State of Supply Chain in the New Shortage Economy

State of Supply Chain in the New Shortage Economy

Feb. 16, 2022
New AME research shows that companies need to gain better insight into their supply chain processes to increase efficiency.

Manufacturing professionals highlighted the need to digitally transform inventory data to better prioritize supply chain actions and collaborate across businesses, in a report,  State of Supply Chain in the New Shortage Economy

The report, produced by the Association for Manufacturing Excellence (AME), and LeanDNA examines the biggest pain points and opportunities for manufacturers.

“Today’s manufacturers are facing unprecedented challenges that have been amplified by the pandemic, from growing demand for customization to complex workflows to increasingly globalized operations,” said Kimberlee A. Humphrey, CEO of AME, in a statement. “Our research shows that the industry must gain better insight into their supply chain processes to increase efficiency and improve outcomes.”

The supply chain has since become progressively more complex, with discrete manufacturers dealing with increasingly customized orders from customers, complex sub-assemblies and parts from increasingly global suppliers, and burdened planning and procurement teams. Manufacturers typically find themselves with fewer buyers, for example, who each have a larger number of SKUs (up 212%), suppliers (up 132%), and exception messages (up 247%) to manage. In order to deal with this growing complexity and efficiently fulfill customer and market demand on finished goods, there are additional areas beyond transportation logistics and assembly line flows, such as procurement and materials management, that require modernization.

Highlights from the report include:

  • Manufacturers are facing several challenges that limit their ability to respond to issues that affect planning, procurement, and suppliers.
  •  95% of manufacturers are investing in factory automation, but most haven’t automated the factory’s critical data and intelligence aspects.
  • 65% of manufacturers are increasing visibility into factory inventory levels and requirements because of COVID-19, with an eye towards managing shortages
  • Top priorities include shortages (47%) and improving inventory turnover (43%), yet procurement and supply chain teams don’t have the information they need to increase factory efficiency
  • The top hurdles to factory transformation are a lack of expertise (60%), lack of resources (46%), limited budget (43%), and ineffective change management (42%).
  • A significant majority of manufacturers believe additional insight and visibility into the supply chain is necessary to avoid shortages, optimize inventory, make processes more efficient, and reduce expenditures.

 “We understand the challenges of the new shortage economy and believe the factory is the greatest source of untapped strategic value for manufacturers,” said Richard Lebovitz, CEO of LeanDNA. “By adding emerging technologies to existing enterprise IT investments, the manufacturing industry will have the tools needed to enable a true digital transformation of the supply chain.”