Enterprise resource planning systems, CRMs and other tech such as RFID, barcoding, customer and supplier portals, blockchain, IoT, and GPS tracking all support this goal.

Modern ERP systems are no longer just about transactional processes and standard business processes. They are now pivotal in meeting customer requirements, supporting automation, and integrating other essential technologies like AI, IoT, CRM and e-commerce.

Companies must stand out from the crowd with a superior customer experience to sustain profitable growth during these turbulent times; however, service alone will no longer suffice. Companies must contain cost and mitigate risk. ERP and related technologies are key to achieving these objectives.

During these turbulent times of supply chain disruptions, geopolitical risk, and stubborn inflation, companies must take bold action to mitigate risk, stabilize the supply chain, provide a customer service edge, and contain costs. As wars rage across the world, geopolitical risk has skyrocketed. If there is a disruption at one node in the end-to-end supply chain, the disruption can ripple throughout the entire chain. Executives realize that the risk is simply too high to count on the supply chain remaining stable without securing and gaining visibility to their full supply chain.

Similarly, as the world struggles with limited resources, high inflation and interest rates, there is an intense focus on cash flow and cost containment. Only those companies that automate, digitize, and utilize advanced technologies across their supply chains will be able to support customer requirements while maintaining and increasing profitability, productivity, and working capital. This will become even more critical as those companies that do not invest in their future will not be able to meet customers’ needs, leaving a vast opportunity for those ready to scale and meet customer requests.

Not enough to use your old ERP in new ways

Better utilizing an old ERP system will no longer suffice. To stand out from the crowd, you must go beyond these fundamentals and offer a differentiated or personalized customer experience.

For example, your ERP system must allow for progressive e-commerce capabilities that support not only B2C consumer expectations but also provides advantages for B2B customer ordering and status visibility with ease and effectiveness. Your ERP system should support customer personalization as well as product and service customization.

Similarly, a customer relationship management (CRM) system should be robust in tracking your pipeline, building relationships, and providing relevant insights and statistics of where to focus. Our most successful clients focus on analyzing CRM data, forecasting future customer needs, and utilizing these insights to build customer relationships.

The best clients combine CRM with a powerful business intelligence system to create predictive analytics and assess what if scenarios. The best companies connect directly with their customers’ data and provide proactive insights and differentiated value to their customers.

In addition to gaining sales, companies should utilize ERPs to take customer service to the next level with collaborative customer ordering programs and vendor managed inventory programs. By utilizing demand planning and sales forecasting including the use of AI and predictive analytics as well as replenishment planning and advanced planning functionality, clients can solidify their preferred partner status.

For example, a health care products manufacturer grew the business by outperforming their key customer’s resources in determining what to stock where. Not only did they increase their customer’s fill rate and shorten lead times, but they also reduced their customer’s inventory levels. The customer responded by expanding business and suggesting additional opportunities. In addition, the manufacturer reduced inventory levels and improved their production, warehousing, and transportation efficiencies. Profitability and cash flow increased.

Manufacturer technology that supports supply chain visibility

End-to-end supply chain visibility is essential to responding quickly to changing conditions and in providing Amazon-like status updates to your customers. Several technologies support this type of visibility, including RFID, barcoding, customer and supplier portals, blockchain, IoT, GPS tracking, and more. Smart companies are collaborating with supply chain partners to gain access to status information and to connect, plan, and optimize efficiencies across their supply chain.

For example, if you know the status of key materials, you can better plan production to minimize costs while meeting customer expectations. If you know the status of incoming goods, you can optimize truckloads and modes of transportation to mitigate costs while improving delivery performance.

The metaverse can bring together what customers ask for with what customers need. In essence it can accelerate your SIOP (Sales Inventory Operations Planning) process. In a metaverse collaborative room, any set of customers, consumers, and suppliers can meet virtually to review sales forecasts, projected production plans, and possible supplier/capacity limitations that could affect manufacturing volume. They also can visualize an immersive supply chain network map, see where inventory is, identify issues, and model possible solutions. These types of proactive solutions will upgrade your ability to secure your supply chain, enhance margins, and provide end-to-end visibility.

The ever-increasing importance of automation

In addition to automating repetitive tasks, ERP systems and related technologies can keep facilities running at night without people. Since most clients have consciously prioritized which customers to serve due to limited resources, taking advantage of lights out capabilities is quite appealing.

For example, an aerospace manufacturer had a bottleneck in a critical area of the shop that required high-skilled resources to function which created significant past due and unhappy customers. This client purchased a robot and invested in high-skilled talent to modify the robot to work for their needs and connect it to their systems. They were able to program the robot during the day and run lights out on second and third shift, quickly resurrecting their customer service and supporting future growth.

