JDA 2018 survey finds integrated planning and execution is key for manufacturing competitiveness
April 20, 2018 by JDA Software
Apr. 20, 2018 – Responding to the “Amazon effect” and today’s consumer demands, manufacturers are reprioritizing and focusing their technology investments on inventory optimization solutions (43 per cent) and integrated planning and execution technologies (41 per cent), according to findings from the 2018 Intelligent Manufacturing survey conducted by JDA Software.
The survey findings suggest manufacturers are embracing a new retail-like role and willing to cater to both consumer needs and the competitive direct-to-consumer space.
In an effort to address future shopping behaviours and consumer tastes, 51 per cent of manufacturers say they are focused on enabling internal and external collaboration across the supply chain. Many manufacturers say they are also focused on demand sensing (44 per cent) and/or data science (33 per cent) to improve forecasting.
Additionally, nearly a third of respondents revealed a commitment to integrated planning, wherein their long- and mid-term planning process is integrated with tactical execution through a single, connected technology accessed by users across the supply chain function. A key part of being able to meet consumers’ changing needs is based on how well companies integrate sales and operations planning (S&OP) with sales and operations execution (S&OE). On this front, two-thirds of manufacturers are falling behind.
“The Amazon and Alibaba effect have significantly compressed consumer order fulfillment delivery time expectations. Now, more than ever, planning and execution processes must be more tightly coupled. Yet even while our data shows a portion of respondents understand the importance of prioritizing both short-term execution and strategic long-term planning, too often we see manufacturing companies focused on one and not the other and it’s limiting the value of their planning efforts,” said Fred Baumann, group vice president, industry strategy, JDA. “Incorporating real-time data inputs across both the planning and execution horizons can further bolster an integrated approach. We found that, as a result of implementing supply chain digitalization strategies or technologies, the subset of respondents who follow an integrated S&OP and S&OE approach reported benefits such as greater profitability (61 per cent), increased customer service levels (49 per cent) and reduced spend (48 per cent).”
Another critical component for manufacturers to address when embracing the role of retailer is supply chain maturity. Today, there are just about as many “predigital” manufacturers (18 per cent) as there are digitally mature manufacturers. However, while only 18 per cent of respondents say they’ve reached digital supply chain maturity, nearly twice as many respondents (35 per cent) anticipate they will get there within two to three years.
“Supply chain digitalization is no longer a ‘nice to have.’ It’s a strategic mandate and a dramatic differentiator that drives revenue and market share growth. The companies that are investing in their supply chain today, that have support from their leadership teams, and those that are positioning the supply chain function as a key point of differentiation – these are the companies that will excel and achieve profitable business growth,” said Baumann. “We see 35 per cent of survey respondents aspiring to reach digital maturity in the next two to three years, but to achieve that goal and to be equipped to successfully go up against Amazon, these manufacturers will need to make digitalization a priority now.”
Given the business benefits linked to supply chain digitalization, such as greater profitability (49 per cent), increased customer service levels (38 per cent), reduced spend (38 per cent) and increased competitive abilities (35 per cent) – all of which are critical in keeping up with consumer demand – the fact remains that companies opting to put digitalization on hold for another 12 to 36 months will fall behind in more ways than one.