In many ways, manufacturing has become simpler than it ever was. What required scores of expensive machines, thousands of people, enormous production plants and storage, has been reduced to a handful of machines, men, manufacturing units and storage. Thanks to the smooth flow of information across sophisticated IT systems (ERP, CRM, SCM, social media, etc.), efficient on-demand manufacturing has become the norm, making it possible for manufacturers to manage thousands of SKUs for diverse markets.
Conversely, the orchestration of the tiny moving parts in the background that enable this simplification has become extremely complex. Today, planners and decision-makers in manufacturing have to deal with a constant stream of market data, competitive analysis, supplier information and operational data. They don’t have the luxury of time. An error in mapping demand to plant operations and supply chain capabilities can result in inventory overhang, poor plant performance and loss of market share. New tools, designed to handle the realtime needs of manufacturing in a digital economy, are needed.
Take the case of a mobile handset manufacturer – and this example echoes itself across every type of manufacturing activity – that sources CPUs, batteries, antenna, switches, power frequency oscillators, memory, displays, chargers, etc., from multiple suppliers based on price and proximity to the manufacturing plant. To meet sudden changes in demand, handle rush orders or respond to fluctuating component supplies, planners can’t take days to collect data and reach decisions. The good news is that with improvements in connectivity, the growing momentum around the Internet of Things (IoT), and Big Data technologies, it is possible to extract actionable intelligence. It is the post-processing activity that is tedious, confusing and error-prone.
What should the manufacturer do when a supplier in, say, China fails to fulfill component orders because of an unexpected natural disaster or a labor problem? What is the corrective action that Material Requirements Planning needs to take? What are the best actions planners can take based on price points and market demand? Which SKUs should be temporarily discontinued? Which plants should re-execute production schedules based on the location of the new supplier?