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The technology investment required for a 21st century supply chain


 Nick Harrison, Partner, KPMG in the UK

With the Fourth Industrial Revolution (4IR), the Internet of Things and industrial automation being the biggest buzzwords in 21st century manufacturing, how does the supply chain fit into this picture of disruptive technologies driving new productivity and growth?


While new technology can provide a solution for some, often it’s the processes and systems that prove the barrier to improvement. Technology isn’t a silver bullet to solve every challenge.

 In working with UK manufacturers, I know that 4IR and improving their supply chain are some of the biggest challenges they are wrestling with. However, many are confused about what 4IR actually means and where they should start.

The first step for organisations in this position is to take a detailed look at operations and how their systems and processes connect with their supply chain and customers. How visible is customer demand? How is that integrated into production schedules? How quickly can they predict and adjust based on new demand? How can downtime be minimised on machinery? How can shift patterns be optimised? What information can be drawn from the endless supply of data?

Often, the business growth isn’t hampered by internal operations, but by a lack of customer focus. This can come down to the wrong pricing strategy, too many customer touch points before the customer can make a purchase, or a complicated and inefficient website or ordering system. From back-office transformations to software upgrades, there are solutions available.

Getting buy-in for these types of changes is generally not the challenging part. Typically, the problem lies in the ‘stickiness’ of the solutions and the managing the change. How will these improvements continue over the long-term as people go back to focusing on their day jobs? As a strategic partner with manufacturers working on these challenges, we help our clients develop processes to embed a culture of change and improvement.  

Brexit’s impact

Brexit’s impact on the manufacturing supply chain is going to be bigger than imagined. Just look at the automotive industry. A typical vehicle takes approximately 3,000 parts, sourced from an integrated, international supply chain that took 20-30 years to build. A typical car takes seven years to develop and everyone in the supply chain is working towards that date (and has to be able to supply replacement parts for the life of that vehicle after that date). How will UK manufacturers adapt their supply chain given a new trade reality?

Brexit will also impact processes, raising compliance issues, such as requiring two separate systems for UK and EU supply chains. How do manufacturers ensure these systems are integrated, but hold separate product codes and data?

These are significant issues that very few people fully understand yet. 

Disruptors on the horizon

In every industry we’re seeing the rise of more disruptors, such as Tesla in the automotive industry.

While many people believe the technology-driven shop floor is the key one they should consider, the switch to the cloud may be an overlooked solution. Companies are moving away from investing in physical assets that need to be updated every two years. Instead, they are putting their data in the cloud. This type of storage also helps create one secure, master set of data rather than relying on separate spreadsheets and data stored on separate systems across the company.

No matter where a manufacturer is on their journey to adopt 4IR and grow their supply chain, there is no doubt change is happening faster than ever. The key is to take the first step to identify solutions that suit your business.

This and other topics of business interest to UK manufacturers will be discussed at the National Manufacturing Conference on 22 February 2017. KPMG’s own Stephen Cooper, Partner and Head of Industrial Manufacturing, will be presenting as part of a panel on ‘Making Britain the best place to do manufacturing – a global perspective’. Tickets are available now.

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