UPS Report Shows “Smart Operations” Are Key to Manufacturing Excellence
August 08 2016 - 9:00AM
Traditional Lean and Six Sigma practices are insufficient to
address the complexities of modern industrial manufacturing, and
companies are turning to “smart operations,” which use pervasive
data collection, advanced analytics, technology investments and
deeper collaboration with partners to prepare their value streams
for the next industrial revolution, a new white paper from UPS
(NYSE: UPS) shows.
Over the next three years, a growing number of successful
manufacturers will enhance their manufacturing processes with smart
operations, a broader supply chain strategy that extends beyond the
factory walls, according the paper, “The Rise of Smart Operations:
Reaching New Levels of Operational Excellence.”
Lean and Six Sigma methods remain the standard for
manufacturers, but continuous improvement has a downside. Overly
optimized processes can become inflexible, leaving the business
unable to adjust rapidly to disruptions in the supply chain and
changing customer demand. Manufacturers that use smart operations
are better positioned than others to compete and thrive in today’s
fluctuating markets. That’s because increased visibility of
inventory location and transportation allow companies to better
analyze and quickly manage changes to their supply chain both
upstream and downstream of the factory.
“Smart operations are crucial to the long-term success of
manufacturing companies,” said Derrick Johnson, vice president of
marketing at UPS. “The strategy enables manufacturers with limited
resources to serve their increasingly demanding customers more
flexibly.”
UPS and market research firm IDC conducted the survey of more
than 100 manufacturing operations executives and hosted focus group
discussions to assess how far along companies are in implementing
smart operations. The report showed that 53% of companies were at a
relatively low level of overall maturity. Still, 47% of the survey
respondents said their company’s progress toward smart operations
exceeded that of their peers.
There are five areas essential to smart operations:
- Connected products: Increasingly, industrial
manufacturers sell products that are connected in the cloud. This
connectivity allows companies to offer better maintenance service,
which sometimes even generates new revenue streams.
- Connected assets: Manufacturers with connected
assets are better able to monitor their operations to anticipate
and even correct problems before they occur.
- Supply chain decision making: The data and
analytic tools used in smart operations help manufacturers resolve
issues in the supply chain faster.
- Buy-side value chain: Smart operations allow
manufacturers to automate purchasing with their vendors and manage
the inbound transportation of those supplies.
- Sell-side value chain: Smart operations allow
manufacturers to change transportation modes and speeds as well as
destinations based on shifting customer demand.
At the heart of this business strategy is digital transformation
enabled by investments in technology for data collection, advanced
analytics and connectivity for products, assets and partners
throughout the value chain. One top-tier automotive supplier that
participated in the study explained: “We are no longer an
automotive company, but a technology company in the automotive
business.”
The UPS report also showed that manufacturers increasingly rely
on external service providers, freeing themselves to focus on their
own key competencies. Companies that have made less progress toward
smart operations can take advantage of the technology and process
investments their partners have already made.
UPS invests more than $1 billion annually in technology that
includes innovative solutions to help manufacturers optimize their
total value chain and implement strategies to quickly adapt to
problems. The company’s supplier management services, for example,
facilitate flawless transport and import of goods. UPS also offers
visibility tools to help customers keep track of freight shipments
around the world.
For more information on UPS industrial manufacturing solutions,
visit www.ups.com and click the Industry Focus link under the UPS
Solutions tab. To download the UPS white paper on smart operations,
go to www.ups.com/smartops.
Kyle Peterson
404-828-4626
kylepeterson@ups.com
United Parcel Service (NYSE:UPS)
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