JDA 2018 Intelligent Manufacturing Survey

Transcription

1 JDA 2018 Intelligent Manufacturing Survey

2 Battling the Amazon effect, manufacturers embrace a new role Amazon s successful e-commerce model has forever changed consumer expectations, creating widespread disruption across the retail industry and the rest of the supply chain. Many business-tobusiness (B2B) companies now expect the same service levels as today s consumers, and how manufacturers are responding to this Amazon effect is a prevalent theme among the respondents of the 2018 Intelligent Manufacturing survey, prepared by JDA Software, Inc. In response to changing consumer demands, the survey findings indicate that manufacturers are focusing their technology investments on inventory optimization solutions (43 percent) and integrated planning and execution technologies (41 percent). Respondents also say they are preparing their supply chains to be more responsive and meet rapidly changing consumer behaviors by focusing on several strategies such as enabling internal and external collaboration (51 percent), improving forecasting with demand sensing (44 percent), and by leveraging data science for forecasting insights (33 percent). Additionally, nearly a third (31 percent) are integrating sales and operations planning (S&OP) with sales and operations execution (S&OE) through a single, connected technology accessed by users across the supply chain. Another critical component manufacturers must address when embracing this retail-like role is digital supply chain maturity. Even though 70 percent of respondents say digitalization in the supply chain is currently a major initiative or will become a major priority within 12 months, only 35 percent of respondents project that their company will be running a fully integrated digital supply chain within the next 2-3 years. Survey methodology: JDA collected responses from 271 U.S.-based professionals across the manufacturing and wholesale/distribution industries in February 2018 via a third-party research partner to determine the findings of its 2018 Intelligent Manufacturing survey. Fifty-two percent of respondents represent companies with global operations, hold positions in IT (48 percent), manufacturing (37 percent) and operations (seven percent), and the majority are either a manager (37 percent) or a director or above (28 percent).

3 Prioritizing integrated planning and execution is key No longer just a concern for retailers, the Amazon effect is prompting manufacturers to rethink and reprioritize their technology investments to better address changing consumer demands. Because Amazon s customer service has become the gold standard, expectations for shorter order fulfillment and delivery times have become the norm for both business-to-consumer and B2B companies. In response, 43 percent of respondents say their company has invested in inventory optimization solutions to help keep up with today s consumer demands. A significant number of respondents also revealed that their company is investing in integrated planning and execution technologies (41 percent), warehouse automation (39 percent) and inventory allocation solutions (37 percent). How companies have invested in supply chain technology in response to the Amazon effect and to keep up with today s consumer demands Inventory optimization Integrating planning and execution Warehouse automation Inventory allocation and reliable promising Customer segmentation 23 % 43 % 41 % 39 % Not surprisingly, investments in inventory optimization technology and customer segmentation are popular, as both are critical components of a customer-centric supply chain. With manufacturers under greater pressure to deliver inventory on time and in full to their retail partners, knowing where to position inventory across the supply chain to meet those requirements is essential. Many large retailers have already started instituting fines for late deliveries, making non-compliance an increasingly costly issue for manufacturers. As more manufacturers start selling direct to consumers, many of these supply chain capabilities will become critical to ensure that orders are delivered in the most profitable manner while also meeting consumers delivery expectations. Because consumers shopping behaviors are continuously evolving, many companies have already started preparing their supply chains to address this. In fact, more than half of the respondents (51 percent) are focused on enabling internal and external collaboration across the supply chain. Additionally, many respondents are focused on improving forecasting abilities with demand sensing (44 percent) and data science for better insights (33 percent).