As companies expand and upgrade the use of ERP and related technologies, they can create unique value for customers and in their supply chain. Taking it a step further, to thrive during these turbulent and inflationary times, it is important to automate, digitize, reduce repetitive labor requirements, increase efficiencies, and standardize so that more can be achieved with fewer resources. The best companies engage their people and connect with customers and suppliers to upgrade the end-to-end customer experience.

Originally published on Smartindustry.com on November 17, 2023.

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According to Polaris Market Research, the market size of artificial intelligence (AI) in manufacturing is predicted to grow more than 41% during the next decade. Although the latest Sikich Industry Pulse found that less than 20% manufacturers have started to implement AI, the ones that want to thrive in the next decade are pursuing AI strategies that make sense to support their business objectives. AI can help manufacturers target where to focus and automate mundane tasks.

There are many uses for AI in manufacturing. A classic example is predictive maintenance. Instead of preventative maintenance, target where to maintain with predictive maintenance to maximize your efforts. Collaborative robots (cobots) work alongside people and often can perform tasks such as those requiring heavy lifting. Digital twins are virtual models of physical objects or layouts, and they can receive information about the object through sensors to get information about maintenance needs etc. On the software side, manufacturers are using robotic process automation (RPA) to handle high-volume, repetitive tasks that can be automated. 

For example, in working with a water tank manufacturer, we wanted to upgrade the use of ERP and start using MRP (material requirements planning) recommendations for purchasing. Before turning MRP on, we had to perform a cleanup of data and add routing data steps in the system. The team was lean, and it was estimated to take a few months to prepare for go-live. The executive team did not want to wait to improve service and increase efficiencies, and so a technical expert on the team used RPA to write a code to automate the setups. We completed the preparation in three days instead of three months and started gaining results.

Another application for AI in manufacturing is a lights-out factory which runs with robots. Although full lights-out factories are rare, this application is gaining momentum across the globe especially as workforce participation rates remain low, manufacturers realize they need to gain control of their success and are reshoring, and margins remain tight with high material and labor costs. Robots can operate around-the-clock without lunches, breaks, and workers compensation claims.

For example, an industrial manufacturing client struggled to find the talent to run its manufacturing operations. They couldn’t keep up with demand, employees were frustrated, and customers were unhappy. They purchased a robot to perform production in a key bottleneck area of the facility; however, the robots couldn’t produce around-the-clock because there was nowhere to store finished product on second and third shift without material handlers. Thus, the engineering team developed an automated way for the product to be moved from the point-of-production. Past due deliveries plummeted as the system came online.

AI is also prevalent in supply chain applications that support manufacturing success. For example, sales forecasting and demand planning is supported with AI algorithms to better predict demand. Even in the most industrial of manufacturers, demand patterns have been difficult to predict, creating a need for AI to get in front of demand. AI is also used in inventory management and to prevent bottlenecks and predict what’s needed.

AI requires proactive design so that you can limit expense and minimize the high-skilled resources required to go live. Start with a rapid assessment of your business requirements, process and technical infrastructure and resources. Select a pilot to test your plans and results will follow.

Originally published in Brushware Magazine, January / February 2024.

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Lisa Anderson was quoted in a SelectHub article when she warned that, in the area of attracting and retaining workforce talent, competitors will always try to steal your best employees.

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Manufacturing Trends 2024: Maintaining A Competitive Edge

What are the most essential manufacturing trends of 2024? I hate to burst your bubble, but this industry doesn’t just focus on AI, IoT, data mining or advanced manufacturing software.

We’re talking about the big-picture patterns that are shaping the future of manufacturing as we speak. This guide will tell you how to retain labor, keep a carbon-neutral work environment, maintain a positive reputation and more.

Key Takeaways

• Some ideal technologies for manufacturing include IoT, IIoT, AI and data mining.
• When adopting smart factories, there should be a harmonious balance between machines and humans.
• Top manufacturing process types include repetitive, discrete, process, continuous, job shop, 3D printing and more.
• Ideal ways to attract and retain manufacturing employees are giving them satisfactory work environments, liveable pay and benefits, training opportunities. and more.
• Because of the digital twin market’s resourcefulness across the manufacturing and PLM sectors, this market could hit $155.84 billion in value by 2030.

Top Trends for 2024

1. Attracting and Retaining Workforce Talent

Lisa Anderson, founder and president of LMA Consulting Group Inc., warned that competitors always try to steal the best employees.

Pay alone will not suffice. In our experience, the most important priority to retaining top talent is company culture and leadership. People do not follow companies. They follow leaders. Clients with leaders who appreciate talent, offer training and advancement opportunities, and are willing to address poor performers and tough topics are respected and successful. On the other hand, clients with volatile leaders are losing talent at a quick pace.”

