Manufacturers have had to learn in a short space of time that you must be adaptable, agile, flexible and able to react quickly to disruption. In other words, you need to be resilient if your business is to thrive in the face of unpredictable change.
In this blog, we'll cover why and how you can build the business case for improving supply chain efficiency.
- What's changing for manufacturers?
- The importance of resilience
- But isn't resilience costly?
- How to achieve supply chain resilience
- The impact of technology on your business
- Why Microsoft Dynamics 365: Benefits and ROI
What's changing for manufacturers?
It’s been a torrid few years for the industry. The perfect storm of Brexit, the U.S.-China trade war and latterly the COVID-19 pandemic has meant that the fundamental nature of supply chains – the movement of goods and services – have been and continue to be, drastically disrupted. In many cases, manufacturers have experienced extremes in variation of demand and supply like never before.
Additionally, the widespread industry adoption of lean management practices to supply chains over the last few decades have left supply chains seriously exposed.
However, disruption to supply chains should now be considered the new normal. McKinsey & Company note that supply chain disruptions lasting a month or longer now happen every 3.7 years on average.
It has never been more important, therefore, to ensure your supply chain is resilient, flexible and efficient.
The importance of resilience
Resilience in business can be defined as the ability of an organisation to successfully confront the unforeseen. Building resilience into your supply chain is key as:
- It enables your organisation to adapt to disruptions successfully
- It ensures business continuity
- It provides end-to-end visibility of your supply chain to make data-driven decisions as opposed to emotionally-driven decisions on demand and supply
A resilient supply chain means you can return to normal and ramp up faster due to the agility in planning, sourcing and distribution processes driven by non-monolithic business solutions whilst de-risking the impact of future disruptions. With a resilient supply chain, your organisation will be better equipped to generate positive cash flow by optimising resources, staying profitable, retaining market share and remaining competitive.
But isn’t resilience costly?
Increasing supply chain resilience in many cases increases costs, but this should be offset against the cost of doing nothing with all the associated risks of poor supplier performance, late and or incomplete orders and ultimately, unhappy customers.
Equally, old assumptions that resilience can be purchased only at the cost of efficiency no longer ring true. The latest advances offer manufacturing demand and performance simulations (digital twins), monitoring of the supply chain network eco-system, improved data collection and analytics and accelerated response times.
How to achieve supply chain resilience
Increasing visibility and flexibility in your supply chain increases your ability to withstand significant disruptions and to respond to fluctuations in demand. But where do you start with your improvements?
1. Invest in the right technology
Invest in business systems that can improve end to end visibility of your supply chain. You need to be able to monitor the current real-time status of logistics, inventory and factory operations, and access the tools to predict both the upstream impact (suppliers) and downstream impact (customers) of any disruptive event.
2. Create a connected factory
A connected factory uses the Internet of Things (IoT) technology linked to a comprehensive analytics and business information tool. This allows you to optimise supply and production planning, ensuring you have the right resources, inventory, people and equipment at the right place and at the right time.
3. Ensure agility
Agility in planning and can take a number of forms. For example, in an organisation where manufacturing processes are standardised (bills of materials, item numbers, routes and operations etc) and impacted by supply chain disruption, production can quickly be re-routed from one part of your organisation to another where the supply chain is more stable.
The impact of technology on your business
Microsoft Dynamics 365 for Supply Chain Management improves workforce optimisation, enhances supply chain visibility, ensures you can build agile planning and distribution processes and maximises your asset uptime and efficiency.
It allows you to answer key questions such as:
- How can I achieve on-time delivery at lower cost?
- Does my organisation have data integrity issues where different teams are using data from disparate systems to make decisions?
- Does my organisation have many recurring manual business processes and how is our productivity impacted by them?
- Can I categorise suppliers not just by spend but also by revenue impact if a disruptive event occurs?
Why Microsoft Dynamics 365: Benefits and ROI
The benefits of D365
Microsoft Dynamics 365 for Supply Chain Management brings together data from all your lines of business, across systems, in a single, comprehensive, enriched view—formatted to apply real-time intelligence across applications and services.
From this, you can connect data, relationships and workflows across the business with end-to-end applications to optimise operations, empower cross-functional teams and better engage customers. You can also gain a 360-degree view of your business and drive repeatable outcomes at scale, powered by persistent, AI-fueled insights derived from unified, enriched data and signals.
What’s the ROI?
Microsoft commissioned Forrester to undertake a Total Economic Impact Study. In it, Forrester interviewed seven organisations with years of experience using Microsoft Dynamics 365 for Supply Chain Management and Microsoft Dynamics 365 for Finance.
Then, Forrester created a Total Economic Impact framework, a composite company and an associated ROI analysis. The composite organisation was a global vertically-integrated manufacturer and retailer with $1 billion in revenue with a sales split of 80% wholesale and 20% retail.
The risk-adjusted present value benefits for the composite organisation are based on those experienced by the seven interviewed organisations:
- ROI of 60%
- Payback period of 20 months
- Revenue increase of 4%
Your next steps: The ultimate checklist to improving supply chain efficiency
Investing in the right technology can do wonders for improving the efficiency and resilience of your supply chain. However, it’s not the only thing you need to consider.
You must also focus on your processes and people. The technology you choose must complement your existing processes and your vision for an innovated future must be shared by your people.
For more tips on transforming your manufacturing operations, improving production performance, getting team buy-in and enhancing your supply chain, download our checklist below.