4 How companies are preparing the supply chain to rapidly address future consumer shopping behaviors and tastes 51 % 44 % 33 % of manufacturers are focused on enabling collaboration across the supply chain of manufacturers are focused on improving forecasting with demand sensing of manufacturers are focused on leveraging data science for forecasting insights When asked to choose which technology would drive the greatest improvement to their forecasting abilities, respondents were divided. Nearly 1 in 4 respondents (24 percent) say pattern recognitions powered by data science offer the best forecasting improvement for their supply chain, followed closely by predictive analytics (22 percent) and statistical algorithms (21 percent). The technology that manufacturers think will drive the greatest improvement to their forecasting capabilities 24 % Pattern recognitions powered by data science 22 % Predictive analytics 21 % Statistical algorithms 18 % Improved demand sensing 15 % S&OP-based consensus number To fully combat the Amazon effect, planning and execution processes must be more tightly coupled. Nearly a third of respondents (31 percent) are integrating their long- and mid-term planning with tactical execution processes by using a single, connected technology, accessed by multiple users across the supply chain. In other words, these respondents are integrating their S&OP and S&OE processes. The other two-thirds are falling behind. 11 %

5 How long- and mid-term planning (S&OP) is being integrated with tactical execution (S&OE) processes One extended process % One technology One user Disconnected S&OP and S&OE process % Different technologies Multiple users Connected S&OP and S&OE process % One technology Multiple users Over the next 12 months, 40 percent of respondents will be focused on enabling both a financially-led S&OP and a comprehensive constraint planning based S&OE process, while 21 percent are focused on neither. Only 16 percent of respondents will be focused on enabling a comprehensive constraint planning S&OE process alone. Navigating geopolitical uncertainty Rising protectionism and shifting global trade policies are just a few of the factors contributing to growing geopolitical uncertainty and increased risk exposure for those respondents with global operations (52 percent). Of those companies that operate on a global scale, 38 percent have percent of their business near shore and 35 percent have percent of their business near shore. Ease of doing business, cultural proximity, quality of service delivery, lower risk and cost savings have made nearshoring a hot trend, and the survey findings suggest that companies will continue to focus on nearshoring strategies in Thirty-five percent of respondents with global operations expect to move roughly percent of their network near shore in the next 12 months. Another 30 percent say they expect to move percent of their network near shore over the next year. Of those with global operations, total percentage of network expected to move near shore in the next 12 months 24 % 11 % 30 % say 10% - 20% of network expected to move near shore say 20% - 50% of network expected to move near shore say 50% - 75% of network expected to move near shore say 75% - 100% of network expected to move near shore While U.S. administration policies, Brexit referendum negotiations and international conflicts have made headlines recently, 37 percent of respondents at companies with global operations report that these geopolitical events have had zero impact on their nearshoring strategy. In contrast, a close 33 percent of respondents at companies with global operations believe that Trump Administration policies have impacted their nearshoring strategy.

6 Identify the recent geopolitical events that have impacted your nearshoring strategy Brexit Trump policies Recent natural disaster 24 % 11 % International conflict 30 % None of the above = respondent with global operations Over half (54 percent) of respondents review their network strategies annually. This annual approach is fairly consistent across companies with global operations (54 percent), domestic operations (56 percent) and regional operations (51 percent). Conversely, 27 percent of respondents treat reviewing their network strategies as a once and done process. Only 19 percent of respondents review their network strategies when prompted by a major event, such as an acquisition. The path to digital supply chain maturity Another critical component manufacturers must address when embracing the role of retailer is digital supply chain maturity. Nearly half of the respondents (46 percent) are aggressively pursuing supply chain digitalization strategies and technologies as a major initiative in How aggressively companies are = respondent pursuing with strategies global operations and technologies for digitalization specifically in the supply chain 46 % 24 % 8 % 22 % It is a major initiative in 2018 It will become a major priority within a year It will become a major priority within a 2-3 years Don t know Even though 70 percent of respondents say digitalization in the supply chain is currently a major initiative or will become a major priority within 12 months, only 35 percent of respondents project that their company will be running a fully integrated We operate a fully integrated 18 % digital supply chain within the next 2-3 years. digital supply chain In fact, when asked about the maturity of their supply chain today, 34 percent of respondents say they have We have adopted some digital adopted some 34 digital % supply chain functions, but are not fully integrated. Only 18 percent claim to be operating a supply chain functions, but they are fully integrated digital supply chain today. 28 % not fully integrated Forty-eight 30 percent % of respondents admit to either We are exploring digital options, but 23 % operating a predigital supply chain or say they are exploring digital options, but they have not begun integration efforts yet. Looking ahead 2-3 years, the number of have not begun integration efforts respondents who 18 % expect to still be operating 14 % a predigital supply chain or exploring digital options drops to 37 percent. Predigital CURRENTLY NEXT 2-3 YEARS CURRENT STRATEGY NEXT 2-3 YEARS NOT A PRIORITY

