BY JENS DREMO AND MATS NILSSON
This article was originally published in Supply Chain Effect No. 2-23 (read the full magazine here).
Digitalization has been in focus for a long time and continues to be in focus, as it remains extremely important for companies to be efficient, to develop and to make the best use of all available business information.
The potential is huge. There are always new technologies that can be used to take new steps in the development of efficient supply chains, and AI and ML are increasingly talked about as technologies for taking new steps. It is not only technology that influences the change of supply chains, the whole environment influences and makes us act and change our processes. But to be successful, available information/data and new technologies need to be utilized.
The use and impact of digitalization on supply chains can be seen from two perspectives. Either the technology is used to streamline an existing process, without changing the process itself, or new processes are adapted and created as new technologies become available and simply change the possibilities. In many cases, technology creates entirely new ways of thinking and working.
The world is constantly changing, digitalization and the development of new technologies is accelerating - those who want to be successful in their supply chain must be agile (fast and flexible), have good tools and exchange information with customers and suppliers. Suzuki Garphyttan and their group IT manager Anders Jonsson are continuously working on their digitalization:
- Suzuki Garphyttan has a history that goes back more than 100 years and our ambition is to be around for just as long. Since the beginning, we have focused on being innovative and leading in spring wire handling. But with new challenges in the market, where a large part of our products are used in internal combustion engines, we have had to adapt to remain competitive. We are therefore working to streamline the company and adapt to new customer segments.
The customer decides
For whom is an efficient supply chain really important? Is it the end customer, a manufacturing plant, a hub or your industry? Basically, it is the end customer's wishes and requirements that determine which type of supply chain will be crucial and successful. The end customer makes the price/performance decision and makes his choice. To be competitive and in demand, the supply chain must be optimized, cost-effective and deliver customer value.
From left: Jens Dremo and Mats Nilsson.
Rigid and agile
A good supply chain process is both rigid and agile. That is, rigid, standardized in terms of producing the products needed to satisfy the end user, agile in the sense of always looking for alternatives well in advance to ensure the logistics process is guaranteed. What could happen that requires change and adaptation? Well, the world situation such as war, pandemic, freight routes, weather disasters, politics, recessions and booms in different parts of the world or a wrongly parked freighter in the Suez Canal. If you want to manage these types of external events, you must have good system support and regularly exchange digital information so that you and your customers and suppliers can manage fluctuations and disruptions.
- One of our key improvement projects is to digitalize our operations. We have invested in a new common ERP system for the group, which we call OneShare. This will be the platform to connect us more closely with our customers and suppliers. To help us with this connection, we have enlisted the help of PipeChain SCM, who are delivering this as a service to us. Our goal is to have an ERP system and an integration partner that handles the entire digital flow for us," says Anders Jonsson at Suzuki Garphyttan.
Optimizing and balancing your finished goods inventory has always been an important issue, as a company's ability to deliver is crucial. In some industries, an inability to deliver is unthinkable. A typical example of this is the automotive industry. Since the late 1980s, being a reliable supplier to vehicle manufacturers has required process thinking and close cooperation. A mutual exchange of digital information created a delivery process that remains largely intact today - with delivery plan, notification and invoice, in some cases even a purchase order. Just because the process is still similar, the demand for efficiency hasn't slowed down, but rather intensified and become even clearer. If you are passive in these matters, you will be left behind with lower profitability and over time dissatisfied customers, which in the long run leads to lost customers. It is therefore important to constantly continue to develop," emphasizes Anders Jonsson:
- Global trade entails several challenges and in the next step we are reviewing our transportation within the group and, in cases where the products are bought/sold outside the EU, also efficient customs management. With the help of PipeChain SCM, we have created an ability that we can further develop over time to streamline these two parts.
No chain is stronger than its weakest link, therefore there will continue to be several parallel chains for the same assignment. Each link may be involved with several other parallel links both before and after the process. The big difference on the horizon is that the decisions made today about which path to take are largely human decisions. Letting go of control or power is, at first glance, a very big and demanding idea - bordering on the impossible - but let's consider what it might mean.
Machine learning and AI
With so many possible scenarios constantly changing and creating new conditions, it becomes an impossible task for humans to handle. Here we will see a rapidly growing need for machine learning and AI to handle the complexity and challenges. The more you think about this, you get a mental image from the Terminator movies; is AI dangerous or not? Everyone will have to find the answer in their own context, but we believe that the streak we see on the horizon will grow, change shape and increase over time. If we are to optimize and balance our supply chain process and deliver what our customer wants, the winds are blowing towards exchanging digital information at the right time and applying data in smart system support that helps you and your business partners to make wise decisions, or even have the decisions made by the systems.
Transparency and cooperation
Going all the way requires transparency, cooperation and sometimes new business models. Only then will the smart and efficient supply chains of the future be achieved, increasing the competitiveness of both the entire chain and the individual companies, which in turn leads to the customer choosing your product. Among other things, PipeChain has chosen AI as an effective tool in digitalization. To find the practical way, we work together with the market and listen to needs, wishes and visions. Digitalization is still going strong and AI is part of this process.