Study Finds Manufacturers Using Tech to Address the 'Amazon Effect'

A new study from JDA Software Group finds that manufacturers are responding to the “Amazon effect” by focusing on technologies that address key areas such as inventory optimization, planning, execution and supply chain collaboration and digitalization.The “2018 Intelligent Manufacturing Survey” finds that 43% of manufacturers are reprioritizing and focusing investments on inventory optimization solutions, while 41% are emphasizing integrated planning and execution technologies.At the same time, 51% are focused on enabling internal and external collaboration across the supply chain. Many are also emphasizing demand sensing (44%) and/or data science (33%) to improve forecasting.Additionally, 31% are committed to integrated planning wherein their long- and mid-term planning process is integrated with tactical execution through a single, connected technology accessible to all supply chain users. The ability to meet changing consumer needs is largely based on how well companies integrate sales & operations planning execution. Two-thirds say they're falling behind in this regard.Conducted in February, the study involved 271 U.S.-based professionals across the manufacturing and wholesale/distribution industries.“The Amazon and Alibaba effects have significantly compressed consumer order fulfillment delivery time expectations,” said Fred Baumann, group vice president of industry strategy for JDA. “Planning and execution must be more tightly coupled. 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 companies focused on one and not the other, and it’s limiting the value of planning. Incorporating real-time data inputs across both the planning and execution horizons further bolsters an integrated approach.”The Path to Digital MaturityAnother critical component is supply chain maturity. Today, there are just about as many “pre-digital” manufacturers (18%) as there are digitally mature manufacturers. While only 18% of respondents say they have reached digital supply chain maturity, nearly twice as many (35%) anticipate they will get there within two to three years.“Supply chain digitalization is no longer a ‘nice to have,’” added Bauman. “It’s a strategic mandate and a dramatic differentiator that drives revenue and market share growth. Companies investing in their supply chain today will excel and achieve growth. We see 35% of respondents aspiring to reach digital maturity in two to three years. To achieve that and successfully go up against Amazon, manufacturers need to make digitalization a priority.”Sixty-five percent of this aspirational group said supply chain digitalization is a “major priority” for 2018. In addition, 47% realize the importance of integrated S&OP and S&OE processes; within 12 months, 44% plan to enable a connected, financially led S&OP and a comprehensive constraint planning S&OE process. Aspirational manufacturers have also reported a current investment in digital strategies and solutions.Critical benefits are linked to supply chain digitalization, including greater profitability (49%), better customer service (38%), reduced spending (38%) and increased competitive abilities (35%). Companies that delay digitalization by 12 to 36 months will lag.Gearing Up for AmazonTo retain top talent, 55% of manufacturers plan to cross-train employees across all supply chain needs. And in direct response to the influx of digital data from sources like internet of things tools and social media, news, events and weather, 78% plan to invest in new talent over the next 12 months to better utilize insights. To attract talent, respondents are embracing workplace mobility (55%), establishing supply chain as an elite company organization (42%), and adopting cloud solutions for increased business focus (36%).

Study Finds Manufacturers Using Tech to Address the 'Amazon Effect'

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