The recent Panama Canal crisis highlighted how one break in a supply chain can be very costly for businesses, leaving their entire operations at a standstill (three weeks in some cases). This is not the first time disruption has occurred in the Panama Canal after previous droughts – and it probably won’t be the last, as research shows disruptions lasting over a month happen every 3.7 years on average.
Businesses are under pressure to diversify supplier partnerships and increase their operation flexibility to avoid these and other disruptions caused by rising shipping costs, issues securing raw materials, and labour shortages.
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The introduction of Industry 4.0 and the shipping version in the form of Maritime 4.0, as well as IoT technologies, cloud, AI, and data analytics, have all driven a growing supply chain transformation. We are now starting to see smart factories that help businesses offer customers internet-based services with smarter tech and smarter products.
To avoid further supply chain disruptions, all manufacturing businesses need to up their digital game with the new technologies, and that includes maritime and shipping manufacturing. To avoid further costly disruptions ($4m in the Panama Canal case) these organisations should be prepared to make supply chain changes, in some cases to redefine how products are made and developed, and to ensure customer demands are met.
There are three essential steps to be taken on the road to avoiding these costly disruptions: reshore and nearshore operations, adopt a long-term sustainability plan, and operationalise AI.
Nearshore operations to meet rising customer demands and expectations
As supply chain disruptions become part of the new business environment, it’s time for manufacturers to end their reliance on disparate and siloed operations and instead look to nearshoring as the answer.
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By GlobalDataCustomer expectations around delivery times are changing, with 62% of UK consumers now expecting next-day delivery when ordering online – an expectation that traditional offshoring business operational models now struggle to match. Yes, regional or local supply chains can be more expensive and add another level of complexity, but they do allow for greater inventory control and bring the product closer to the end customer, which reduces overall lead times.
Nearshoring also provides an opportunity to clamp down on miles covered and will help manufacturers introduce a circular approach to operations. With over 4 in 5 UK adults recognising their role in reducing their environmental footprint, it is clear that the manufacturing industry needs to mirror this popular attitude – and technology will play a key role here.
It’s time for manufacturers to go green
Nearshoring is certainly one way that manufacturers can become more sustainable but with customer sustainability expectations rising, companies now have to show a long-term commitment to creating greener supply chains.
Many businesses are making efforts to report on internal sustainable efforts such as miles covered and energy consumption but extending reporting down the supply chain poses challenges, such as effectively reporting on a supplier’s energy usage. To achieve a comprehensive sustainability profile, this reporting must span the entire supply chain.
Leading organisations are pushing for data standardisation among their supply chain suppliers but this brings its own set of pros and cons. Increased standardisation can make the supply chain more efficient and easier to review, potentially reducing a company’s risk. However, there’s more work needed to establish this standardisation.
As public and regulatory interest grows, having a clear view of supply chain processes will become even more important. In the short-term, expect leading companies to keep investing time and effort to better organise their supply chain data.
Business intelligence dashboards unlock years of hidden actionable data
Many businesses now have extensive data archives spanning several years, including substantial sales orders and operational performance records but the ability to extract maximum value from this data remains a common challenge.
This is where the introduction of business intelligence dashboards with Supply Chain 4.0 can offer real-time production insights to inform decisions, boost efficiency, cut costs, and refine product quality.
The convergence of operational technology (OT) and information technology (IT) adds to the data challenge, particularly where legacy equipment is still in use. It is important to recognise that the solutions being implemented require tailored approaches due to the unique demands of each manufacturing organisation. Developing applications within a business can be tricky, with not every business having the in-house data skills to do this.
Custom applications that don’t require extensive coding expertise can address this digital skills gap. Versatile solutions that combine low-code services, self-service analytics, and automation for instance, can make it easier for manufacturers to create applications that precisely align with their specific needs, boost efficiency, and innovate in the process.
Avoid costly disruptions with operationalised AI
AI has left a mark on every industry and when it comes to the manufacturing landscape, the story is no different. Already many businesses are using AI tools to process real-time data from sensors to provide manufacturers with immediate insights and action, especially if quality measures breach thresholds. But the capabilities of AI don’t stop at detection.
Manufacturers must consider many factors in production and delivery, such as demand versus capacity and how much materials cost along the supply chain – and this is where unsupervised AI can be a useful tool for risk identification and market trend forecasting.
Manufacturers should prepare for a long digital transformation journey to ensure they achieve their intended outcomes. The transformation process of implementing Industry 4.0 technologies will allow manufacturers to effectively manoeuvre with shifting customer expectations and business conditions – all while ensuring they stay competitive.
To avoid scaling challenges, manufacturers will need to take a calculated approach to planning, processes, and adoption to achieve a sustainable business model. Through not planning and identifying key supply chain trends, companies run the risk of getting left behind by industry frontrunners.
