How a Digital Supply Chain Impacts Supplier Collaboration
This is part 3 of a 5-part series about digital manufacturing called Embracing the Power of the Next Industrial Revolution. This blog series explores the different challenges throughout the product lifecycle and how to “go digital” in Industry 4.0.
In the last blog, I discussed internal collaboration challenges during product design. Many of the same struggles that companies experience with internal siloing extend to outside entities. Teams hesitate or are simply unable to share information openly and proactively with suppliers and partners. This creates roadblocks to innovation and product optimizations.
My colleague and friend John Heller recently explored the benefits and importance of collaborative and open relationships with suppliers in an extensive blog series. To summarize his series, optimizing relationships with suppliers relies on multiple strategies to be successful, many of which are cultural collaboration shifts. I also believe that digital technology and tools can impact how manufacturers and suppliers collaborate.
The Cost Of Today's Siloed Supply Chain
In the early stages of product development, engineers and designers are focused on ideating and understanding feasibility with new product ideas. Organizations need to understand:
- How new product innovations will support the market
- The timeline to complete the product
- Whether the design is optimized for customer and market needs
- Market research into other competitive products
Although industry analysts agree that early supplier collaboration helps these initiatives, the supply chain remains mostly siloed off. Without transparency, openness, and communication, the silo effect costs organizations more than they realize.
Slow Product Development Cycles
According to survey data from Jabil, 93 percent of auto manufacturers face issues in shortening their go-to-market strategy. In fact, 30 percent believe their product development lifecycles have lengthened. When asked what may be contributing to these longer cycles, respondents included supply chain concerns:
- Long test cycles (43 percent)
- Procurement cycle and supplier selection (37 percent)
- Supply chain problems (35 percent)
Lost And Damaged Goods Due To Reactivity
Most companies have a limited ability to assess and identify risks in their supply chain due to limited supplier transparency. When supply chain disruptions happen, it comes as a surprise and leads to extra costs, delays, and operational problems. IDC reported that three out of four companies suffered supply chain disruption in 2015, with $56 billion of goods stolen, lost, or damaged worldwide.
Digital Tools Improve Supplier Collaboration
Digital transformation can help address supply chain challenges. When “going digital”, manufacturing organizations have an opportunity to bridge gaps to their suppliers, creating transparency and catalyzing idea sharing. The digital approaches to product design discussed in the previous blog can impact how OEMs share ideas and collaborate with suppliers:
- Digital twins: A fully digital, physics-based representation of a product allows teams to understand exactly how a product will perform. The ability to share digital twins with suppliers will help teams solve problems, fully develop solutions, and optimize performance.
- Cloud solutions: Design collaboration and file sharing solutions allow OEMs and suppliers to easily share product designs without revealing competitive IP.
- Additive manufacturing: Engineers and designers can share physical components with suppliers to confirm designs before larger production initiatives.
- Virtual and augmented reality: Within simulated environments, OEMs and suppliers can quickly review a model in real-time, even in disparate locations.
Digitalizing the supply chain with tools like these can help to dissolve silos by providing full visibility into both the OEM’s and the supplier’s needs and business processes. Having a more agile supply chain lets manufacturers manage risks and drive collaborative innovation.
Digitalization Creates An Agile Supply Chain
Digital technology provides a new level of collaboration and agility representative of digital manufacturing. Thanks to modern business processes and innovative technology, suppliers can quickly shift attention and move resources to mitigate risks and accelerate new opportunity engagement. Speed, responsiveness, and collaboration gives OEMs an edge against the competition.
An agile supply chain also provides opportunities for suppliers to proactively collaborate and engage in product design much earlier in the product lifecycle. The earlier that OEMs include suppliers into the product design conversation, companies can experience:
- Better innovations
- More efficient ideation
- Shortened design cycles
- Greater insight to market fit
Digital Manufacturing and Supplier Collaboration
OEMs can leverage the digital technologies they use for internal collaboration with external partners to accelerate development cycles, lower costs, and identify innovations. Digital manufacturing approaches allow for greater visibility and efficiencies into supplier collaboration. Once the product design cycle becomes more digitalized, OEMs can also start to implement digital approaches during production, and turn the shop floor into a smart factory.