All News & Insights

Today’s competitive supply networks are digitalized, responsive, and flexible enough to adapt rapidly to changing markets, challenges, and opportunities. 

TAKEAWAYS:
● Looking at your supply network as an extension of your business provides an opportunity to significantly improve results.
● The goal is to reduce latency and enable agility across all aspects of the supply chain decision process.
● Increased collaboration, visibility, and improved execution across the supply chain are now the keys to success.  

Properly managed supply chains have long been instrumental in the success of manufacturers, with the leaders continually adapting as capabilities have evolved. Walmart was an early pioneer in driving costs out of the supply chain through automation, technology, global sourcing, and creative logistics. Amazon added additional speed, transparency, and visibility to give rapid deliveries and almost real-time order and delivery status, even expanding to support third-party manufacturers and sellers — which currently represent more than 60% of their retail business. Success in supply chain management combined with organizational scale has given both companies significant control over the market and the manufacturers that supply them. They set a new bar for how supply chains should be managed.

Conversely, many manufacturers have been negatively impacted by their inability to effectively manage their supply networks. There have been stories of companies that outsourced their supply chains without providing proper oversight that resulted in issues with quality, deliveries, customer satisfaction, and margins. During the Covid pandemic, in addition to supplier challenges, an overreliance on the just-in-time replenishment model compounded shortage issues, leading to missed opportunities for many manufacturers. With the complexity of the global supply chain, it took years to bring supply chains back to a “normal” state.

Manufacturing 4.0 supply networks are digitalized, responsive, and flexible enough to adapt rapidly to changing markets, challenges, and opportunities.

Now, with increasing nationalistic pressures, constantly changing regulations, new tariff challenges, and the introduction of rapidly evolving transformative technologies, it is even more critical that manufacturers manage their supply chains to the most optimal level possible. Increased collaboration, visibility, and improved execution are now the keys to success. Manufacturing 4.0 supply networks are digitalized, responsive, and flexible enough to adapt rapidly to changing markets, challenges, and opportunities. The following ideas can help optimize and positively transform your supply chain.

Make the Supply Network an Extension of Your Business

Looking at your supply network as an extension of your business vs. treating suppliers like traditional vendors can significantly improve results. Using a unified system that offers full visibility into the supply chain while integrating the supply network with shared systems can help standardize processes, maintain quality standards, and ensure delivery commitments are met. Integrated feedback loops to ensure process and quality compliance enables the business to improve performance, reduce costs, and bring about better execution. Automated business processes throughout operations and the extended supply network enables better efficiencies.

One company that has found success with this is Cohu, a global technology leader in semiconductor test equipment. As a high-tech manufacturing company, they are heavily reliant on outsourcing to build and supply their products. Their success is dependent on integrating their suppliers into their manufacturing business to ensure high-quality and on-time deliveries.

The earlier that a problem or opportunity is identified, the greater the manufacturer’s chance of achieving a quick and optimal resolution.

“One system and one process means that production managers in Malaysia don’t have to work with three or four different processes and workflows when engineering change orders come through,” said Cohu CIO Craig Halterman. “As we extended our supply chain solution to our suppliers, we now capture information about the components they make early, so we don’t find out that a piece didn’t pass inspection or was made outside of a certain control limit when we’re putting our machines together. Any time we can reduce the quality issues coming in our door that we have to pass back to the supplier is a major improvement.”

A critical element of success is closed-loop feedback that enables quality processes and validates that the processes were followed. As Ronald Reagan famously said, “Trust but verify.”

Enable Rapid and Improved Decisions

As manufacturers deal with increased turbulence across the supply chain, the goal is to reduce latency and enable agility across all aspects of the supply chain decision process. This includes time to identify problems, determine resolutions, and execute the best solution.

The earlier that a problem or opportunity is identified, the greater the manufacturer’s chance of achieving a quick and optimal resolution. Clear visibility across the supply chain and business operations is essential. Best-in-class processes like Sales and Operations Planning (S&OP) and Integrated Business Planning (IBP) provide a strong foundation for making faster, more informed decisions. However, disconnected, spreadsheet-based processes often hinder the timely flow of critical information. Some manufacturers run monthly S&OP cycles that take more than a month to complete. This can lead to missing the critical feedback loop that is essential for success.

IBP enhances these capabilities by integrating financial planning more effectively. For instance, incorporating financial planning tools with supply chain scenario planning enables rapid analysis of tariff impacts, improving adaptability. Additionally, including the supply network in collaborative forecasting and capacity planning further strengthens the overall process, leading to better outcomes.

Leverage New Technologies for Optimization

Manufacturers have long leveraged technology to enhance supply chain capabilities. Initially, computer systems evolved from material requirements planning (MRP) to enterprise requirements planning (ERP) to optimize processes across the business. Demand planning was an early adopter of AI, utilizing advanced techniques like Bayesian Markov forecasting to improve forecast reliability. AI-driven anomaly detection has enhanced quality control, predicted deviations, and improved supply chain data. Meanwhile, IoT has improved machine connectivity and business processes, enabling early warnings and automating execution.

In recent years, AI has emerged as a major disruptive force in supply chain management. Both traditional and generative AI are becoming embedded across organizations, increasing agility, enhancing performance, and boosting employee productivity. This is especially crucial as the National Association of Manufacturers’ annual surveys consistently highlight a persistent shortage of skilled workers.

AI now offers even greater advantages, such as more accurate transit time predictions, improved supply chain risk identification, and enhanced demand forecasting through the integration of external data. AI-powered planning advisors help supply chain professionals analyze supply and demand data more efficiently, while AI-driven supplier onboarding accelerates quality assessment and data validation. With AI increasingly embedded in business processes, the potential for improvement is vast. Generative AI, in particular, will initially serve as an intelligent advisor — offering insights, feedback, first drafts, and fast, accurate responses — enabling better, faster decision-making. These advancements will make supply chains and their supporting networks more agile and responsive.

Build a Skilled Workforce

For years, surveys from the National Association of Manufacturers have highlighted a persistent shortage of skilled workers — a challenge that will become even more critical as AI adoption accelerates. To keep pace, employees will need to continuously develop new skill sets to enhance efficiency and adapt to evolving roles. While some may fear that AI will replace highly skilled supply chain professionals, the reality is that AI will likely raise the bar, requiring manufacturers to become even more agile and responsive.

Rather than replacing workers, AI will serve as an enabler — automating repetitive and mundane tasks so employees can focus on creative, strategic, and complex problem-solving. A key skill for the future workforce will be understanding how to effectively integrate AI into business operations. Concepts such as digitalization and Manufacturing 4.0 will be essential for driving process connectivity and business transformation.

Beyond traditional skills like communication, supply chain management, and data analysis, employees will need to develop expertise in leveraging AI to enhance decision-making and optimize supply networks. By mastering these new capabilities, they will play a vital role in transforming manufacturing operations, addressing future challenges and opportunities, and ensuring they remain indispensable to the success of their organizations.  M

About the author:

John Barcus is Group Vice President, Manufacturing Industries & Emerging Technologies at Oracle.