Article

Embracing a digital future

How manufacturers can unlock the transformative benefits of digital supply networks

Its primary focus is to engage manufacturing executives in a conversation to create a better understanding of companies' journey toward designing and implementing systems that integrate data and information from disparate sources and locations to drive the physical act of producing and distributing manufactured goods. In conducting this research, we surveyed more than 200 companies operating in the manufacturing sector and conducted more than a dozen executives were interviewed on the opportunities and challenges involved in implementing a DSN. And three steps were proposed at the end for companies to take to deploy DSN.

Viewpoints / key findings

Industry 4.0 is causing unprecedented disruption that is blurring the line between the digital and physical worlds. One of the most common and obvious manifestations of this change can be seen in the increasing adoption of digital supply networks (DSNs), which allow for the integration of data and information from disparate sources and locations to drive the physical production and distribution of manufactured goods. Traditional value chains are becoming value networks characterized by a matrix-like design that allows organizations to send and receive data and information to or from any point in their ecosystem to better meet shifting market conditions and unlock new forms of value.

While a traditional supply chain moves information along with raw products and finished goods from one end of the production systems to the other, a DSN is a flexible, interconnected matrix that allows data and information to move non-linearly to maximize efficiency to meet changing consumer and market demands, which is critical to the future health and development of an organization (Figure 1).

Figure 1. Importance of DSNs to the future health of an organization
 

While many companies are aware of the benefits DSNs can offer, a majority still remain slow to fully embrace this increasingly important digital shift. The problem is that manufacturers are still facing some key challenges (Figure 2).

Figure 2. Top 10 biggest challenges associated with launching/executing DSN initiatives
 

With the pressing issues to deploy DSN, we highlighted following steps that companies need to take:

  • Think big. Companies looking to tap into the benefits of DSN should break out of a traditional, linear mind-set to ask what value can be created from having data and information immediately available to every member of a manufacturing network.
  • Start small. In business environment where recourses are tight and competition for investment is fierce, companies can identify and prioritize discrete proof-of-value projects where digital transformation strategies can be tested and the tangible ROI of DSN implementation can be demonstrated. Companies can gain near-term traction by starting their DSN journey with a few small steps designed to solicit board and C-suite support for larger implementations down the road.
  • Scale fast. Once a DSN implementation has been proved to deliver a sufficient return on investment, companies should position themselves to expand the effort across the enterprise. Companies should also be thinking creatively in order to address key challenges such as finding, training, and retaining skilled talent to manage rapidly evolving DSN solutions, and change the organization's internal culture to promote a more strategic approach to creating value and meeting customer needs.
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