Manufacturing - Endeavor Business Media
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Manufacturing - Endeavor Business Media

EXECUTIVE SUMMARY

Optimizing Connected, Resilient Supply Chains in 2024

In 2024, companies in the manufacturing and supply chain space will likely benefit from significant opportunities due to record government investment.1 Examples include the CHIPS Act and Inflation Reduction Act in the U.S., and a £4.5 billion investment in strategic manufacturing sectors in the U.K.

At the same time, with ongoing supply chain interference causing costly disruption to manufacturing operations, manufacturers are focused on finding ways to increase supply chain resiliency. Universal interest in generative AI (Gen AI) has fueled new solutions with the potential to solve many of the challenges facing manufacturers while maximizing the benefit from industry investment—in fact, Gen AI is embedded across all of Deloitte’s Top 5 Trends for the manufacturing and supply chain industry in 2024.

 

With investment in the right digital and GenAI-powered technology, manufacturers of all sizes, from smaller organizations to large global companies such as Schneider Electric, can build a connected supply chain with the insight and confidence to adapt quickly. Robust, scalable, and intelligent solutions such as ServiceNow’s workflow automation platform can help manufacturers embed resiliency into their supply chains and increase collaboration between suppliers and manufacturers, mitigating risk and minimizing disruptions.

12024 manufacturing industry outlook | Deloitte Insights

Optimizing Connected, Resilient Supply Chains in 2024

Discover how manufacturers fortify supply chains amidst change, explore the 2024 manufacturing industry outlook, and delve into Gen AI for resilient supply chains.
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Biographies

Lindsey Berckman
Principal,
Deloitte
Consulting LLP
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Ajay Chavali
Managing Director,
Deloitte
Consulting LLP
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Allen Hackman
General Manager,
Mfg Industry Vertical
ServiceNow
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Ken Engel
Senior Vice President,
Internet Giants
Schneider Electric
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Context

Lindsey Berckman presented Deloitte’s five key manufacturing industry trends for 2024. Ajay Chavali and Allen Hackman highlighted the importance of standardization and collaboration via technology in building supply chain resilience. Ken Engel shared Schneider’s strategy to its digital transformation.

Key Takeaways

Deloitte has identified five major trends emerging from a manufacturing industry landscape rife with unprecedented opportunity and significant ongoing challenges.
For the manufacturing and supply chain industry, 2024 offers a continued opportunity for growth. Record government investment worldwide in manufacturing and supply chain, such as the CHIPS Act and Inflation Reduction Act in the U.S. and the £4.5 billion investment by the U.K. government in strategic manufacturing sectors, have created significant momentum around innovation, fostering new opportunities (including new jobs) for manufacturing businesses.
The industry should push forward in the face of headwinds that have plagued manufacturers and supply chains for the past several years—and will likely continue in 2024.

Addressing product stagnation, labor scarcity, and quality matters remains a high priority, but the introduction of new tools, driven by technology advances such as GenAI, offers great potential for solving these challenges. Those manufacturers that have identified ways to leverage both existing resources and new processes, and to take advantage of AI-driven digital technology, will likely be better positioned to overcome these headwinds and move forward with greater speed and agility.


Over the past year, GenAI has matured significantly as the industry has gained greater understanding of GenAI’s capabilities and how to use GenAI ethically—though there are still many unknowns. With growing opportunities for leveraging GenAI in the business, it is critical for manufacturing businesses to identify the best and most effective use cases for leveraging GenAI to yield the greatest return on investment.

Robust investment and continued headwinds are driving five key trends for the manufacturing and supply chain industry in 2024, all of which are enhanced by GenAI capabilities:

1. Navigating persistent talent obstacles.

1. Navigating persistent talent obstacles.

Incorporating new digital tools can improve talent recruiting. To help ease resource strain, manufacturers can consider digitalizing knowledge from retirees and working with partners to build and upskill the talent pipeline.

2. Smart factory and the journey toward the industrial metaverse.

2. Smart factory and the journey toward the industrial metaverse.

Increasing digitalization and a shift to a smart factory approach, including the industries metaverse, can help improve agility, resilience, and efficiency.

3. Supply chain digitalization for enhancing performance and resilience.

3. Supply chain digitalization for enhancing performance and resilience.

The benefits of digital transformation for factories also apply to the supply chain.

