Whether it’s rising energy costs, soaring wages, out-of-control inflation or supply chain delays, few companies in the manufacturing sector have managed to avoid modern-day challenges.
Simultaneously, macro-level events, such as the war in Ukraine and the global chip shortage, have created additional concerns for decision makers. Analysis from Euromonitor International shows that the global manufacturing sector will remain on the receiving end of turbulence in 2023, with geopolitical risks and energy volatility continuing to be prominent. Those most reliant on energy intake or investment demand are likely to take the heaviest hits.
Further analysis from Forrester Consulting shows that over 30% of manufacturers are in the dark over their inventory, raw materials, work-in-progress and finished goods levels in the distributor network. The frequent cause is a lack of appropriate data to drive this transparency. Over one-third of respondents surveyed note that their organisation struggles with leveraging data to make business improvements, despite the fact that 90% believe it has a significant role in setting business priorities.
Why it pays to plan
Manufacturers are battling with the need to achieve greater efficiency, agility and flexibility due to these hurdles. As the Forrester report points out though, manufacturers have fought back in recent years by working hard to improve their operations — and become more resilient to future challenges — by engaging in digital transformation efforts.
Companies that plan effectively and drive digital transformation efforts forward are ideally placed to increase throughput, reduce costs, deliver productivity and efficiency improvements and deliver products to customers both on-time and accurately. Indeed, when asked, “what tactical steps is your company taking to address current challenges?”, nearly a third of manufacturing decision-makers polled for the Forrester survey (29%) cited ‘improving production planning and forecasting’.
Vital to the success of any manufacturing business is well thought-out master planning. Typically, a master planning ‘run’ would assess actual current sales orders to control inventory replenishment needed to fulfil those orders and further supported by a forecast plan to take into account future projections to enable longer-term material and capacity planning.
The aim of this process is to make best use of the resources available at minimal cost, all in a refined production schedule. Historically, however, master planning was an overnight process that would take hours to run. It was cumbersome to execute – and that still is the case in many manufacturers today.
Enabling proper planning
However, this picture is taking on a different form, with leading solutions providers paving the way for change. Microsoft, for instance now provides a hyper-scalable multitenant service called Planning Optimisation. It is specifically designed for very fast calculations resulting in dramatically shorter runtime and therefore dramatically improving planning performance, allowing organisations to execute quick planning runs during office hours to immediately react to rapidly changing demand. This in turn enables manufacturers to gain better visibility over their stock to take more informed decisions more quickly that deliver better business outcomes and lowering costs.
Technology enhancements are empowering this approach. A growing number of manufacturers are already implementing data collection through their planning processes. The ability to build on this and use predictive insights from AI and IoT across planning can be instrumental in enabling manufacturers to move from reactive to proactive operations.
However, according to Forrester’s research, only 48% of manufacturing operations leaders consider their organisation very prepared to implement new technology quickly and correctly. To ensure this, partner businesses can provide support to guide organisations in their journey towards intelligent planning processes. Either through the initial implementation or subsequent managed support, partners can help manufacturers to adopt modern intelligent processes at a cost and cadence the organisation can adsorb. Engagement with partners can also allow organisations to make best use of innovative updates due to continued investment from large-scale providers such as Microsoft.
Powering operational excellence
Master planning has long been in need of a shake-up. After all, successful execution will determine the efficiency of the entire order management process. Poor implementation will negatively affect cash flow and impact on the bottom line. Done right, and enhanced productivity and accelerated growth awaits businesses. With a winning combination of state-of-the-art digital technology and expertise from partners, manufacturers are able to fully optimise their master planning, helping to transform operational processes and power up competitive advantage.
About the Author
Tim Rowe, Microsoft Practice Lead at Delaware UK. Our mission is to help our clients reach their full potential, by applying our common sense, business experience and passion for technology. Delaware is a global consultancy that partners with leading technology providers such as SAP and Microsoft to deliver advanced digital solutions. We develop, innovate and implement technology transformations guiding our clients towards an intelligent future.
Featured image: ©xiaoliangge