To read the full article, click here.

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Lisa Anderson was quoted in a SelectHub article on automation changing the supply chain landscape: “Automation is coming, whether or not we get on board. To thrive in today’s Amazon-impacted business environment, customers expect rapid deliveries, 24/7 accessibility, last minute changes and easy returns with innovative service options such as Amazon Key In-Car Delivery. To meet these ever-increasing expectations while increasing profitability and cash flow, executives are looking to technology such as robotics, IoT, artificial intelligence, automation equipment and predictive analytics to accomplish these objectives.”

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When the term automation comes up, most people experience a brief sci-fi laden slideshow in their heads. It’s the year 2021, humanoid robots take to the streets disrupting life as we know it and clashing with their old human masters. Lucky for us, when it comes to the world of supply chain automation, robots are more about increasing efficiency and less the whole enslaving humanity angle.

It’s no secret that demand for flexible, accurate and nimble supply chain logistics is on the rise. As consumer and client bases continue to grow at rapid rates, supply chains will need to adapt to larger, more complex methods of information and product transportation. However, there are many time-consuming processes that go along with managing a successful supply chain.

Here is where automation steps in. Time-wasting processes can fall into automated workflows, and human employees can spend more time forecasting, analyzing trend data and developing relationships with clients.

We spoke to Lisa Anderson, the founder and president of LMA Consulting Group Inc., about her thoughts on automation in the supply chain.  “Automation is coming, whether or not we get on board. To thrive in today’s Amazon-impacted business environment, customers expect rapid deliveries, 24/7 accessibility, last minute changes and easy returns with innovative service options such as Amazon Key In-Car Delivery. To meet these ever-increasing expectations while increasing profitability and cash flow, executives are looking to technology such as robotics, IoT, artificial intelligence, automation equipment and predictive analytics to accomplish these objectives.”

Anderson also had this to say on the subject of the cost of automation: “Most executives do not want to be the guinea pig for new technology as they cannot afford disruption and risk. Thus, as new technologies such as robotization and AI advance, they are starting to put their toe in the water to test these technologies and partner with experts to find ways to utilize these technologies to achieve bottom-line improvements. Most executives are so busy trying to keep up with Amazon-like customer expectations while meeting Board financial objectives, they are waiting until these concepts are proven and implementable before jumping in. Yet, we are seeing a definite uptick in interest, trials and small implementations in the last six months.”

To read the full article, click here.

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Manufacturing and Supply Chain Technologies: From 3D Printing to AI

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Medtech companies’ focus on supply chain resiliency and mitigating supply chain risk has increased over the last few years as the pandemic triggered extended lead times, delays, and rising costs. Executives must now be able to pivot quickly to changing conditions, and they want to be in control of their ability to successfully serve customers. In reviewing options to meet these objectives, the critical importance of enterprise resource planning (ERP) and related manufacturing and supply chain technologies has risen to the top.

Taking Control of the Customer Experience

One way to take control of manufacturing and the supply chain as well as build resiliency into the customer experience is by focusing on expanding manufacturing and reshoring manufacturing closer to customers. Reshoring Initiative data show the combination of reshoring and foreign direct investment (FDI)-related job announcements last year reached record high levels—a trend that is expected to continue. As companies reshore, there is a significant emphasis on automation, robotics, 3D printing/additive manufacturing, and other supply chain technologies to reduce costs, minimize hard-to-find talent, increase quality, and keep abreast of customer requirements.

Nearshoring also remains popular for companies that want to improve customer performance by moving manufacturing closer to customers. Mexican exports, for example, rose 5.8% to $52.9 billion in May 2023, the second highest reading on record, according to Bloomberg. Mexico is also automating, digitizing, and employing advanced manufacturing methods. Case in point: Global automotive technology firm Luminar announced in April the build-out and ramp up of a new highly automated, high-volume manufacturing facility in Monterrey, Mexico. Moreover, Nuevo León Gov. Samuel García, said at the World Economic Forum in January that an “advanced manufacturing platform” would soon be launched in the state to focus on process digitization and automation.

Besides supporting reshoring and nearshoring initiatives, medtech firms also are interested in deploying advanced manufacturing techniques to augment their competitiveness. With skyrocketing inflation, manufacturers are paying more for materials, components, labor, and freight. In addition, the cost of capital has increased significantly, further decreasing margins, and limiting cash flow. Thus, manufacturers are searching for opportunities to increase efficiencies, automate repetitive processes, utilize robots, and embrace digitization as much as possible to decrease costs, increase margins, and better control customer pricing.