7 Digital supply chain maturity: today vs. projections for 2-3 years 18 % 34 % 30 % 18 % We operate a fully integrated digital supply chain We have adopted some digital supply chain functions, but they are 28 % not fully integrated = respondent We are exploring digital options, but 23 % with global operations have not begun integration efforts 14 % Predigital 46 CURRENTLY % NEXT 2-3 YEARS 24 % 8 % 22 % As manufacturers consider how to adapt their supply chain operations to better cater to consumer needs, supply chain digitalization is becoming an important differentiator. There are many factors such as a company s business model, industry, competitive framework, etc. that companies should consider when evaluating which digital technologies will drive the most value within their organizations. While respondents plans for deploying digitalization technology vary, it s clear that digitalization plays a part of most companies current or future supply chain strategies. We operate a fully integrated 18 % digital supply chain The top five technologies respondents report using within their organizations to support their current supply chain We have adopted some digital strategies are: 34 Internet % of Things (IoT) (57 percent); cloud-based applications (47 percent); mobile applications (47 percent); advanced analytics prescriptive, predictive, preventative supply (46 percent); chain functions, and digital but data they hub (44 are percent). 28 % not fully integrated In the next years, % the top five technologies respondents plan to deploy as part of their organizations future We are exploring digital options, but supply chain strategies are: digital data hub 23 ( percent); integration platform as a service (37 percent); low-touch/ have not begun integration efforts no-touch user interfaces (37 percent); integrated or smart sensors (36 percent); and automated factories (35 percent). 18 % 14 % Predigital CURRENTLY NEXT 2-3 YEARS Digitalization plays a part of most companies current or future supply chain strategies CURRENT STRATEGY NEXT 2-3 YEARS NOT A PRIORITY 21 % 22 % 57 % 21 % 32 % 47 % 23 % 46 % 27 % 36 % 34 % 19 % 44 % Internet of Things Mobile applications Advanced analytics Integrated or smart sensors Automated factories Digital data hub 22 % 47 % 26 % 36 % 23 % 40 % 39 % 30 % 25 % 33 % 42 % 28 % Cloud-based applications Supply chain visibility Integration platform as a service Control tower Software as a service Low-touch / no-touch user interfaces Additionally, respondents report that inventory traceability (42 percent), mobile applications (37 percent) and big data and predictive analytics (35 percent) were the top areas of focus for investments within the distribution center (DC)/warehouse in Inventory the next five traceability years. Conversely, 42% IoT supply sensing was the least popular investment option in the next five years. Mobile applications: 37% Big data / predictive analytics: 35% Automation: 28%