4. Aftermarket services as a potential differentiator.

4. Aftermarket services as a potential differentiator.

Manufacturers are investing in digital technologies that can create new and enhanced aftermarket offerings that could lead to revenue-generating opportunities, enhanced customer loyalty, upselling and cross-selling opportunities, and a competitive advantage in general.

5. Product electrification and decarbonization.

5. Product electrification and decarbonization.

Increased investment in net-zero-enabling solutions can foster innovation and change in manufacturing and supply chain companies.
“It’s creating new space for new market entrants—and even new fields—to grow and mature over time, which will be really important for the industries in this space.”

– Lindsey Berckman, Principal, Deloitte Consulting LLP

Improving supply chain resiliency is a key focus for manufacturers.

Average lead time for production materials. (Average lead time in days)
2020 - Lead-time
2021 - Lead-time
2022 - Lead-time
2023 - 37% increase from prepandemic average 63.

Note: The prepandemic average was calculated from lead time values taken from January 2015 to December 2019.

Source: Deloitte analysis of the Purchasing Managers’ index reports published by the Institute for Supply Management.

While supply chain approaches have evolved significantly over the past few years, there is still room for improvement. Supply chain problems are ongoing and create extremely expensive disruptions to manufacturing operations.
Manufacturers are now prioritizing supply chain resiliency, focusing resources on analyzing supply chains, identifying bottlenecks, and determining how to apply technology to help mitigate risk, increase collaboration, and maintain security across the entire chain.
Risk—understanding it, assessing it, and managing it—is key to improving supply chain resiliency. The quicker the response to risk, the lower the impact. However, having disconnected systems, functions, and locations creates chaos and results in a lag in response time.

Disconnection creates chaos

Advancements in technology have enabled solutions that help provide proactive risk identification and management in the end-to-end supply chain.

With increased digitization has come an onslaught of cybersecurity attacks, especially on operational technology (OT) infrastructure. The impact of a 

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successful attack deep into the supply base is driving increasing need for cybersecurity capabilities to be incorporated into the product itself, across platforms, and in different organizational areas as new products are brought to market.

 

In addition to connected systems, standardizing on a common and proven aggregation and predictive analytics system, such as ServiceNow, can avoid many of the cybersecurity matters that stem from multiple disparate systems having to connect to one another.

 

Employing a common, trusted, and scalable platform for data collection and management also supports collaboration among all supply chain stakeholders by reducing data-sharing friction and customization requirements.

LESS

These are connected solutions that:

  • Take into account data from multiple sources across the supply base
  • Aggregate information in a centralized single source of truth
  • Apply intelligence to help predict and alert on matters before they occur
“It’s a combination of making the right type of digital technology investments, building processes around that, and then refining them over a period of time . . . continually improving your ability to sense risk and the ability to react to it is what we found is an effective way to manage what we're seeing in the marketplace.”

– Ajay Chavali, Managing Director, Deloitte Consulting LLP

Collaboration is a foundational element to drive resilience and agility in the supply chain.

Technology
Technology that can gather information and apply intelligence to notify operators of potential problems is a critical component in improving supply chain resiliency. However, alerts alone are often not enough. Manufacturers should also have systems in place to understand and correctly react to notifications.
Tools
Tools such as easy-to-understand dashboards that present curated insights based on data gathered from across the end-to-end supply chain can help manufacturers and supplier partners more effectively identify and execute mitigation strategies.
A Proven Portal
A proven portal also offers the ability to qualify and onboard suppliers, drive sales, provide service through 24/7 AI-powered chatbots in real time, share and track customer cases, and more. The increased collaboration provided by these capabilities in turn increases visibility, flexibility, and agility. Enabling relevant information to flow with ease between suppliers and manufacturers improves proactive risk mitigation, ultimately reducing disruptions and creating a more resilient supply chain.
A proven portal also offers the ability to qualify and onboard suppliers, drive sales, provide service through 24/7 AI-powered chatbots in real time, share and track customer cases, and more. The increased collaboration provided by these capabilities in turn increases visibility, flexibility, and agility. Enabling relevant information to flow with ease between suppliers and manufacturers improves proactive risk mitigation, ultimately reducing disruptions and creating a more resilient supply chain.
“Collaboration is the foundation. To have a resilient and agile connected supply chain, you’ve got to be able to communicate and collaborate with your . . . suppliers, with the transportation providers, even with your customers. . . Without that, it just doesn’t work.”