To grow their business, manufacturers are focusing on providing customers with a superior experience. In the current Amazon-impacted business environment, customers expect rapid deliveries, 24/7 service, and quick responsiveness—elements that once were considered forward-thinking and innovative but have now become essential. To stand out from the crowd, companies must go beyond these fundamentals and offer a differentiated or personalized customer experience. Thus, using a modern ERP system is essential to success because it will support these basic needs and augment them with such related technologies as customer relationship management, order fulfillment visibility, warehouse management system, transportation management system (TMS), e-commerce, advanced forecasting and planning, artificial intelligence, and predictive analytics.

A healthcare products manufacturer that distributed products throughout the United States wanted to improve their service levels, lead times, and inventory levels across its various facilities for customers. The manufacturer accomplished this goal by rolling out a vendor managed inventory system with suppliers and set aggressive scorecard metrics. The manufacturer used an ERP system to connect to its key customer’s demand and inventory data, and developed a forecasting and replenishment planning system. Hence, the manufacturer was able to establish an efficient system to maximize service levels for its customer while minimizing inventory levels and costs by utilizing business intelligence reporting to identify forecast exceptions and advanced planning functionality to proactively manage service levels. The software provided visibility into key customers’ distribution centers so the manufacturer could decide how to reallocate inventory to improve service while reducing inventory. Additionally, by integrating the replenishment orders to its customers’ locations with ERP and TMS systems, the manufacturer maximized multiple-stop truckloads and route in an optimal sequence to minimize freight costs.

Manufacturing and Supply Chain Technologies

There are numerous manufacturing and supply chain technologies that yield a substantial return on investment. 3D printing is providing a distinct advantage to manufacturers interested in providing quick prototypes to customers, and it is being used in several medical and industrial applications. According to G2 and Oxford Performance Materials, more than 75% of American patients with damaged skulls from disease or trauma received implants made by Oxford Performance Materials’ 3D printer. GlobalData predicts that customization, lower production costs, and quick turnarounds will drive the medical 3D printing market’s growth. Such benefits, along with the sector’s 23% compound annual growth rate (IndustryArc data), is prompting smart manufacturers to increasingly pursue clinical trials for 3D-printed products.

Augmented reality (AR), virtual reality (VR), and digital twins (a digital representation of an intended or real-world physical product, system or process) are some of the promising technologies in manufacturing and supply chain circles. They are particularly valuable in the current business environment as companies grapple with limited high-skilled resources, cost management concerns, and delivering a superior customer experience. AR/VR is used to train employees on ways to use and maintain equipment, about trials and simulations responsibilities, in collaborative product design, and in remote monitoring and factory audits. Digital twins can be used to evaluate “what if” scenarios to optimize the plant floor or data sets. An engineer-to-order manufacturer, for example, can utilize a digital twin to evaluate capacity with various configuration forecast models to stay ahead of customer requirements and result in a more efficient and responsive supply chain.  

The Metaverse can bring together customers’ wants and needs. In essence, it can accelerate the SIOP (Sales Inventory Operations Planning) process. In a metaverse collaborative room, retailers and their suppliers (or any set of customers, consumers, and suppliers) can meet virtually to review sales forecasts, projected production plans, and possible supplier limitations that could affect manufacturing volume. They can also visualize an immersive supply chain network map, see where inventory is, identify issues, and model possible alternatives.

The internet of things (IoT) and artificial intelligence (AI) are transforming the supply chain as well. As ERP systems, machines, and vehicles capture data with IoT, AI will learn how to predict breakdowns and recommend predictive maintenance plans, making preventative plans obsolete. Forklifts and autonomous vehicles will capture many signals and provide alerts to prevent impending safety incidents, and advanced planning systems will utilize machine and operational performance data to predict run rates and provide insights on how to minimize usage.  

Robots are bringing a new level of efficiency and repetitiveness to manufacturing. Industrial manufacturers are using welding robots to produce parts around the clock to minimize labor costs, quality issues, and injuries. Similarly, an aerospace manufacturer developed a robot that could produce on second and third shift with lights-out manufacturing a complex process to address a critical shop bottleneck. The aerospace firm quickly alleviated past due orders and got in front of its customer’s needs.

Manufacturers are also pursuing visibility across the supply chain so that customers can check status around-the-clock and supply chain partners can gain visibility and respond to changing conditions. Thus, digitizing information in the supply chain is a priority. This can range from simple concepts of barcoding/ RFID, lot tracing, and electronic data interchange to complex and collaborative topics such as customer portals, supply chain control towers, and port optimizers. Taken a step further, companies are investing heavily in blockchain to gain an immutable ledger of product and financial transactions across the supply chain.

