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December 09, 2016
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Ten ways the manufacturing supply chain will transform itself in 2016 (and beyond)

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The next 24 months will bring radical changes in manufacturers' supply chain strategies and operations, says analyst group IDC. The drivers: technologies such as cloud-based commerce networks, demand-sensing technology, and 3-D printing.

The way the analyst group IDC sees it, manufacturing is on the brink of a digital transformation. The industry's processes, business models, and human resource needs are set to be radically changed by a host of still-developing technologies and technology-driven trends.

While many of these technologies, such as e-commerce and 3-D printing, have been around for a while, it seems that IDC sees them as converging to create radical changes in the manufacturing supply chain over the next 24 months. In "IDC FutureScape: Worldwide Manufacturing Supply Chain 2016 Predictions," analysts Simon Ellis, John Santagate, Christopher Holmes, and Marc Van Herreweghe issue 10 bold predictions for how this digital transformation will change the manufacturing supply chain. Here's a brief outline of those predictions:

1. Cloud-based commerce networks. By the end of 2016, the majority of manufacturers will be actively employing commerce networks in their supply chains to facilitate demand awareness, supply visibility, or the development of new products. According to IDC, commerce networks have assisted manufacturers in procuring direct and indirect materials for more than 15 years. Over this time, commerce networks have progressed from largely EDI-based, point-to-point data transmission to richly interactive hubs, where a manufacturer and its suppliers and partners can share structured and unstructured data. Today, commerce networks support near-real-time communication and drive efficiency gains throughout manufacturing supply chains.

2. Micrologistics. By the end of 2018, at least a quarter of all manufacturers will have implemented a "micrologistics" network that involves multiple, localized nodes, such as smaller regional distribution centers, predicts IDC. This distribution strategy is being driven by the need to support retailers' omnichannel efforts, according to the analyst company. To enact these strategies, IDC anticipates that many manufacturers will need to rely on outside partners, such as third-party logistics providers.

3. Integrated business planning. By 2018, the great majority of manufacturers will be using integrated business planning (IBP) to coordinate their enterprisewide planning activities. IBP takes a step beyond more traditional sales and operations planning (S&OP) to include product/innovation planning, marketing/campaign planning, customer/account planning, and financial/risk planning. To achieve this holistic planning process, previous planning systems, such as trade promotions management and S&OP, will need to be integrated together—or at least united under a common analytics platform.

4. Modern postponement. Manufacturers are under increasing pressure to be responsive to customers' demands for mass customization, rapid delivery of products, and local or regional production. IDC anticipates that at least half of manufacturers will use postponement strategies, where production or customization is done at the last possible moment, to accomplish this. Manufacturing will become more flexible than in the past by making use of technologies such as 3-D printing, robotics, and cognitive computing (self-learning systems that use data mining, pattern recognition, and language processing).

5. Resiliency and visibility. For the past few years, manufacturers have increased their use of demand-sensing technologies. As a result, they now have better visibility into what their customers want and can be more resilient in the face of demand changes. This visibility also means that production no longer has to be driven by short-term demand forecasts. Instead it can be based on actual, real-time demand signals.

6. "Broadening" of the supply chain. Manufacturers will continue to broaden their supply chains to include nontraditional elements—such as product design, manufacturing, and service—in order to increase their ability to respond to customer demand.

7. Cloud-based warehouse management systems and transportation management systems. Manufacturers will increasingly move away from on-premise installations of supply chain execution systems and toward cloud-based WMS and TMS—or a hybrid version that combines the two approaches.

8. Robotics. Serious improvements have been made in the capabilities, usability, and reliability of robots and autonomous guided vehicles. As a result, IDC predicts that 80 percent of manufacturers will reevaluate whether to use robots and automation technology in their warehousing networks.

9. The Internet of Things. Manufacturers already are embracing the Internet of Things (IoT) through the use of such devices as remote sensors. IDC expects these efforts to continue as manufacturers look to gain data-driven insights into their operations; those insights will improve both productivity and decision making.

10. Talent. Given the nine previous predictions, it is perhaps not surprising that IDC anticipates that by 2020, half of all operational jobs in the supply chain will have evolved into knowledge-based jobs that support new technologies like cognitive computing and robotics.

Get more information about the IDC report.

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