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Digitalisation to make manufacturing supply chains more resilient

24th November 2022

By: Schalk Burger

Creamer Media Senior Deputy Editor


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The digitalisation of supply chains will make them more transparent and challenges more visible, better informing production planning and, thereby, making production value chains more resilient to disruption, says professional services and advisory firm PwC South Africa digital supply chain division head Pieter Theron.

Supply chains have globalised to such an extent over the past two decades that it is almost impossible to manufacture without importing some elements, whether this be components or raw materials, he adds.

"Today, suppliers must respond to the technical challenges posed by the digitalisation of supply chains and end-to-end integration. For example, producers should be able to see from suppliers' inventories whether they have enough raw materials to support the producer's production schedule or not," he explains.

Further, 60% to 70% of companies are looking to re-evaluate or replace their existing systems, and 80% of respondents to a PwC survey said they do not see benefits from their supply chain systems and are not convinced of their value, hence their reticence to deploy them.

However, the challenges to deploying and using supply chain systems rest more on the lack of skills and specialist supply chain planning and system design than it does on the systems themselves, he notes.

"We advocate a use-case-driven approach be taken by industrial companies. Additionally, the time to deploy the systems should be kept short. The typical 12 to 18 months development cycles should be cut to two months. The system must be tested and, if it is effective, deployed or, if not, then it must be shut down and the company must move on," Theron advises.

Long development times are compounded by not having the right capabilities within an organisation, he adds, highlighting the challenge of developing and retaining skills in companies.

"For a client, [PwC] improved the workings on the shopfloor by 22%, without any additional investment of money or equipment, by optimising the company's procurement, and contributing R180-million to its gross profit.

"Many companies can save millions of rands by improving procurement and their supply chains. For example, a warehouse stockout at a supplier would mean that the full production capacity of the shopfloor is not being used. Often, these issues are purely supply chain planning problems," says Theron.

Improving procurement is also one of the low-hanging fruits in improving the sustainability of supply chains.

"Identify the levers that can bring the benefits being sought and then implement the solution. Solving a use case provides money that can fund the next project so that solving business challenges becomes a funding mechanism.

"However, companies need a scalable platform on which to deploy, iterate and implement, or move on if the solution is not delivering value. Companies need to do rapid deployments that provide benefits so that it pays for the next cycle," Theron notes.

Supply chain digitalisation lags a bit behind the digital transformation of organisations, but PwC is seeing investments in this space, and artificial intelligence and machine learning are being used more often in supply chain planning, while neural networks are being used to increase accuracy.

"Companies experiment for far too long. What distinguishes manufacturing companies that are leading in digitalisation is a scalable digital platform to exploit new technologies quickly, reap the benefits and move on," he emphasises.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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