The Bottom Line

Smart executives will leverage ERP systems as well as manufacturing and supply chain technologies to create a customer service edge. Equally important, they will automate, digitize, and turn data into insights to help their organizations become forward-thinking, resilient, efficient, cost effective, and predictable. Since only these uniquely positioned, innovative manufacturers that can scale up or down rapidly will be prepared for the change and volatility in the global supply chain, they will have the unique opportunity to leapfrog the competition, capture market share profitably, and be in the position to thrive for decades to come.

Lisa Anderson is founder and president of LMA Consulting Group Inc., a consulting firm specializing in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. She is president of the Inland Empire Chapter of APICS, the leading trade organization of supply chain management. Anderson recently released Future-Proofing Manufacturing and the Supply Chain Post COVID-19 as an e-book. 

Originally published in MPO November/December issue.

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What is All the Hoopla Over ChatGPT?

If you haven’t been living under a rock, you’ve heard about ChatGPT and other AI (artificial intelligence) competitors such as Google’s Bard and Elon Musk’s AI platform. Everyone has gotten into the conversation, from marketing professionals to tech experts to people like Elon Musk are talking about AI and how it will transform the world…..with a bit of caution throw in for good measure.

Artificial intelligence has been around for quite some time. Who doesn’t own an Alexa? Even my Mom thought Alexa was the best gift she ever received as it is an easy alarm, answers questions, tells her about the weather and much more. With that said, AI has expanded far beyond Alexa in recent years.

What are the Uses of AI in Manufacturing?

There are many uses of AI in manufacturing and supply chain. According to Markets and Markets, artificial intelligence in manufacturing market size is valued at $2.3 Billion in 2022 and anticipated to increase to $16.3 Billion by 2027. That is a MASSIVE increase. Obviously, there is vast potential, and so you better get on board, use common sense, and determine what makes sense to support your long-term objectives. Here are a few of the common uses:

• Predictive maintenance: AI is used to collect data from machines and predict which will break down and what maintenance should be performed to avoid breakdowns and maximize output.
• Demand forecasting: AI can be used to predict future trends instead of relying solely on historical patterns. After all, historical patterns are no longer sufficient.
• Generative design: In engineering intensive environments, AI can be utilized to mimic the design process to quickly produce hundreds of design options for a single product. We work with several clients that could use this base once it produces a solid base.
• Raw material pricing: Similar to demand forecasting, AI can be used to forecast commodity prices.
• Machine optimization: Edge analytics uses data sets gathered from machine sensors and can provide insights on how to maximize efficiencies and minimize waste.
• Quality controls: AI can also monitor quality and quickly identify defects so that quality can be built into the process instead of identified later.
• Robots: AI robots can help eliminate the monotonous operations, reduce errors and eliminate waste.
• Supply chain alerts: By monitoring your end-to-end supply chain with AI, you can be alerted to supplier failures, impacts predicted and options evaluated.
• Autonomous vehicles: AI can be utilized to automate the factory floor, optimize deliveries, and ensure the production line continues to run.
• And many more…..

AI Uses in Logistics

Similar to manufacturing, there are a mountain of uses in logistics including the following:

• Autonomous vehicles: Self-driving trucks are being tested and could greatly minimize the issues associated with the shortage of drivers.
• AI Warehouse Automation: AI can be used to track robots, inventory, identify errors, and monitor warehouse conditions.
• AI for visual inspection and damage detection: AI is being used commonly to quickly and accurately identify damaged goods on a conveyor belt before they ship to a customer.
• Predictive maintenance: Similar to manufacturing, predictive maintenance is an improvement over preventative maintenance.
• Delivery drones: AI can power delivery drones that can streamline and automate the shipping process.
• Route planning & optimization: Why calculate thousands of potential routes manually? Instead, use AI to run through thousands of route permeations and take into account other factors such as weather, traffic, and construction to optimize your freight.
• Data-Driven Analytics: Use AI to track and manage the flow of goods throughout the supply chain. Identify potential issues and mitigate them before they occur.
• And many more…..

Is AI Good or Bad?

Certainly, there are many valuable uses of AI in manufacturing and supply chain. If you want to thrive, you will need to embrace AI. Of course, you cannot blindly follow artificial intelligence. Use a bit of common sense, start with practical applications that will provide immediate value with strong paybacks, and expand where it makes sense. Do not jump in and let AI take over. Instead, think about what you’re doing, test the results, and expand.

There are many positive results from using AI. These include error-free processing, automation of repetitive tasks, 24/7 availability, faster decision-making, predictive capabilities etc.

