Manufacturers have been chasing demand signals ever since Six Sigma and lean manufacturing started to gain popularity in the late 1980s. But a recent white paper from third-party logistics provider UPS and the market research firm IDC says that these continuous-improvement programs have taken manufacturers as far as they can go.
Overly optimized processes can become inflexible, leaving the business unable to adjust rapidly to disruptions in the supply chain and changing customer demand, says the paper, "The Rise of Smart Operations: Reaching New Levels of Operational Excellence." In order to keep up with swiftly changing customer demand and sudden supply chain disruptions, manufacturing companies need to move beyond Kanban cards and magnetic whiteboards and embrace so-called smart operations—what's known in other circles as the industrial Internet, Industry 4.0, or connected manufacturing, according to the study.
Smart operations, the paper says, use big data, mobile applications, advanced analytics, and technology that fosters deeper
collaboration with partners. UPS and IDC have identified five ways that industrial manufacturers can use these types of
After analyzing the results of a survey of 103 manufacturing executives as well as focus-group discussions, UPS and IDC conclude that most companies are still in the beginning stages of implementing smart operations. According to the study, 47 percent of companies surveyed consider their smart operations to exceed their peers' operations or to be best-in-class. Even these companies, which the paper calls "thrivers" in the new connected economy, still need to make more progress. For example, of those companies that are thriving in the digital environment, only 35 percent can analyze their supply chain performance in real time or near real time and receive suggestions for corrective actions in an automated way.
Manufacturers that are able to use smart technologies to improve their operations and respond faster to both changes in demand and supply disruptions will realize a significant competitive advantage and will be prepared for the next industrial revolution, the paper asserts.