MESA International is running a Smart Story Awards program to celebrate the people using manufacturing data and IT to make smart decisions throughout value chains. In a previous post, I mentioned the savings a company can realize by using digital threads of manufacturing information. But, who or what is demanding these digital threads? Here are some culprits.
Mandates are different in every industry, but the trend is that they are becoming increasingly stringent on traceability so that companies can prevent issues instead of reacting to them. One example in the food world is a mandate that requires verification of the Preventive Controls Rule. The problem is the rule is too time consuming when tracked by hand. In this example, a company used IT to consolidate the steps to test and record temperature information to create a real-time digital thread with alerts to prevent issues.
OEMs OFFERING PaaS
Another example of demand for digital threads stems from the coming of the Circular Economy. OEMs like Philips are starting to rent out their products instead of selling them. This is giving OEMs a Product-as-a-Service (PaaS) model which comes with the added responsibility of maintenance and proper disposal of the products. Therefore, OEMs are taking a closer look at their supply chain because their quality, sustainability, and logistics metrics could affect their business in a completely different way.
RETAILERS SERIOUS ABOUT SCORECARDS
Demand for digital threads is also coming from the retailers who care about sustainability metrics. Wal-Mart actually has one of the best programs I've seen in terms of incentivizing OEMs/brands who continuously improve environmental metrics. Based on a supplier's performance on Wal-Mart's sustainability scorecard, the supplier's products could actually get better positioning on store shelves or on their eCommerce website.
CUSTOMIZING & SCRUTINIZING CONSUMERS
Some OEMs are selling directly to consumers these days. That means taking an individual order which translates into a planning, production, delivery, and return headache. While passing off the delivery problems to a 3PL may seem like a good solution, ask yourself...are you really ready to take on individual orders as an OEM or as a supplier to an OEM? Or worse, are you agile enough to take on individual orders for customized products and still be able to make a profit?
Plus, your number one buyer (the consumer) actually wants to see your digital thread on their phone and possibly make a purchasing decision based on it. Consumers are using apps to scan products to check on levels of sustainability, the list of ingredients and their origins, and even which political party a company is affiliated with.
ON-DEMAND INVENTORY FROM EVERYONE
I found that a shocking amount of capital is tied up in inventory. So much that U.S. retailers are currently sitting on about $1.43 in inventory for every $1 of sales they make! (Source: Stifel via SCDigest) Companies could help combat this cost if they used an inventory management system. 46% of SMBs either don’t track inventory or use a manual method. (Source: Wasp Barcode)
It's only a matter of time before retailers and online stores (maybe even the consumers) demand digital threads of manufacturing information so they can orchestrate better systems.
If you've used digital threads of manufacturing information to make smart decisions, submit your story to help the world advance to the next industrial revolution...the smarter, healthier, more efficient revolution!