On the other hand, there are drawbacks as well. One is that humans no longer have to think. That is a BIG concern if you don’t maintain this ability to monitor AI etc. Big unions such as the ports are worried about unemployment. However, there is a lack of talent in today’s marketplace, and it does not appear to be improving with the retirement of the baby boomer generation. In fact, more high-skilled roles will be needed with AI. On the other hand, if you aren’t interested in learning and prefer repetitive tasks, your job is likely to go away. The statistics prove this worry to be false. For example, UPS put automation and AI in place in a large distribution center, and their volume increased, propelling them to hire more people. This is a common story yet there remains a LOT of controversy. Unfortunately, making the U.S. more uncompetitive vs. China’s ports is not the solution as we already are manual vs. using technological advances, automation, and robotics.

Elon Musk and and a group of artificial intelligence experts want to pause the development of AI. They want to make sure the risks are mitigated and that the effects will be positive for advanced uses. For example, who wants their car to drive into a crash without the ability to stop it? This has created a lot of controversy as countries like China will not pause. It is creating quite the controversy. We need smart thinkers using common sense and collaborating to “win this technological war”.

Who certifies the certifiers?

On the other hand, using ChatGPT is largely non-risky – unless you take its conclusions as accurate without verification. It will lead you down the wrong path. There are countless examples of ChatGPT predicting what likely occurred but was not based in reality. The key question is, “Who certifies the certifiers?” as my consulting mentor Alan Weiss points out. The same holds true for AI. Who programs the ‘truth’ into ChatGPT and the like? In fact, ChatGPT is working with 2 year old data, and so as much as it can be valuable in creating a base, do NOT run with AI/ ChatGPT to the bank. Or, you will walk out like a Silicon Valley Bank investor.

Should Manufacturers and Distributors Pursue AI?

Only if you want to stay ahead of changing market conditions in an efficient, cost effective, error-free manner!

Bring on experts and consultants. Provide training and education for your teams. Learn about AI, its uses, how it could add value in your situation, and evaluate potential business partners/ software suppliers. Take the leap with a controlled pilot. And surpass your competition! Only the technologically advanced will thrive in the next decade.

How Does AI Relate to ERP?

Modern ERP and related systems (such as advanced planning and demand planning systems) are incorporating AI. It will no longer be sufficient to struggle with an outdated ERP system. If you do not have a modern ERP system, hire an ERP selection consultant to help you find the ‘right’ system for your critical requirements and take the plunge to upgrade your ERP system.

If you are interested in discussing how to incorporate AI and related technologies into your technology roadmap review our ERP and technology resources and/or contact us to discuss your situation.

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Modernize Your ERP System: A Guide for Selection & Implementation Success

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CLAREMONT, Calif., April 3, 2024/ExpertClick/—The key to positive AI integration is to explore opportunities and understand where this technology can best be used, according to The Society for the Advancement of Consulting® (SAC). Organizations that start the process now will gain a clear advantage of scale, having had more time to test and augment their AI tools.

AI in Manufacturing Boosted by Rapid Scaling

“Manufacturers must have the capability to scale rapidly. With that, they will keep up with new business opportunities from reshoring, nearshoring, and supply chain transitions,” points out Lisa Anderson, president of Claremont, CA-based LMA Consulting Group, Inc. and manufacturing expert known as the Strongest Link in Your Supply Chain. “To minimize cost and risk, and increase volume, smart manufacturers will use technology more to automate, predict, and scale with minimal resources.

“Artificial intelligence is already used in forecasting and predictive maintenance,” she adds. “ChatGPT-type functionality takes capabilities a step further by helping to solve operational and technical issues, giving interactive manual and training systems a solid base. It can also analyze manufacturing and supply chain data to make predictions, such as run rates, and recommend the reallocation of capacity among sites. Proactive executives will start piloting these capabilities soon.”

AI Must Overcome Two Big Barriers

“In most companies, getting things done with AI faces two big hurdles: legacy systems and executive inertia,” says Steven Hunt, founder of Steven Hunt & Associates and an expert on managing change in global companies.

“Older companies already use a labyrinth of legacy IT systems or outdated automated processes,” he says. “Plus, executives have spent the best part of three decades outsourcing basic processes, like IT support and helplines, to low-cost countries. Integrating the new with the old, particularly when those processes are spread around the globe, will not be easy.

“AI’s biggest impacts are likely to be felt in integration,” Hunt explains. “Start-ups have an advantage because they start with a clean slate. Older companies are best off focusing on five areas: choosing the right AI tools, taking small steps, testing the outputs, training the AI tool to be better, and integrating this smoothly with those tasks that only humans can do.”

Prompt Engineering Becomes a Key AI Skill

“While still in the early stages of exploration and leverage, expect AI tools and capabilities to evolve rapidly in 2023,” notes Mark Cioni, president of MV Cioni Associates, Inc. “Organizations can best position themselves to exploit these capabilities by starting with augmentation versus replacement, and recognizing that Prompt engineering is a core skill in this domain.