– Allen Hackman, AVP/General Manager, Manufacturing Industry Vertical, ServiceNow

Capabilities of the connected supply chain

SC Optimization

App Store

Continuous optimization of supply chain networks to increase overall productivity and cost efficiency.

Capabilities

  • Dynamic Network Optimization
  • Tactical Network Optimization
  • Integrated Improvement Tracking
  • Interactive Visualization of Transport Networks

 

Benefits

  • 2-6 w. / Runtime reduction
  • 9-12% / Outband transport costs reduction
  • ~10% / Total logistics costs reduction

Connected SCM

App Store

Management of complex networks, consisting of suppliers, carriers and plants.

Capabilities

  • Stakeholder Enablement and Training
  • Quality Management with External Partners
  • Continuous Optimization of Supply Chain Processes
  • Master Data Management

 

Benefits

  • 13% / Improving the delivery performance throughout the supply chain
  • 43% / Improvement of data quality for more effective supply chain management

360° Control Tower

App Store

Continuous tracking of signals across all processes for 360° — transparency.

Capabilities

  • Real-Time Supply Chain Monitoring
  • End-to-End Performance Management
  • Supply Chain Risk Monitoring
  • Data-driven Optimization with Artificial Intelligence

 

Benefits

  • 5-10% / Total logistics costs reduction
  • 9-12% / Stock reduction without risk increase

ESG Sustainability

App Store

Continuous screening for compliance with supply chain due diligence.

Capabilities

  • n-Tier Risk Analysis
  • 360° Supply Chain Illumination
  • CO2-Tracking and Optimization of the Ecological Footprint
  • Circular Economy

 

Benefits

  • 100% / Conformance of the supply chain with legal guidelines
  • 10-15% / Reduction of ecological footprint
SC Optimization
Connected SCM
360° Control Tower
ESG Sustainability
APP STORE
Continuous optimization of supply chain networks to increase overall productivity and cost efficiency.
Management of complex networks, consisting of suppliers, carriers and plants.
Continuous tracking of signals across all processes for 360° — transparency.
Continuous screening for compliance with supply chain due diligence.
CAPABILITIES
Dynamic Network Optimization
Stakeholder Enablement and Training
Real-Time Supply Chain Monitoring
n-Tier Risk Analysis
Tactical Network Optimization
Quality Management with External Partners
End-to-End Performance Management
360° Supply Chain Illumination
Integrated Improvement Tracking
Continuous Optimization of Supply Chain Processes
Supply Chain Risk Monitoring
CO2-Tracking and Optimization of the Ecological Footprint
Interactive Visualization of Transport Networks
Master Data Management
Data-driven Optimization with Artificial Intelligence
Circular Economy
BENEFITS
2-6 w. Runtime reduction
13% Improving the delivery performance throughout the supply chain
13% Improving the delivery performance throughout the supply chain
13% Improving the delivery performance throughout the supply chain
9-12% Outbound transport costs reduction
13% Improving the delivery performance throughout the supply chain
13% Improving the delivery performance throughout the supply chain
13% Improving the delivery performance throughout the supply chain
13% Improving the delivery performance throughout the supply chain
“How resilient you are depends upon the amount of trust, dependability, and robustness you have in your supplier partners.”

– Ken Engel, Senior Vice President, Internet Giants, Schneider Electric

Additional Resources

Optimizing Connected, Resilient Supply Chains in 2024
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Discover how manufacturers fortify supply chains amidst change, explore the 2024 manufacturing industry outlook, and delve into Gen AI for resilient supply chains.
 
Optimizing Connected, Resilient Supply Chains in 2024
With investment in the right digital and GenAI-powered technology, manufacturers of all sizes can build a connected supply chain with the insight and confidence to adapt quickly.
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Deloitte and ServiceNow for Manufacturing
From the office to the factory floor, Deloitte and ServiceNow help manufacturers efficiently connect, optimize, and enhance their existing technology to advance operations and sustain growth.
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