The Key Trend for Manufacturing in 2015: An Interview with IDC’s Simon Ellis
Drones—near-shoring—3D printing—or something else. What will be the key trend that changes the manufacturing industry in 2015? Supply Chain Nation asked Simon Ellis, practice director for supply chain strategies at IDC Manufacturing Insights, for his thoughts on what 2015 might hold for the industry. His answer might surprise you.
SCN: What is the biggest trend you feel will impact the manufacturing industry’s supply chains in 2015?
Ellis: While there are a number of things we are following, the one that I think we’ll see begin to affect the way manufacturers run their supply chains this year, and ultimately will continue on, is this notion of the networked supply chain. I’ve looked at all of the new technologies and the new business processes and the one that strikes me as having the most transformative potential is this notion of networks.
I’ve articulated a vision of supply chain having three lobes—demand aware, supply visible and innovation networked. The idea in all three of those is that business networks, whether it is B2B commerce networks or ways to connect to consumers, really have the potential to transform how those processes work. On the demand side, it’s about networking with customers, consumers, and even suppliers to a degree. On the supply side, it is about having the connections and visibility into supply, not just into your Tier 1 or direct suppliers, but also into your Tier 2 and Tier 3 suppliers—that notion of deep supply visibility. On the innovation side, supply chain clearly has a role to play in the innovation process. For example, high tech suppliers play a pretty significant role in the innovation process; other industries perhaps a little bit less, but growing. So whether it’s consumers, customers, suppliers, academics, or open-source innovation, it all plays nicely in this context of the innovation network. That’s the thing I’m looking at this year. It’s not going to be one of those things where we complete by the end of the year and then say ‘we’re done, we’re fully networked;’ I think it is something we’re going to see increasingly discussed and increasingly affecting supply chains as we move through 2015.
SCN: In addition to what you’ve just mentioned, how else will the networked supply chain impact manufacturers?
Ellis: As with all things, some manufacturers are leading edge, others fast-followers, and still others are laggards. Certainly the notion of networked supply chains is not something we are just starting to explore this year. A number of leading manufacturers have looked at it and a number of vendors including JDA have talked about networks. The impact for manufacturers, in terms of their business, we’ll begin to see this year, but we certainly aren’t going to say we’ve done it all this year. It will be a journey, especially for those manufacturers who aren’t typically early adopters of these sorts of things. We’ll see the fast-followers and even the laggards start to get involved this year and the impact will be felt over a multi-year journey.
SCN: What should manufacturers do to prepare for and leverage this trend?
Ellis: My advice is not really different than I would have for any new approach or technology, whether you call it skunk-works or pilots or whatever; I think businesses have to do the due diligence on what networks might mean to their supply chain. Are they involved in networks today? Many of them are, but some are not. Those that are may be doing it only in limited areas. The due diligence will say, what does this mean for my business? But also, companies should be clear in their own minds where they are in terms of technology. As you know, I worked for a major consumer goods company for many years and while the rhetoric was early adopter, the reality was really fast-follower. RFID was a very good example of that.
I think it is also incumbent on manufacturers to be clear in their own minds where they are and not try to be what they aren’t. So if it makes sense to be a fast-follower in terms of leveraging networks, be clear on that and behave that way. At the end of the day, it’s about engaging with customers and with vendors, understanding what networks mean for the business, what potentially they can contribute to the business such that as the maturity curve increases over time, they will be in a position to adopt quickly where it makes sense to adopt. As a manufacturer, what you always want to feel you are able to do is, even if you choose strategically not to be on the leading/bleeding edge, at least do enough of the due diligence so when the time comes to adopt, you can do it quickly and effectively. I think at the end of the day, that is what informs the level of preparation for this notion of a networked supply chain
SCN: What is the biggest trend you feel will impact the manufacturing industry’s supply chains in 2015?
Ellis: While there are a number of things we are following, the one that I think we’ll see begin to affect the way manufacturers run their supply chains this year, and ultimately will continue on, is this notion of the networked supply chain. I’ve looked at all of the new technologies and the new business processes and the one that strikes me as having the most transformative potential is this notion of networks.
I’ve articulated a vision of supply chain having three lobes—demand aware, supply visible and innovation networked. The idea in all three of those is that business networks, whether it is B2B commerce networks or ways to connect to consumers, really have the potential to transform how those processes work. On the demand side, it’s about networking with customers, consumers, and even suppliers to a degree. On the supply side, it is about having the connections and visibility into supply, not just into your Tier 1 or direct suppliers, but also into your Tier 2 and Tier 3 suppliers—that notion of deep supply visibility. On the innovation side, supply chain clearly has a role to play in the innovation process. For example, high tech suppliers play a pretty significant role in the innovation process; other industries perhaps a little bit less, but growing. So whether it’s consumers, customers, suppliers, academics, or open-source innovation, it all plays nicely in this context of the innovation network. That’s the thing I’m looking at this year. It’s not going to be one of those things where we complete by the end of the year and then say ‘we’re done, we’re fully networked;’ I think it is something we’re going to see increasingly discussed and increasingly affecting supply chains as we move through 2015.
SCN: In addition to what you’ve just mentioned, how else will the networked supply chain impact manufacturers?
Ellis: As with all things, some manufacturers are leading edge, others fast-followers, and still others are laggards. Certainly the notion of networked supply chains is not something we are just starting to explore this year. A number of leading manufacturers have looked at it and a number of vendors including JDA have talked about networks. The impact for manufacturers, in terms of their business, we’ll begin to see this year, but we certainly aren’t going to say we’ve done it all this year. It will be a journey, especially for those manufacturers who aren’t typically early adopters of these sorts of things. We’ll see the fast-followers and even the laggards start to get involved this year and the impact will be felt over a multi-year journey.
SCN: What should manufacturers do to prepare for and leverage this trend?
Ellis: My advice is not really different than I would have for any new approach or technology, whether you call it skunk-works or pilots or whatever; I think businesses have to do the due diligence on what networks might mean to their supply chain. Are they involved in networks today? Many of them are, but some are not. Those that are may be doing it only in limited areas. The due diligence will say, what does this mean for my business? But also, companies should be clear in their own minds where they are in terms of technology. As you know, I worked for a major consumer goods company for many years and while the rhetoric was early adopter, the reality was really fast-follower. RFID was a very good example of that.
I think it is also incumbent on manufacturers to be clear in their own minds where they are and not try to be what they aren’t. So if it makes sense to be a fast-follower in terms of leveraging networks, be clear on that and behave that way. At the end of the day, it’s about engaging with customers and with vendors, understanding what networks mean for the business, what potentially they can contribute to the business such that as the maturity curve increases over time, they will be in a position to adopt quickly where it makes sense to adopt. As a manufacturer, what you always want to feel you are able to do is, even if you choose strategically not to be on the leading/bleeding edge, at least do enough of the due diligence so when the time comes to adopt, you can do it quickly and effectively. I think at the end of the day, that is what informs the level of preparation for this notion of a networked supply chain
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