Building supply chains of the future

Supply chains are evolving. The traditional, siloed, linear model — entirely focused on the physical movement of goods — has developed for decades in line with globalization and a growing demand and supply base. However, in the technological context of the Fourth Industrial Revolution, expectations are entirely different.

In this modern era, successful supply chain management necessitates real-time visibility throughout the entire connected ecosystem, from sourcing and manufacturing to inventory and transportation. In this context, artificial intelligence, cloud computing, IoT and other digital technologies have become critical determinants of success.

The potential impact of this transformation is clear. A McKinsey report found that companies who digitized their supply chains could expect to grow annual earnings before interest and taxes by 3.2%, and annual revenue by 2.3%.

In turn, digital supply chains support economic and social prosperity by being more resilient, sustainable and inclusive. Automated, connected technology optimizes resource management, enhances operational efficiency, enables data-driven decision making, ensures ethical and transparent practices and reduces environmental impact.

The factory as a revenue generator

As such, production and supply chain processes are no longer considered by leading companies as commodities that need to be cost efficient. We believe there are three main reasons that place the factory as a source of revenue instead of a cost center:

• First, the need for flexibility in a volatile market.  In an NTT DATA survey, 55%  of organizations recognized that demand fluctuations impacted in fulfilling customer orders by more than 10%.
• Second, the increasing demand for customized products; 76% of consumers are more likely to purchase brands that personalize
• Third, the incremental complexity associated with product ‘servitization ’, that positions manufacturing as the main engine of the industrial innovation agenda .

The World Economic Forum (WEF) Centre of Advanced Manufacturing and Value Chains is shaping the future of supply chain management and driving the manufacturing industry towards net-zero. Supporting this, we are currently participating in three key initiatives.

Global Lighthouse Network

The Global Lighthouse Network is a community of leaders using Industry 4.0 technologies to transform factories, value chains and business models. The community provides us with a forum to share perspectives on how digital technologies can empower intelligent, data-driven manufacturing.

Given the growing consumer preference for sustainable goods we believe Smart Factory digitization initiatives should address two complementary business objectives in parallel: improving sustainability parameters and positively impacting business potential.

Technology convergence is also critical in manufacturing and supply chain digital transformation — yet only 23% of manufacturers have achieved more than a basic level of IT-OT convergence. Data capture and infrastructure design — for example, what to keep in the cloud or on the edge — are key to success, and the integration of NTT Ltd. and NTT DATA enables us to make a bigger impact in this area.

The Industrial Metaverse is another important concept for manufacturers, with two key applications: production line design and production line operation. The potential of this technology lies in creating immersive three-dimensional virtual or virtual-physical industrial environments. However, its feasibility depends on having access to reliable and accurate real-time data, which in turn necessitates putting the right systems and software in place.

Circular transformation of industries

This cross-industry, multi-stakeholder initiative focuses on the adoption of circularity at scale, moving recycling and waste management solutions from proof-of-concept to full implementation — with clear implications for supply chains.

Focusing on these environmental impact areas allows leaders to position their brands within the green agenda and explore ways to extend the life cycle of their products. By driving resource efficiency in this way, businesses can also build next generation supply chain resilience and open new sources of revenue. This helps drive sustainable business and environmental benefits in tandem.

As part of our contribution to industrial circularity, we have proposed IIoT (Industrial Internet of Things) solutions to the comprehensive circularity initiative launched by Ralph Lauren. These solutions have the potential to improve the traceability of materials throughout the company’s manufacturing ecosystem — a critical element of supply chain transparency.

People: The future of manufacturing

When it comes to supply chain and smart factory transformation, talk naturally gravitates towards technology. However, humans remain a vital part of the equation, and companies must develop strategies to ensure that their workforce can contribute effectively to advanced manufacturing solutions. In this area, the technology adoption of front-line workers is key and the mechanisms to ensure such adoption are specific for the characteristics of this collective of professionals.

To remain competitive in an increasingly complex manufacturing landscape, companies need to move beyond an automation narrative and consider the empowering role of augmentation. This involves placing the workforce at the center of discussions, creating a more accessible and inclusive work environment, increasing employees’ well-being and fostering human connection and collaboration.

Towards a smarter and more sustainable supply chain

Supply chains are the backbone of the global economy and have a fundamental role to play in accelerating economic growth, social inclusion and prosperity, as well as our shared net-zero vision.

To achieve these goals, digital transformation plays a critical role by optimizing supply chain processes — yielding significant operational and performance improvements that benefit all stakeholders. As a Trusted Global Innovator, we can bridge the gap through our supply chain consulting services and worldwide network of partnerships, helping manufacturers adopt future-ready manufacturing models that drive shared economic, social and environmental value.