Industry4.0 – Strategize Proactively and Transform a Supply Chain using Lean + Digital + Analytics

Goal of this discussion is to evaluate strategies that can help supply chain company in line with current trends of digital world at a high speed in a backdrop of Industry 4.0 (Smartly achieve business strategy)

Emphasis Is on proactive strategy progressing towards Industry 4.0

New Technologies (Let us embrace it) have been disrupting our “BAU (business-as-usual)” business lifestyle more than ever before. With the introduction of modern technologies on almost everyday basis (based on countless ideas converted into tech products) has set up a need for a unique way of thinking around how to actualize our future business vision. This compelling need (I know you feeling it right now) is driven by one of the biggest factors – VELOCITY at which the supply of modern technologies are popping-up around us. This has made me think about how to tie everything up and create a common name to the opportunities being created by this high-speed digital disruption around us. To end your curiosity, I was lucky to find the name in this instance, which is Industry 4.0.

Life in general could be complex, and any rare opportunity to simplify it should be taken up well. To put you guys at ease, I am taking my opportunity to simplify Industry 4.0 to define as

Industry 4.0 further improves the digitalization achieved by Industry 3.0 (all the digital related efforts during past three decades)

How to beat the speed?

With the advent of Industry 4.0 (the fourth revolution), the time has come to unlock power of technology to address tough business problems. These tough business problems appear first in your mind, but not surprisingly, appear last in the list of being solved (because they are extraordinarily complex to address). This complexity has resulted from couple of top factors like, empathy at thought process levels only, poor understanding of underlying need/pain points, lack of capability & capacity to treat the pain points, poor with-in-the-team morale on the top need-for-speed we spoke about.

I have been a proponent of proactive strategy for a simple reason that, it has power to address all the factors listed above in a single sling shot (I could be overly optimistic, we will see). The very moment you start strategizing proactively, meaning, you are reaching out to the complex business problems first rather than problems reaching out to you, puts you ahead in the game and in a different league of leaders both as a person and as an organization. This further lifts our empathy and morale levels as well. (We will see a real situation down here)

Promise

I repeat my promise of keeping this discussion simple and jargon free to help us allow creative thinking without digressing from the core issue/goal here

For new readers – those who want to see proactive strategies in action

Those friends who have come across me just now and interested to know about what I mean by proactive strategies please follow this link. Regardless of the profession/ business you are in, I am sure we have something to share with each other.

Lean+ Digital+ Analytics: A Proactive Supply Chain Strategy for Communications equals more value with lesser resources

A Real situation!

Apart from many factors contributing to the Success (lower cost or higher revenue) of any Supply Chain and Logistics Company depend how quickly (with no delays with-in-the-stages) and accurately (Supply exactly what is ordered)

During a recent and fresh exploratory conversation with leaders (not the real names) of major Supply Chain logistic company, namely, Steve (Managing Director) and Emma (General Manager, major customers). Their company procures, stores, and supplies the needs of a variety of customers like, auto car makers, transport industry, hospital, construction, worker insurance industry etc.

The conversation started with life/business in general during this Covid-19 Crisis and glorious years filled with success stories so far, finally, we arrived at discussing, their vision (which obviously was filled strategies and ideas to take on the next leap). The moment of current truth occurred when we started talking about obstacles in executing strategies to achieve the vision they had originally planned.

To help your curious mind, one of the many symptoms (underlying Issue is not revealed yet) which caught my eye was how delays caused within the procurement function has affected them dearly (higher penalty cost from end customers and lower potential revenue by not selling materials due to delays). 

How a strategy is done today (preventive approach)?

On the surface it is very easily concluded that, the delays were caused by the sub-suppliers (they make the original products and supply it to the supply chain company under discussion here) and the need was to bring the material sub-suppliers to the table so that this gets discussed and possibly addressed. Due to high volume of the delays with most of the sub-suppliers, not surprisingly, this one –off-solution of meeting and addressing issues had become part of, which I call, BAU lifestyle, not surprisingly resulted in more time spent at work and adding further to the cost of doing business due to additional hours put into it. Needless, to say, with all positive steps which a sub-supplier is ready to take will only be labelled as preventive strategy as these actions (perceived as solutions here) are taken extremely late stages of the supply chain actions. To put into perspective, supply chain action cycle would be before = Purchase Requisition generated by customer, during= Purchase Requisition (PR) to be processed as purchase order (PO) after = sub suppliers make & supply the delivery plus reporting once the delivery has been made. 

As a result, it symptomized in

This preventive strategy does work only to address the pain points which are in control of the sub-suppliers. This strategy causes a lot of efforts (meeting and coordinating with sub-supplier activities) resulting in very little net positive results. Not to mention, potentially eating in your bandwidth to take any steps towards your future vision, forget that you will ever be ahead in the game with digital disruption gig as discussed above.

Let us visualize this!

The whole situation can easily be visualized where everyone searching for a lost pen, looking over/under everyone else’s desk, but, under their own table, meaning, a small proactive step at our end, would magnify much desired fruit of success

Realization?

The moment we take any actions to better the during stages (Purchase Requisition (PR) to be processed as purchase order /PO) of the supply chain action discussed here, would dramatically change the outcome, meaning, quicken the cycle by reducing delays and puts us on path to proactive strategy

How to bring Proactive strategy in action?

A three-dimensional strategy is proposed, one, which is proactive (as we front it up with our own delays rather than pushing it to the sub-suppliers). Two, which is predictive (A better visibility on knowing when you will get material supplied minus the delays). Three, embracing digital transformation (Industry 4.0, using power of disruptive technologies thrown at us at a remarkably high speed). The whole idea is underpinned by elements of Lean, Digital technology, Things, Robotics and Analytics.

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Where, we cut down the delays (Thanks to the Lean for ideas of waste of delays) and supplement up the human efficiency using powerful assistive Digital-Bots designed and developed to proactively take do all the mundane steps at a very faster speed lifting overall morale of the workplace (I am still sticking with my one-sling-shot solution concept discussed above). Thereby, giving life to your vision with higher KPI scores (cost or revenue), valuable positive relationships with sub-suppliers and the customers.

To be able to create this one-sling-shot-solution (in this case) it is recommended to take help from the technology (which are already disrupting us). Once such solution has been designed and developed by Aurion Systems and is a tailored-to-fit the needs mentioned above called is IProactiveMate (do not worry, as you can start even now without engaging technological solution as a first step). This solution proactively assists the initial stages of procurement actions by cutting delays along with early detection capability by predicting any purchase requisition is being dwindled (in a live environment) by with-in-the-stages delays via an intelligent dashboard is clearly a winner in improving relationships with both the end customers and the sub-suppliers. As a byproduct, you will certainly feel like 150 years old startup leading the game in the era of digital transformation

How to start and not stop at the end of this article piece?

I would recommend starting simply by just taking this approach, which has negligible risk, simple and yet an amazingly effective positive step towards our goal of a proactive strategy

A) Take pen -paper or manual method (start now)

Complete one cycle end-to-end of converting one purchase requisition (PR) to purchase order release to the sub-supplier(PO) and note down all the steps you have encountered (This will help you discover all the steps in the cycle whether necessary or unnecessary and keep your focus on right aspects). Cut down the unnecessary steps leading to improvements then move on to the next step here.

B) Take help from technology 

Try to make the Supply Chain Procurement cycle autonomous using technology by engaging a solid, affordable solution partner

If you are a COO/CIO/Managing Director/General Manager who is spending more time in reactive/preventive mode than future-facing, please get in touch for an exploratory conversation. We’d be happy to discuss how Aurion Systems can help you lead change and add value to your organization.