“Near-term implications will include new self-service channels for customers and employees, and tight feedback loops as this technology integrates into business processes,” Cioni adds. “AI also includes full organizational commitment to rapidly exploit emergent opportunities, and to jettison what doesn’t work.”

New AI Tools Will Change the Coaching Process

“Most companies produce abundant content to engage with their customers, including articles, blogs, videos and social media posts. ChatGPT can be leveraged to create engaging content in much less time,” says Dr. Maynard Brusman, a San Francisco Bay Area consulting psychologist and executive coach.

“Executive coaches work with leaders and professionals to help them gain self-awareness, clarify goals, and develop requisite skills and habits. Much of the work involves mindful conversations—asking powerful questions, actively listening, and providing customized feedback and reflections. As ChatGPT gets better at language and conversation, it may take over some aspects of this coaching process.”

Dr. Brusman advises his executive coaching clients, “While AI has slowly developed over the last few decades, its adoption is expected to explode within the next few years. Innovative companies that choose to embrace AI will have a strong strategic advantage.”

The Game Changer for Small Companies

“Advanced technology has been a game changer, especially for smaller companies where employees are wearing several hats,” points out Kathleen McEntee, President of Kathleen McEntee and Associates Ltd, a full-service marketing firm focused on delivering results by distinguishing businesses with straightforward messaging addressed in the right media to the right audiences.

“ChatGPT and other AI options can lend a hand to monotonous, repetitive tasks, to fact finding, and to starting the framework of communications,” she says. “They can free up time for people to do what humans do best—be creative, determine strategy, set direction, evaluate customer demand, develop brands and their personalities, and, ultimately, engage with prospects and customers.”

“It is incredible what this software can do,” McEntee notes. “This will not replace the life, branding, and personality we breathe into an organization. Instead, AI will give us the time to do what we do best: improve the customer experience and increase efficiencies.”

The Definition of AI is a Moving Target

For decades, new technologies have been introduced as being based on “artificial intelligence,” according to Linda Popky, president of Redwood Shores, CA-based strategic firm marketing firm Leverage2Market Associates, and author of the book Marketing Above the Noise: Achieve Strategic Advantage with Marketing That Matters.

“It seems that anything that goes above and beyond what we are used to seeing is labeled AI,” she says. But over time, these things become part of our daily life and we no longer find them strange or frightening, she notes.

“Siri and Alexa are AI-based tools, as are the algorithms that make recommendations on Amazon or Netflix. We need to strip away the fear of a supreme artificial intelligence displacing the human race, and focusing instead on where each technology can be put to good use, and where human reasoning and experience cannot be replaced.

“To quote Spiderman, ‘With great power comes great responsibility.’ We need to be aware of what new AI tools do well and where they can cause serious problems without good management and human intervention.”

AI comes with Advantages and Unfulfilled Desires

“From what I’ve seen thus far and also expect to see, ChatGPT should be used with discretion,” said SAC Founder Alan Weiss, PhD. “It’s probably a huge advantage in creating policies, instructions, and simplifying. But it leaves a lot to be desired in terms of relationships: customer communications, employee interactions, and advertising.”

Originally posted on SAC website: April 3, 2023

The post It’s Not Whether to Integrate AI—But When, Where, and How appeared first on LMA-Consulting Group, a supply chain consulting firm.

Manufacturers are experiencing unprecedented disruption of the supply chain on both the supplier side and the customer side. Sources of raw materials and parts have become unreliable, and shipments have been delayed during the pandemic. Shipping costs have skyrocketed. Customer expectations for delivery and service rise higher and higher, while demand often has become volatile. 

Consultant Lisa Anderson, president of LMA Consulting Group Inc., works with manufacturers and distributors to develop strategies for supply chain management. In this interview, she offers guidance on coping with the current turmoil and its effect on manufacturers, their suppliers and their customers.

VALVE MAGAZINE: What is the supply chain? 
LISA ANDERSON: The supply chain connects the manufacturing, transportation and distribution processes that get product from the initial suppliers through manufacturing—which may include multiple steps—to the final customer. So, if you’re a manufacturer, the supply chain starts with your supplier’s supplier and goes through you to your customer’s customer. 

VM: What new ways of working are coming to the fore in a post-COVID-19 world? 
LA: Manufacturers must be more resilient, innovative and responsive with regard to changing conditions, including customers’ shifting needs for products and levels of service.

To adapt, some folks are looking at producing closer to the customer so they can be more responsive to fluctuating customer conditions. 

We’re also looking at utilizing more technology that gives visibility into our supply chains. Part of becoming more resilient is having better knowledge of your suppliers, processes and customers. 

