukraine have highlighted how important it is to invest in global supply chain resilience.”

Future Proofing: Digitalization as a Solution

The same report notes that many British manufacturers are trying to mitigate supply chain risk by reducing the geographical spread of their procurement networks, with 42% of those surveyed having increased the proportion of UK-based suppliers.

However, near shoring provides only a partial solution. Longer term, digitalization offers a more robust response. According to global consulting firm McKinsey, organizations should seize this moment to grasp “a once-in-a-generation opportunity to future-proof their supply chains” – and this involves a range of digital technologies.

“The complexity and diversity of supply chain risks require smart management tools”

• McKinsey

“The complexity and diversity of supply chain risks require smart management tools,” states McKinsey, “and leading companies are applying a range of new techniques, from digital alerting systems to track potential disruptive events to risk ‘heat maps’ that help them focus their attention on high-risk regions and suppliers.”

The research from Make UK demonstrates that some manufacturers aspire to this level of digitalization, with 42% of survey respondents intending to increase investment in technology to boost responsiveness and flexibility within their supply chains. At the same time, however, 28% said they had yet to develop an approach to implementing digital supply chain solutions. Only 20% reported being at an advanced stage of implementation and actively seeking to be early adopters of emerging technologies.

The Complexity of Supply Chain Risks and the Need for Digital Tools

The report from also provides insights into the supply chain monitoring technology that manufacturers are already using within their operations. The most popular tools are dashboards and analytics, found in 57% of manufacturing units thanks to their low cost, widespread availability, and ease of use.

Other technologies mentioned by survey respondents include real-time sense and response systems (22%) as well as more advanced technologies such as AI and machine learning (19%). Manufacturers are also introducing robotics and automation (20%), augmented and virtual reality (12%) and blockchain (9%) into digitalized supply chain systems.

Within a context where soaring inflation, high energy costs and geopolitical instability are all amplifying the threats from supply chain disruption, introducing these kinds of digital monitoring tools boosts resilience and flexibility.

Digitalization is not just reactive. It offers competitive advantages, too

Moreover, digitalization is not just reactive. It offers competitive advantages, too – and when viewed from this perspective, it can be easier to secure the support and funding needed to make progress with digital transformation.

Taking the Next Step in Digital Transformation

How do you take the next step in this digital journey? The goal of the digitalization process is to realize solutions relevant to your organization needs, says Simon Hilton, Senior Vice President of Business Development for RS Integrated Supply.

“Defining what resilience means to both the enterprise and your department is critical”

• Simon Hilton, Senior VP, Business Development, RS Integrated Supply

Not all organizations have that level of insight, however. “Defining what resilience means to both the enterprise and your department is critical,” Hilton says. “Most manufacturers don’t pay much attention to that and that can be a costly mistake.”

 

Once you have a clear understanding of what your organization needs to be more resilient, you can make an informed decision about the technologies and tools required to deliver the right results.

“Digitalization offers engineers and maintenance teams more visibility while creating flexibility to make quicker and more accurate decisions”

• Robert Kline, Chief Technology Officer, RS Integrated Supply

And remember, there is support available to achieve these goals. Robert Kline, Chief Technology Officer, RS Integrated Supply, recommends introducing digitalization by partnering with a strategic supplier.

“Across the supply chain, from procurement to inventory management to IIoT and condition monitoring, digitalization is now a critical pillar,” he said. “Digitalization offers engineers and maintenance teams more visibility while creating flexibility to make quicker and more accurate decisions.”

Conclusion

The increasing frequency of crises in recent years has made resilience in manufacturing supply chains a greater priority. Digitalization is critical in creating resilience and agility in the supply chain. It offers a range of benefits and competitive advantages. Organizations should take the next step in digital transformation by understanding the meaning of resilience and making informed decisions about the technologies and tools required.