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June 15, 2016

The future of manufacturing: Going digitalIn a recent report on the future of manufacturing, the Wall Street Journal highlighted many exciting trends driving us ever closer to the digital supply chain. One of the stories, Bringing Smart Technologies to Old Factories Can Be Industrial Size Challenge featured TCS Sundeep Oberoi sharing insights on the supply chain initiatives we regularly work on with many of our clients: How do we get from todays analog-based supply chain to the digital future? And, once we do, how do we ensure it benefits the business?

As the article details, a lot of hard work, expense, and organizational change is required. Taken broadly, I believe it comes down to three steps: Get the fundamentals right, align with business goals, and develop the required capabilities and organizational structure to realize the digital supply chain of the future.

The fundamentals

The idea of the digital thread running through the supply chain from project initiation to customer delivery is compelling. Whats not to like about a factory of the future that orders its own supplies, prints out spare parts and schedules preventive maintenance? This journey begins with data, the DNA of going digital.

Moving an organization from physical to digital is a complex transformation. What we see, in many legacy environments is that data is not always created or maintained consistently across functions and business units. Whats called one thing in procurement is called something else in distribution, and different companies that have grown through acquisition are often left holding a hodge-podge of inconsistent data structures.

The end game is to create and ideate anywhere, and manufacture and deliver anywhere while collapsing time and cost. If you are driving these goals with data definitions that are relevant only to a local manufacturing environment then you lose that transportability and the digital thread breaks. Using common data definitions allows digitization that is useful and consistent across the organization.

Just as you need common data definitions, you also need common processes. How you define a supply chain and a manufacturing process must become harmonized and moved to a standard set of processes wherever possible.

Infrastructure is the third fundamental to get right. Do you have an infrastructure that can capture digital information flowing from all those IoT sensors in the manufacturing environment? Is your infrastructure in remote locations capable and consistent so that applications and processes are useable everywhere?

Aligning with the business

With the fundamentals taken care of, the question turns to business alignment. Its easy to become excited about the technology everyone seemingly wants their own digital or big data initiative but its really about understanding where the opportunity-potential exists in your business. For one business, the opportunity may be around improving local customer responsiveness and customization. In this case, it might make sense to consider a 3D printing model rather than sensoring machinery. For another organization, it could be an entirely different business problem, say the ability to drive down warranty costs and improve the ability to service customers rapidly. The key is to attack the leverage point inside the business thats going to drive higher profitability rather than pursue improvement and innovation uniformly.

In short, without a clear, data driven understanding of leverage points in your supply chain, you wont know where to start.

Developing capabilities and responsiveness

The distinction between process, function and technology is blurring. Fundamentally we are still attacking some of the same old problems where is my stuff and what went wrong? but we are doing so using automation: cognitive or self-managed systems that allow us to focus on outliers or anomalies and less on traditional workflow. So supply chain organizations are becoming large-scale technology integrators and business innovators to a certain extent. Building and managing that infrastructure of digital assets and relationships requires a very different set of capabilities from the traditional expertise in manufacturing planning or quality control improvement. And those new skills have to be captured and leveraged in a new organizational structure to serve the business alignments discussed above.

The digital supply chain may not be a fulfilled reality yet, but, as the Wall Street Journal article shows, many companies across industries are taking steps today to be leaders tomorrow. You can prepare your organization by getting the fundamental blocking and tackling right, aligning objectives with business goals and acquiring or developing the right capabilities in an agile organizational structure. I look forward to your comments or questions here on the digitizing the supply chain.

Matthew Lekstutis is the Supply Chain Consulting Lead for Tata Consultancy Services. He has over 20 years of experience as an industry executive and advisor including COO level P&L management responsibility. Matt helps clients to capture business performance improvement opportunities and drive growth by enabling new business models and technologies across the supply chain.


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