Supply chains are developing at an incredibly rapid rate; it wasn’t too long ago that everything was done in-house. But with specialised manufacturing companies emerging to produce higher quality products, and emerging economies overseas driving costs down, supply chains are now in a state of being incredibly complex and global. But this has brought in incredible amounts of risk, and the systems to manage these supply chains haven’t kept up, making it difficult to manage supply chain performance.
And that’s what Valuechain are solving with, Network Portal.
Attempting Supply Chain Integration in Real-Life
First, I’ll give you a bit of background. About a decade ago, supply chains were very flat. The benefit of that was that OEMs had a good direct relationship with Tier 1s. The knowledge, the relationships and the communications were all contributing towards good business models. However, it was very inefficient. Companies couldn’t focus on their core competencies, there were high overhead costs and limited risk share.
The Introduction of Tiered Supply Chains
Gradually, this evolved into supply chain rationalisation which centred on supply chain management and creating a digital supply chain ecosystem. Supply chains began to adopt a food chain model, which reduced the overhead costs and allowed companies to focus on their core competencies. This is the area that I find interesting because it’s where there’s a lack of knowledge. Good Tier 1s were becoming Tier 3 and Tier 4 suppliers, a lot of knowledge and responsiveness was lost. Something I wanted to discover was how to ensure low costs and risks, whilst maintaining the valuable knowledge and communication.
I finished my research in 2002 with the intention to set up a company, which is why I did my research, but I had a choice to make. I could have gone into software, but I couldn’t (and still can’t!) write code. Thankfully I now work with people who can. The alternative, and the option I decided on, was to go into manufacturing.
I set up my first company called Aerogistics. We had some success and controlled the bottlenecks, bought an aerospace special processing company and managed the constraint of the supply chain which was around electroplating and heat treatments.
My Attempt at Supply Chain Integration
I was able to set up a low-cost supply chain in India and Poland, which allowed Aerogistics to grow rapidly in size and success.
I was living the dream for a few years and was awarded best new business in 2007.
Suddenly, the wheels fell off the bus.
I’ve spent a lot of time analysing what I could have done differently and how I learned from my mistakes. I find it helps to imagine trying to change the fan belt in the car while it’s running. It’s as if I didn’t have enough time to improve the business processes to scale up effectively.
We had spent some money on Oracle ERP software and yet we were doing everything on spreadsheets. Spreadsheets are amazing, especially because they’re so flexible and convenient, but just not at all scalable. They don’t allow you to scale up. They aren’t collaborative or traceable in an audit, and they’re hard to share. Our systems were very fragmented. Our risk management too focused on reacting, as opposed to being proactive. We were too worried about planning how to react, rather than how we could prevent. Total cost was an issue also. I heard about low-cost labour countries and tried to cut costs by accessing this resource. Ultimately though, I was adding cost because I wasn’t managing the risk of the supply chain, I was seeking lower cost labour rather than trying to re-engineer the value chain.
What could I have done differently?
I could have done a lot differently upon reflection, but strategy and execution are the two key things. Strategically speaking, on-shore supply chains are encouraged.
- Maintained agility with localisation
So firstly I should have kept a more local supply chain to maintain the responsiveness in order to react to risk and improve the knowledge transfer. Before sending work to India and Poland I should have been able to manage the NPI process and transfer.
- Better Management Software
Secondly, the outputs of a supply chain are only as good as the data put in, so if you aren’t getting good data from your suppliers, it’s trash in trash out. Your suppliers need better ERP software to manage their production facilities and machines. To be able to automate your new product introduction, managing key stage gates of the risk in the supply chain is vital.
- OrderBook Visibility
Finally, it’s an unfortunate fact that you can’t trust everyone in this world. If you take your suppliers’ promised dates as a fixed delivery date without any transparency, you often get let down. Having order book visibility is really important.
But a great strategy means nothing without execution. That includes having ERP, supply quality engineering. It means consolidating not just your ERP data, but also what is being placed with suppliers, your spend, your order book visibility, also your supplier audit and your supplier business diagnostics. You should be able to compile all of those things, instead of having lots of fragmented systems with ERP and spreadsheets. It needs to be easy to navigate. You should be able to map your suppliers and your suppliers’ suppliers. Furthermore, it’s not enough just to map that, but a key part of successful supply chain management is supply chain engagement. That requires understanding the answers to questions like what’s in it for me? Why should I share more data with my customers if it could make my life harder? A win-win situation is possible, but the tricky part is identifying how to achieve it.
