Enabling high performing production sites with digital supply chain engineering
The need for decommoditisation
In response to potentially stagnating markets, the ageing global population, and significant and rapid changes in consumer behaviour, many businesses are looking to decommoditise their products. This process involves a shift from the production of high-volume products with low profit margins to the manufacturing of those with high added value that target specific end-user needs. In this way, profits can be sustained with lower production volumes.
The process of decommoditisation presents significant challenges to a business, however. It requires production, supply chain and logistics operations that can scale intelligently and flexibly to the current conditions of a given market.
This can all be achieved through the use of high performing production sites, which are enabled through digital asset engineering, and by exploiting digital supply chain engineering solutions.
Using emerging technologies like process simulation, the internet-of-things (IoT) and blockchain, high performing production sites help the manufactures to produce more reliably with a higher flexibility and with a lower footprint. Meanwhile, digital supply chain engineering yields cost-effective logistics, a stable supply chain and a better-connected ecosystem for customers, peers and suppliers through the real-time communication and coordination in a trusted eco-system.
But how do you switch from traditional production to high-performing production?
Digital supply chain engineering
The journey starts with identifying the problems. First, you must ask some questions. What will your logistics and supply chain strategy be? Do you want to have more storage space, for instance, or do you want to be more flexible? Based on the answers to these questions, the process of digital supply chain engineering can begin.
Most problems with supply chains and logistics operations stem from a lack of understanding of the connections between flows of people, materials, energy, data and value—meaning that they cannot be optimised.
Process simulation tools have been used for many years to improve logistics and supply chain operations. Now, through the use of emerging technology such as IoT, large amounts of data can be collected from devices in operation along the whole length of the supply chain, processed in the cloud or on-site and used to simulate processes. When all this information can be collected and evaluated in a holistic manner, optimised solutions to a wide range of logistical and supply chain problems can be formulated.
Further, to stay connected, trusted and transparent, industry could start sharing this data using, for example, blockchain technology. Every agreement, process, task and payment would have a digital signature that could be identified, validated, stored and shared. Transparency and trust at every step in the process could eliminate risk, improve security and remove the need for intermediaries. Each party in the ecosystem would be able to see the status of their partners in detail, improving communication and making the whole system more competitive by connecting the upstream and downstream in the ecosystem.
Through the combination of process simulation, IoT, data integration and data sharing, digital supply chain engineering can ease the task of decommoditisation. It serves to create an interconnected ecosystem of customers, producers and suppliers. Bottlenecks can be detected and solutions to these problems proposed in real-time. The process is risk-free, as the effects of these solutions can be extensively tested in a virtual environment using digital twin technologies. Further, the insights revealed by this process can be fed-back into the digital asset engineering of high performing production sites—helping to improve the flexibility of these assets.
An expert in digital supply chain engineering
At Royal HaskoningDHV, we have decades of digital supply chain engineering experience gained from the automotive, pharmaceutical, fast-moving consumer goods (FMCG), healthcare, petrochemical, food and beverage industries. With our advanced engineering solutions and expertise in digital technologies, we can help you to improve your supply chain in this challenging industrial environment and, ultimately, win the battle for decommoditisation.
The key takeaways on the decommoditisation challenges
- Many businesses see decommoditisation as key to maintaining the long-term profitability of their businesses, but it can be challenging to implement.
- Decommoditisation requires that a business' supply chains and logistics are as adaptable and as scalable as possible.
- Digital technologies can be employed to gather and evaluate data from the supply chain, which can in turn be used to create highly optimised solutions to a wide range of logistical and supply chain problems.
- Digital asset engineering and supply chain engineering are complementary to enable high performing production sites.