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Manufacturers Think Their Digital Capabilities Are More Advanced Than They Really Are

Manufacturers are inexplicably optimistic about the digital maturity of their supply chains and networks—and the gaping disconnect between how they see themselves and the state of their actual digital achievements could set the stage for dramatic disruption.

In a new report, “Embracing a digital future: How manufacturers can unlock the transformative benefits of digital supply networks,” Deloitte uncovered a number of startling insights into how manufacturers are digitizing—or not—their supply networks to unlock competitive advantages and reap financial rewards. Shifting away from traditional linear supply chains toward data-rich digital supply networks (DSN) could help manufacturing enterprises excel in the age of digital transformation.

Above all, Deloitte found that many of the surveyed companies lack a proper understanding of their DSN standing. While 51 percent of surveyed companies believe their supply networks are more digitally mature than their peers, just 28 percent said they’ve undertaken any DSN solutions implementations at all. That kind of “overoptimism” is what often leads to careless inaction, which in turn opens the door for potential disruption, Deloitte noted.

Though respondents cited supply chain transparency as the No. 1 goal of enabling a DSN—noting its promise to drive gains in efficiency—a scant 6 percent said they have full access to data from ecosystem partners, which in essence is what “transparency” means.

While it’s clear that manufacturers must invest in DSN solutions, what’s not clear to them is which specific technologies offer the greatest benefit or the right time to effect organization change. Still, manufacturing enterprises see digital supply chains enabling both upstream and downstream benefits. On the upstream side, companies want DSNs to trim their operating costs (17 percent cited this as their top DSN-related financial goal), improve product quality, increase visibility throughout supply network. Growing sales (stated as a top financial goal by 22 percent), fostering new business development, and creating strategic advantages were among the specified downstream goals.

According to Deloitte, digitized supply chains could drive new revenue streams for manufacturers that monetize the masses of data flowing in from vast sensor-equipped networks. Many see opportunities in areas like predictive maintenance, for example, which, while adding new income to the business, would also benefit the end-user by reducing equipment downtime and more.

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Deloitte also found that manufacturers want to embrace the digital evolution—but cannot see the path forward.

That’s because there’s no one route to enabling a DSN, the report indicated, as each company has specific needs, resources and operating models. However, the “think big, start small, and scale quickly” approach can guide most manufacturers toward quick wins that secure executive buy-in for greater digital supply chain transformation. What’s more, opting for a controlled solution deployment can limit the enterprise risk in the event that the digital trial yields less than stellar results. Quickly pivoting from “bad” ideas and scaling up successful ones can affect network-wide digital change much rapidly and effectively, the report noted.

Manufacturers are prioritizing and investing in diverse areas of digitization. Top priorities over the next year include supply and demand planning and synchronization, improving existing technology infrastructure, and conducting risk assessments. Those interested in demand planning are seeking improved forecast accuracy, which currently ranges between 70 percent and 75 percent, Deloitte found.

When it comes to where manufacturers are putting their investment dollars, advanced analytics (40 percent) wins out, cited by surveyed manufacturers as important to doing business. Despite all the blockchain hype, just 17 percent said they’re pouring resources into this technology, though supply chain is one of the areas widely believed to benefit from secure, distributed ledger technology. Twenty percent said they’re investing in autonomous robotics, Internet of Things technologies are attracting 33 percent; and 24 percent said advancements like additive manufacturing and 3-D printing are getting their dollars.

There’s one significant obstacle holding manufacturers back from executing on their DSN ambitions: identifying and training them with the right skills, both of which were mentioned by 30 percent of Deloitte’s survey takers.

Separate Deloitte research pinpointed a stark skills gap among domestic manufacturing employees: roughly two thirds lack the computing, technical and problem solving skills required for the digital transformation in manufacturing and another 60 percent lag in mathematics competency.

This stands in contrast to the 59 percent of survey respondents that said their workers possess adequate skills to compete in a DSN environment. According to Deloitte, companies might feel this way because they’re very early into their digital transformation journeys and their workers have sufficient skills—for the moment—but as complexity increases, they’ll find their employees aren’t equipped to excel in a high-tech workplace.