Collaborate, improve resilience in an industrial automation supply chain
Integrated digital tools improve supply chain productivity by minimizing time wasted in manual information exchange, more easily creating consistency across supply chain processes. Automated steps add consistency and decreases chances for human errors.
- Understand how rapid changes in supply chains created a need to share more information more effectively.
- Learn the advantages of improving data transparency for supply chains.
- See how tools can increase supply chain digitalization, integration and automation.
Integrated supply chain insights
- Rapid changes in supply chains require sharing more information effectively.
- Data transparency tools can increase supply chain digitalization, integration and automation.
Recent unprecedented supply chain issues (due to the COVID-19 pandemic and several ongoing geopolitical situations) continue to force manufacturers to reassess and establish a well-conceived contingency plan to limit the business impact of supply disruptions. The integrated nature of the modern supply chain system requires close collaboration based on transparency, information-sharing, two-way communication and increased digitalization so suppliers and customers can work together to overcome supply vulnerabilities.
Collaboration must take a lead role in paving the way for a more modern, digitalized era of supply chain management, which ultimately will help build resilience.
Rapid changes in supply chain management
The last three years have challenged those in in supply chain management. During the pandemic, the well-oiled global transition of goods and services ground to a halt almost overnight as lockdowns kept workers at home and ships in port. With factories closed, lead times and backlogs quickly grew. With reduced availability, prices of raw materials and vital components rose sharply.
Even global companies with factories and customers around the world were affected, like many other organizations, with long delays on delivery times, which were unheard of pre-2020.
To compound these issues, supply chains were pressured by an explosion in demand for some components and materials during the same period, which increased competition for limited stock. For example, growth in the electric vehicle (EV) market is gathering pace, so batteries, electronics and semiconductors were in high demand from other companies too. Other markets were building stock to prepare to react once lockdowns eased, and “normality” was restored.
When it seemed “normality” was in the cards, war broke out in Ukraine in 2022, and this created specific gaps in the supply chain; Russia and Ukraine are big exporters in grain, fertilizer, timber, metals and other areas. Outside of Europe, tensions between Taiwan (home to some of the world’s biggest semiconductor manufacturers), China and the U.S. continue to disrupt previously efficient supply chains, leading many to wonder if alternative strategies need to be developed.
The above challenges share a lack of predictability. Without the ability to predict or control the outside influences affecting supply chains, reliance on others increase to navigate the evolving landscape.
Improving the view of the bigger supply chain picture
The current unpredictability of supply chains is difficult to manage and plan for as scenarios and expectations change. This is when collaboration is essential and where information sharing and open communication are key to minimizing business disruption.
Since the pandemic started, we have been striving to advance forecasting activities for vendors to increase their planning horizon. Better forecasting creates a longer time window, which allows vendors to place orders with their vendors further in advance and better plan production capacity. It decreases risk related to getting components and materials when needed.
That long-term view is essential for planning. Long-term commitments for critical items give vendors even greater visibility into future pipelines to improve supply chain efficiencies. These commitments are constantly being updated to increase stock levels as needed or develop specific vendor-management-inventory deals.
To ensure the forecasting and planning approach stays on track, weekly executive management escalation calls discuss status of specific critical components like electronics. This ensures that manufacturers and distributors have the real-time information needed to prioritize accordingly.
Openly sharing information decreases stress of unpredictability to improve the bigger picture of supply chain visibility.
Improving data transparency for supply chains
Data transparency can help when working with vendors to build a more resilient, more effective end-to-end supply chain. In many organizations, implementing more data transparency was the original problem. Spurred on by supply-chain pressures from the geopolitical climate, development of a supply chain collaboration tool accelerated to help data transparency with vendors.
A digital platform implemented as a pilot is in the process of being rolled out globally. The working version of the tool allows partners to access relevant data to make their plans and adjustments based on what they see. The tool is designed to ensure data accuracy, speed and alignment for vendors and buyers. Future releases may identify bottlenecks in supply chain and manufacturing issues, so vendors can understand how far in advance they may need to place orders or how to reshape or reshuffle the mix of products they are ordering.
Modules and functionalities of the digital collaboration tool will help improve transparency in the short term. Once the pilot starts, more functionalities will be considered. Supply chain partners will collaborate to help identify and incorporate the lessons learned in the pilot to advance platform capabilities. Collaboration will accelerate the transformation program.
Develop a culture of two-way supply chain communications
Foundations of data transparency require a shared willingness for two-way communications. Communications with vendors and customers improve with open data sharing. This is a main way to minimize supply chain surprises.
Communication is crucial between supply chain participants and cross-functionally. For example, if a customer is struggling to deliver on a specific component perhaps because a component material or chemical substance is increasingly hard to source or is going to be discontinued, collaboration may help find a resolution, bringing in other departments as necessary. Can we find a potential alternative technical solution? How can we help each other? Real information sharing is becoming more crucial.
Increased supply chain digitalization
Digitalization is a key enabler of meaningful, supply chain collaboration, and it is becoming more important for business. COVID made the need for digitalization more evident; a digital approach lowered the risks of working and delivering on customer commitments during lockdowns.
Digitalization also can be a key driver in supply chain sustainability. Using data from vendors and their suppliers, a cloud-based version of supply chain collaboration software can assess emissions for all product components and monitor future CO2 emissions.
Digitalization is also essential for improved productivity in the supply chain by minimizing time wasted in doing something manually, which could have been done more quickly digitally. It creates consistency across supply chain processes. More automated steps add consistency and decrease chances for human error.
Integrating, improving supply chains
During unpredictability, advancing digital connections creates a more focused end-to-end picture of every supply chain. Geopolitical events, natural disasters and global pandemics happen. Businesses, manufacturers, vendors and customers that collaborate can proactively improve supply chain effectiveness.
Using innovative technology and an open, transparent approach to collaboration lowers risk and ensures we are operating in the most efficient and sustainable way for customers, now and in the future.
Sara Cattaneo is ELDS – head of supply chain at ABB; Edited by Mark T. Hoske, content manager, Control Engineering, CFE Media and Technology, firstname.lastname@example.org.
KEYWORDS: Supply chain digitalization, supply chain automation
How are digital automation tools helping identify and improve current and potential future supply chain challenges?