8 49 % have realized have improved have reduced spend have increased 21 % 21 % 23 % 27 % 22 % 32 % 36 % 57 % Investment priorities within % the DC/warehouse % over the next 5 34 years % Internet of Mobile Advanced Integrated or Automated Things applications analytics smart sensors factories Inventory traceability 42% 22 % Mobile 26 applications: % 37% 23 % 39 % 25 % Big data / predictive 36 % analytics: 35% % % 47 % Automation: 28% 40 % 42 % Virtual reality / augmented reality: 25% Cloud-based Supply chain Integration Control Software as applications Parcel visibility management: platform 25% as tower a service RF devices: a 22% service Deployment of drones: 19% RFID: 17% Inventory traceability 42% IoT supply sensing: 10% Mobile applications: 37% Digital data hub 28 % Low-touch / no-touch user interfaces Big data / predictive analytics: 35% Looking specifically at respondents Automation: who are 28% working toward operating a fully integrated digital supply chain within the next 2-3 years (labeled here as aspirational manufacturers ), 65 percent are on-track, reporting that supply chain Virtual digitalization reality / is augmented a major priority reality: for their 25% organization in In addition, nearly half (47 percent) of this aspirational group have Parcel realized management: the importance 25% of integrated S&OP and S&OE processes; within 12 months, 44 percent are planning to enable a connected, financially-led S&OP and a comprehensive constraint planning S&OE RF devices: 22% process. Aspirational manufacturers have also reported a current investment in digital strategies and solutions, with most investing Deployment in IoT. of drones: 19% RFID: 17% IoT supply sensing: 10% Aspirational manufacturers reporting a current investment in digital strategies and solutions 19 % 44 % 63 % 59 % 58 % 58 % Internet of Things Cloud-based applications Mobile applications Software as a service 55 % 53 % 53 % Integration platform as a service Advanced analytics Digital data hub Looking once more at the full range of data collected, 8 out of 10 respondents are seeing value resulting from the supply chain digitalization strategies or technologies deployed within their organizations. Nearly half (49 percent) of respondents are seeing greater profitability for their company. Respondents are also realizing significant value in the form of increased customer service levels (38 percent), reduced spend (38 percent), and increased competitive abilities (35 percent).

9 Value resulting from strategies or technologies related to supply chain digitalization 49 % have realized greater profitability have improved customer service levels have reduced spend have increased competitive abilities 34 % created new revenue streams 29 % have reduced inventory 27 % have increased customer loyalty 17 % did not see value in these areas Attracting and retaining talent will also be a key consideration for manufacturers throughout their digital supply chain transformation. Over half (54 percent) of respondents plan to add a small number of new hires in the next year to specifically address the rapid increase of available industry data. Almost a fourth (24 percent) plan to add a significant number of new hires. To attract top talent today, respondents are embracing mobility in the workplace (55 percent). Forty-two percent of respondents are establishing supply chain as an elite organization within the company to attract top talent. Additionally, to retain top talent, 55 percent of respondents are cross-training across all supply chain needs and establishing a true Center of Excellence. Forty-eight percent of respondents are empowering people to help analyze business decisions to retain top talent. Conclusion The JDA Intelligent Manufacturing research underscores how important supply chain digitalization is in helping companies battle the Amazon effect. For many manufacturers, supply chain digitalization has become a dramatic differentiator, driving significant value for 8 out of 10 survey respondents. For those companies that don t believe digitalization can drive real results within their organization, it s time for them to rethink their position. Greater profitability, improved customer service levels, reduced spend and increased competitive abilities are among the wide range of business benefits respondents have attributed to their supply chain digitalization efforts. Even though 70 percent of respondents indicate that supply chain digitalization is currently a major initiative or will become a major priority within 12 months, only 35 percent anticipate that their company will be running a fully integrated digital supply chain within the next 2-3 years. This discrepancy indicates that the path to digital supply chain maturity is not clear for all manufacturers. While many companies are prioritizing digitalization, they need to take their supply chain digitalization plans a step further and crystallize their roadmaps. Insights from this research highlight how respondents are investing in different supply chain technologies and strategies such as inventory positioning, integrated planning and execution, and interconnected S&OP and S&OE processes to help keep up with changing consumer demand. For those manufacturers unsure about how to get started on their digital supply chain journey, they would be best served to work with supply chain service providers to chart a course of action.

10 About JDA Software Group, Inc. At JDA, we re fearless leaders. We re the leading provider of end-to-end, integrated retail and supply chain planning and execution solutions for more than 4,000 customers worldwide. Our unique solutions empower our clients to achieve more by optimizing costs, increasing revenue and reducing time to value so they can always deliver on their customer promises. Using JDA, you can plan to deliver. jda.com Copyright 2018, JDA Software Group, Inc. All rights reserved. JDA is a Registered Trademark of JDA Software Group, Inc. All other company and product names may be Trademarks, Registered Trademarks or Service Marks of the companies with which they are associated. JDA reserves the right at any time and without notice to change these materials or any of the functions, features or specifications of any of the software described herein. JDA shall have no warranty obligation with respect to these materials or the software described herein, except as approved in JDA s Software License Agreement with an authorized licensee