For bigger companies, capturing real-time intelligence contributes greatly towards that process.
We focus not just on big companies with ERP systems automatically managing their supply chain, but we look into how to engage the suppliers, Tier 1s, Tier 2s and right down to SMEs. SMEs should be more willing to share information including operational information, commercial information, technical information. Our approach to creating a digital supply chain ecosystem is to provide not just technology but also intelligence to suppliers, allowing for better visibility of demand, better information about competitors and access to different tools.
An important part of Industry 4.0 is the ‘try before you buy’ model. That means before making a big investment, you need to prove out some internal benefits. The freemium productivity apps are one approach. It’s about connecting end to end supply chains, from a bottom-up perspective. This motivates the suppliers to share information with customers, suppliers for data to be captured and visualised.
How we’re creating collaborative ecosystems
Our approach involves productivity tools. We have production control software that we sell predominantly to manufacturing SMEs, but we also have a system that sold directly to Airbus for additive manufacturing. We capture data from people, plant, processes, throughout the product lifecycle using smart data capture which was developed with Bentley Motors.
Smart Workflow standardises processes in the business, including new product introduction.
This is not just about within the walls of the factory. Industry 4.0 also includes partners. If you have great control of your business but lots of disruption from customer volatility, or poor supply chain performance, there will be inefficient levels of inventory just to buffer the volatility. How can you connect with your customers and your suppliers? How can you do that intelligently? How can you capture data in real time and analyse it to make predictions?
My passion is about helping SMEs drive productivity, drive efficiency and to collaborate. That’s the only way the whole supply chain can be competitive. That’s why we work with lots of companies but primarily SMEs.
Enabling Intelligent Clustering
One of our platforms is called Network Portal. It’s about intelligent clustering. Intelligent clustering can describe how a large company can cluster with its suppliers, or how a supplier can collaborate with other customers and suppliers. Capturing data from local government, industry associations and accreditation bodies, from ERP software, CRM software, PLM software, audits, from what’s online, from financial credit risk, environmental risk and social media. That’s a huge amount of data, so how do you make meaningful use of it?
That’s what we have here. I refer to it as like a Facebook of business to business. Companies can maintain their own profile, they can say what capabilities and capacities they have, they can then drill down and start to see who is involved in their supply chain and who their connections’ connections are. There are plenty of visualisation tools out there to manage whatever information you want, but they’re only as good as the data integrity you can capture.
Creating Intelligent Ecosystems
So how do companies start their journey? It’s all well and good having an ideal view of the destination you want to get to, but what can you do differently tomorrow to achieve the goal?
It all comes down to data: where you get the data from originally, and how to ensure that it is good, reliable data from people, plant, processes and partners. The next step is using that data with different tools. It’s important to visualise your data in real time, share it through dashboards, through mobile interfaces, through cloud technologies. Get the data wherever it needs to be to reach the right people at the right time to make the right decisions.
You can’t go straight to the AI without the next step: diagnostic analytics. You’ve got your data, you’re visualising your data, but you need to understand why things are happening. We focus a lot on quality analysis, analysing the root cause of why a job failed, why didn’t we achieve the productivity levels we were expecting, and further examples. How can you capture that intelligence from the operator and supply chain? Only when you do that can you start to enter the world of predictive analytics on an operational level.
Diagnostic analytics enables you to progress from lessons logged, to lessons learned. It’s more than just capturing what’s happened, it analyses why it happened, and looks at what could we have done to prevent it and making sure there is a closed feedback link so we have the right plans in place to prevent it from happening again.
Once you have all the data you can begin to consolidate it into a real-time, intelligent dashboard to visualise the data of your supply chain.
What are the next steps?
To conclude, the modern evolution of supply chains has done wonders for bringing down costs, and increasing quality; but there’s no way to accurately manage the risk in supply chains due to a lack of visibility. From experiencing these problems first hand in my Aerogistics business, I’ve learnt the hard way, the importance of knowing information about the whole supply chain.
This has shaped Valuechain’s mission to enable companies further down the supply chain to produce good data and become more productive. This way, companies benefit from visualising the whole supply chain, powered by accurate data to create world-class supply chains.
If you have thoughts on the progress of supply chains or need help in creating your digital supply chain ecosystem, please get in touch via firstname.lastname@example.org