ML Journal

Sharing data-driven insights across networks can turn transactional suppliers into strategic partners. 

TAKEAWAYS:
● Establishing trust can help foster open communication among various leadership teams working toward common aims.
● For exchanging data with suppliers and other partners to be useful, manufacturers need to organize the reams of information they have stored in various repositories.
● A commitment to preparedness planning also underpins a successful collaborative ecosystem for manufacturers.  

As supply chains become ever more complex and global manufacturing ecosystems continue to shift, industrial companies need to focus on intentional collaboration across those ecosystems to achieve greater operational efficiency. Sharing data and data-driven insights across suppliers, other partners and customers can improve products, services, communications and customer satisfaction.

Setting up a network where all parties can benefit from transparency and working together requires several key foundational elements, from establishing proper data systems and processes to undergoing thorough risk assessments. A handful of best practices—which we highlight below—can build a better environment for innovation to drive growth, and enhance business continuity planning, risk management, and overall organizational preparedness.

Opportunity in Collaboration

Equipped with the same information about sourcing, orders, forecasts and customer satisfaction, manufacturers and the other organizations throughout their ecosystem can work together to improve the inventory profile, reduce lead times for information sharing and reduce costs. Sharing these data-driven insights—and communicating about them—can help companies across a given network deliver faster, improve product quality, hone marketing efforts and even lower transportation costs. Ultimately, this turns transactional suppliers into strategic partners.

But businesses need to have a tangible plan to foster a more connected, communicative and collaborative supplier ecosystem. Here are some best practices that can anchor the effort:

1. Lay the data foundation—For exchanging data with suppliers and other partners to be useful, manufacturers first need to organize the reams of information they have stored in data warehouses, data lakes and other repositories. Using data analytics technologies and developing clear key performance indicators can help companies crystallize trends in demand, supply and various factory floor metrics such as production output, quality and defects.

Digital portals, messaging and video apps, factory sensors, and third-party platforms to exchange information on sales and orders can all streamline operations, but having data protocols and governance in place is crucial to ensuring those technologies stay secure and functional. When manufacturers, their suppliers—across multiple tiers of the supply chain—and other partners share real-time, data-driven awareness about product levels and demand, it can help the broader network better meet demands. It also enables companies to evaluate risk from every direction, which can improve supplier resiliency and translate to more consistency for customers.

2. Establish trust and communication—One important metric for companies is sharing supply chain goals across a given manufacturing ecosystem. This can help in developing a sense of working toward common aims and fostering open communication among various leadership teams.

Teams will likely need to strike a balance between openness and protecting proprietary information, but much of the data suppliers and manufacturers have on hand can be of mutual benefit to share. By making data and insights transparent across the supply chain, overall inventory positions, lead times and quality can improve, ultimately setting the stage for collaborative strategic initiatives.

3. Conduct risk assessments and internal audits—Evaluating risks across the supply chain, including those of suppliers’ suppliers, is critical for identifying potential threats and vulnerabilities and ensuring resiliency. Manufacturers need to consider geopolitical tensions, financial conditions, and environmental catastrophes to develop contingency plans. Understanding the impact of the recent Los Angeles fires on a supplier, for instance, enables manufacturers to inform customers promptly and take necessary actions to mitigate disruptions.

A collaborative ecosystem where parties share information on a regular basis will be better equipped to implement and monitor, similar to early detection systems around risk. Internal audits are another important tool; System and Organization Controls (SOC) 1 and SOC 2 audits often reveal gaps in crisis management, business continuity, and disaster recovery that companies need to address. Continuity planning is essential, and significant disruptive events in the past five years alone prove that this should not be an afterthought.

4. Prioritize organizational preparedness—A commitment to preparedness planning is another factor that underpins a successful collaborative ecosystem for manufacturers. Best practice suggests aligning the business resilience programs of crisis management, business continuity, disaster recovery, and cybersecurity incident response programs under the enterprise risk management (ERM) function. If an ERM function does not exist, those programs are often the responsibility of operations, finance or compliance. Manufacturers must ensure that their continuity plans address the dependencies and shared risks within the supply chain to strengthen business resilience.

The emphasis on overseas manufacturing, particularly in the Asia-Pacific region, underscores the need for robust continuity plans. Sourcing materials from single vendors presents chokepoints that can severely affect production if disruptions occur.

Resilience: Key for any ecosystem

Business resilience is integral to any manufacturing ecosystem. The dependency on shared vendors and the reliance on technologies such as automation, machine learning and cloud infrastructure highlight the importance of having comprehensive continuity plans. Collaboration should be central to these resilience efforts; by all parties having more granular visibility into the entire supply chain, teams can work together to fix issues as they arise and capitalize on opportunities more efficiently as demand and supply continue to shift. Embracing these best practices will set manufacturers up for a more successful future.  M

About the authors:

Casey Chapman is a principal at RSM US LLP.

Chuck John is a director at RSM US LLP.

Jake Winquist is a principal at RSM US LLP.