VM: What kind of technology are we talking about?
LA: AI—artificial intelligence—is hot and so is the Industrial Internet of Things (IIoT). At a manufacturing company these technologies can enable a transition to predictive maintenance rather than preventive maintenance, for example. 

A company’s ERP (enterprise resource planning) system, a necessity in manufacturing today, allows visibility of your whole operation and aids in making purchasing and other decisions. An ERP system can take advantage of those other technologies, as well. 

To anticipate customer demand, we could look at historical demand, but then the pandemic changed everything. But we can look at predictions: our sales forecasts and predictive analytics. Those relate to AI, and somewhat to IIoT if we’re able to connect with customers at that level. 

VM: How do you get visibility into your supply and what your customers need? 
LA: On the supply side, you want to know if your materials are on the way to you. Where are they? You could have access to GPS data about the truck or the boat carrying the materials. Maybe they got sidetracked—everything is getting rerouted lately.  

On the customer side, let’s say you’re a valve manufacturer and your customer is an oil refinery. The refinery would be connected by IIoT and use an ERP system. With access to data, you could see that this customer is going to need a new valve, how many valves they have in inventory or how many valves they are using on a weekly basis. That’s giving a better picture of the demand. 

VM: Are customers willing to share that kind of data? 
LA: I think the answer is yes. It depends on how you position the conversation, of course. You can say, “I’d really like to understand more about what you have in inventory and get regular updates because I want to be resilient on my end and communicate with my suppliers so I can better serve you.” If you say it like that, then the answer is likely to be yes. How would you get the information? It could be through electronic data interchange (EDI) or through a portal. But the information could be sent in an email, if all else fails. 

VM: In a post-COVID-19 world, what traditional techniques or ways of working will we have to put aside?
LA: From a supply chain point of view, if you were already utilizing best practices, probably not much needs to change. But, in my experience, most manufacturers have not been using those best practices.

Supply chain disruptions are now commonplace. We have to think about how we’re going to account for and adapt to those risks in our supply chain design, whether it’s sourcing differently, partnering with other companies or using other approaches.

VM: Are supply chain professionals going to look at expanding their local supply base again, after the previous push to buy from China and other low-cost-production countries?
LA: There’s definitely a surge in terms of reshoring and producing in a local or regional way, for a lot of reasons. We need to keep up with customers’ changing demand. If possible, you want to be closer to the customer to reduce lead times. Then, there’s a trend toward clusters where suppliers and manufacturers are located more closely together in a region. The region could be very small or it could be large, like North America.

VM: How can supply chain teams manage the balance between achieving greater cost savings without compromising on quality?
LA: That is definitely an issue with sourcing components from faraway suppliers. It’s not even just the quality. It’s also the lead time and the ability to make changes. Companies are finding that the labor cost component is not as significant as it used to be, especially taking into consideration the recent tenfold increase in ocean freight costs. Except for commodity products, there are more and more reasons to look for sources closer to home. The question is: Who can you partner with? You may find suppliers in Mexico, if you are a U.S. manufacturer, or even within your own state. 

VM: How can a company increase its resilience in the face of all the chaos?
LA: I think those that are going to be successful coming out of this pandemic are the ones that actually have the raw material and parts because lead times are going way out—what used to take four weeks is taking 14 and what used to take 14 weeks is taking 26.  It can come down to sourcing items closer or holding inventory. However, these days, suppliers don’t even have the time to build inventory.  

If you’re dependent on a faraway vendor for a key material, a key casting or any vital supply, get on top of that right away. Find out what resources your suppliers have because you may need to find some additional sources. What I’m hearing across the board is that a lot of companies are in deep trouble. The ones that are succeeding find innovative ways to cope: locate new sources, produce in house, partner with another company. It’s not simple, but it needs to be done. 

If you continue to use a faraway supplier, make sure that you have a backup source of supply that’s not located in the same place as your primary supplier. For example, if both your primary and backup suppliers had been in Wuhan, China, that would obviously have been bad. On the other hand, for some of my clients whose primary source was in China, having a backup source in India didn’t help, either. 

Be sure to have a backup source in a location not affected by the same kinds of problems as your primary supplier’s area. Then, you also need to treat the backup not like a backup. You have to get at least 20% of your volume from the backup supplier all along, to make sure they’re ready for you when you need them. VM
 
Lisa Anderson, MBA, CSCP, CLTD, is ranked #16 in SAP’s Supply Chain Influencers. She is the founder and president of LMA Consulting Group Inc., a consulting firm that specializes in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. 

The post Valve Magazine: Coping with Supply Disruption and Demand Volatility appeared first on LMA-Consulting Group, a supply chain consulting firm.