As the frequency of shocks and disruptions to business increases, manufacturing companies are gearing up to become more adaptable. In a commissioned global analytics study conducted by Forrester Consulting on behalf of WNS, 2021, ~67 percent of executives identified accelerating the response to business and market changes as a top priority.
A McKinsey Global Research study notes that the world must be prepared to operate in an environment where disruptions are a regular occurrence. Supply chain disruptions – lasting more than a month – are likely to occur at an average frequency of 3.7 years. This is significant for manufacturing companies that are dependent on global supply chains.
The current environment calls for an urgent resetting of sourcing, distribution, logistics, and supply chain management. Businesses need to build more agility, flexibility, and collaboration based on a foundation of integrated information and planning.
Data Maturity and Revenue Growth: A Direct Link
Our analytics study finds that data analytics maturity correlates with business performance and resilience. Despite the market disruptions caused by the pandemic, 82 percent of organizations with advanced data maturity saw a positive year-on-year revenue growth over the past three years. In comparison, only 9 percent of beginners experienced revenue growth and a staggering 61 percent experienced a decline in business performance.
The COVID-19 pandemic exposed vulnerabilities in the lean supply chain approach that has manufacturers working directly with a few tier-one suppliers. These suppliers in turn rely on multiple tier-two suppliers, thus creating a complex ecosystem, wherein a manufacturer has limited visibility into the entire supply chain. This has emerged as a weak link in the manufacturer’s ability to manage disruptions.
Manufacturers are now realizing the need for a digital supply chain that offers real-time visibility and insights. They are using the Internet of Things (IoT) to track containers with raw material and finished products, and Artificial Intelligence (AI)-powered analytics to understand demand and predict production schedules, and optimize distribution and retail network.
Data Modernization is a Precursor to Creating Winning Insights
Decision-makers in manufacturing are aware of the critical role of data and analytics, with our analytics study reporting that 73 percent of respondents identified it as a critical priority. However, merely having access to data is not helpful, unless the business can adjust the supply chain with intelligent and integrated planning. This requires internal alignment with sales, operations and production in real-time.
Digital transformation efforts must aim for a mesh-up of operational technology with IT to achieve crucial business goals, including an agile and adaptive organization.
Data modernization is enabling manufacturing to build resilience and prepare for disruption in the following ways.
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Improved operational efficiency: Data-based decisions help companies to better utilize resources and assets, and refine prediction models
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Better inventory management: Knowing where demand will come from ensures that the right inventory is in the right place at the right time
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Re-calibrate supply chains: Analytics-based scenario planning enables demand management and replenishment by activating second and third-tier supply chains
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More efficient manufacturing: Data-based insights build adaptability by sensing market parameters at various points of the supply chain and optimizing production schedules
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Smarter inventory management: In-store and predictive analytics facilitate improved inventory management, leading to higher fill rates, higher on-time availability, and fewer stock-outs
A Deloitte study finds that digitally equipped companies can navigate uncertainty better with built-in resilience. Our analytics study shows organizations with higher data and analytics maturity have realized improved revenue and competitive advantage. Now is the time for manufacturing companies to improve visibility and scenario planning by digitizing the supply chain, and brace for the next disruption.