The discipline of Supply Chain Management requires multi-enterprise collaboration. Is your multi-enterprise supply chain responsive, adaptive, agile, and efficient? How well does your multi-enterprise supply chain enable your people to profitably meet the demands of your customers?
Manufacturers are constantly driven to manage their supply chains better, improve operational costs, quality and service levels, and differentiate themselves from competitors.
To be competitive, today’s manufacturing supply chains reach beyond the boundaries of a single company’s plant floor operation, organisation, and geography.
In today’s ‘Flat World’ they operate globally, beginning with suppliers, and extend to other business partners, including transportation firms, outsource manufacturers, sales and distribution channels, and customers.
To manage their multi-enterprise supply chains effectively, manufacturers must do more than track the progression of raw materials and finished products as they travel globally from supplier to consumer.
They must also monitor, measure, and adjust the performance of the supply chain in real-time striving for the right balance between supply and demand that produces the highest possible profit for both the company, and its supply chain partners.
Furthermore, manufacturers must be agile enough to react quickly to capitalise on the changes brought about by the increasing supply and demand volatility in today’s flat world economy. Ultimately, managing an extended, multi-enterprise supply chain presents some common challenges for all companies, regardless of industry:
Increased Pace Of Flat-World Operations
In a global, networked economy, and ‘Flat-World’ operations Supply chain cycle times continue to decrease, while the pace of business change continues to increase.
Shorter Product Lifecycles
Global competition and increased customer demands are forcing manufacturers to bring products to market faster and cheaper.
Product Proliferation And Complexity
Product differentiation strategies have led to increasingly complex products, produced in numerous configurations, often engineered assembled or manufactured ‘to order’.
Global, Networked Supply Chain
To deal with product proliferation and complexity, today’s manufacturers outsource much of their production and logistics and participate in a multi-enterprise networked supply chain that requires constant communication and collaboration with their supply chain partners.
Risk Created By Increased Demand And Supply Volatility
Today’s ‘Flat-World’ provides consumers with transparency of availability and costs that can create massive fluctuations in demand for products, while extended global supply chains can often be less responsive, creating supply shortfalls.
Increased Regulatory Oversight
Manufacturers face escalating regulatory compliance requirements that include full auditability of the source, content, movement, use and disposal of their products, across their increasingly complex and distributed multi-enterprise supply chains.
Focus On Cost Reduction And Increased Efficiency
Despite the increased complexity and reduced cycle times in today’s supply chains, continued cost reduction and constant improvements in operational efficiency are certain for today’s manufacturers.
Given these challenges, manufacturing executives no longer equate the Supply Chain Management discipline as simply sourcing materials at the lowest cost.
Microsoft Industry and Supply Chain Solution Management teams, in surveying its customers, ISV and SI partners, and consulting with independent Industry Analysts have identified the following Supply Chain investment Megatrends:
1. Supply chain performance has become synonymous with business performance as most CEOs recognize the strategic value of supply chain. Supply chain dashboards are being created that provide real-time visibility of end to end supply chain performance, assembling data from internal and trading partner systems
2. Multi-Enterprise collaboration in real-time is becoming a necessity as end-to-end cycle times continue to compress, and partner performance increases supply chain risk. Demand, cost, quality, compliance, delivery and capacity data is being shared through multi-enterprise portals, and aided by unified communications for real-time collaboration on operational events
3. Sensor enabled supply chain, whether through barcodes, mobile devices or RFID, is critical to providing real-time visibility of end-to-end supply chain compliance and performance. Automated data collection is no longer driven by customer mandates. Manufacturers are instrumenting their supply chains in the same way that they automated their production facilities, to increase productivity, flexibility, accuracy, and real-time visibility, that yield positive ROI.
4. Demand Driven Supply Chain leaders are achieving superior financial performance by sensing, shaping and responding to demand faster than their competitors. While there are many cultural and architectural steps to becoming ‘demand-driven’, one of the most prominent is new 360°, event driven Sales, inventory and Operations Planning processes that provides multi-enterprise collaboration to facilitate joint value creation with supply chain partners in dealing with inevitable demand and supply spikes
5. Lean Supply chain thinking is being modified as traditional lean thinking creates increasingly brittle supply chains in today’s complex and highly volatile demand-driven economy. Technology is being adopted to scale lean practices across the enterprise, while leveraging smart math to deal with the complexities introduced by high product mix, high volume manufacturing and highly distributed supply chains. Mobile technologies, RFID, supply network design and modeling, and lean planning and execution are helping achieve the balance between lean and agile supply chains.
6. Supply chain business continuity is being put into sharp focus as outsourcing, talent shortage and increasing demand volatility increase supply chain risk. Supply network design and inventory optimization tools are now run routinely to tune supply chain configuration and operating parameters. Supply chain ‘War Rooms’ are providing highly visual and interactive monitoring of overall supply chain performance and early warning of risks.
7. Low source country sourcing continues to rise, but decisions are increasingly balanced by consideration of associated increased lead times, poor product quality, and increased supply chain risk. Manufacturers are implementing more rigorous SLAs that require suppliers/contract manufacturers to electronically provide real-time performance data that is monitored on Supplier Scorecards that provide early warning of potential risks.
8. Supply chain outsourcing continues to rise. Over 92% of companies surveyed already outsource some aspect of their production, and over 40% intend to expand their supply chain outsourcing, particularly as the complexity of logistics increases, and the supply chain talent shortage grows. Collaboration between trading partners and their outsourced service providers is driving B2B integration between on-premise back office systems and hosted or cloud-based supply chain services.
9. Shifting demographics are forcing a major redesign of global supply chains. Across all industries, there’s wholescale redesign of supply chains to balance low cost sourcing opportunities with new regions of high growth. Beyond investment in supply network design tools, the scarcity of supply chain talent is driving investment in global dashboards to maximize productivity of scarce experts, while new intuitive people ready supply chain planning and execution applications are required to guide the workforce through increasingly complex supply chain operational decision making.
10. Green supply chain designs are becoming a reality as fuel costs and increased consumer focus on sustainability allow alignment of corporate social and fiscal responsibilities. Manufacturers have been quick to recognize the financial benefits that can be achieved from reductions in fuel costs from supply network re-design and more efficient supply chain execution. Some are integrating supply chain design with their product design and carbon footprint reporting, driving the need for enhanced collaboration and reporting from their supply chain partners.
