Building Supply Chain Resilience for Manufacturing with NTT DATA Business Solutions

Mid-sized manufacturing companies today struggle to increase their margins and revenue due to unique supply chain challenges in the current business environment.

“Some of the mid-size organizations that we’re working with address those challenges by looking at three goals,” says Brooks Noonan, Industry Solutions Principal – Manufacturing at NTT DATA Business Solutions. They include:

More accurate forecasts: To help boost revenue by ensuring the organization has the right items serviced for the right customers at the right time by leveraging tools in a unified system that can project more accurately.

Getting a more optimized supply chain: Analyzing and having inventory optimization tools can help reduce inventory and cost while maintaining the right service levels and increasing margins.

Leveraging new go-to-market models: Such as the ‘as-a-service’ model or a subscription-based model. “I work with a press manufacturer that’s doing exactly that, nearly giving away their product for free but having an as-a-service subscription to keep the uptime and replacement parts to that press in operation for their customers,” Noonan explains.

Manufacturing as a service-based model

He explains why a service-based model is fast becoming popular with mid-sized manufacturers:

• Revenue growth: “A service-based model brings more revenue over time,” Noonan says. “We’ve seen this in other industries, and manufacturers are finally starting to jump onto that trend and move to this model to bring in more revenue over time.”
• Better customer experience: This model provides a more well-rounded experience. For example, Noonan says that he works with a manufacturer in the Midwest who offers a full-service offering to their customers. This gives the customer peace of mind, knowing that their supplier is covering the entire product range.
• Getting a predictable supply chain: Manufacturers get a predictable supply chain the more they service an item in the field. Noonan explains, “With an as-a-service model, manufacturers have more predictability on spare parts and refurbishment that they can apply to internal supply chains.”

 How digital transformation helps

Digital transformation has been a helpful tool to solve some of the supply chain issues faced by manufacturers specifically in two ways:

• Some organizations struggle with disparate systems and data in multiple places, resulting in inaccuracies. Through digital transformation, SAP or other ERP systems combine those data elements and provide a more accurate view of the holistic supply chain.
• Many manufacturers set a lead time from a particular supplier and forget to update it, which often causes inefficiency, mainly when supply chain disruptions occur. “SAP provides a great way to have dynamic data elements to drive a more accurate supply overall and improve lead time management,” says Noonan.

Still, manufacturers struggle with clean data, a key to digital transformation. “Making sure you’ve got clean data going into the system provides a more optimized overall digital transformation landscape,” Noonan says. Change management is another challenge. “Moving from one system to another and doing a digital transformation process is difficult for an organization’s people,” he adds.

“You must ensure your organization is ready to accept the challenge of transitioning and leveraging those new tools. This is critical for the success of a digital transformation project,” Noonan advises.

What this means for SAPinsiders

Supply chain resilience is the need of the hour. SAPinsider research indicates rapidly evolving customer demand and expectations and the imperative to create and support new capabilities and operating models are key drivers for manufacturers to strengthen their supply chain resilience. Manufacturers must also focus on improving forecasting accuracy and leveraging new go-to-market models, such as ‘as-a-service’ or subscription models recommended by Noonan, to boost their revenue stream and enhance customer experience.

Digital transformation can enable stronger supply chains. Seventy-nine percent of the respondents to an SAPinsider survey list supply chain data quality enhancement and harmonization as top requirements for building a resilient supply chain. Digital transformation implemented by SAP partners like NTT DATA Business Solutions can help manufacturers achieve data connectivity and dynamic data by utilizing tools like SAP S/4HANA to update lead times dynamically and improve efficiency and responsiveness to supply chain disruptions.

A smooth digital transformation depends on two crucial factors. Manufacturers seeking a smooth transition to systems like SAP S/4HANA to enhance their service and revenue must ensure clean and accurate data is available for the new system. Effectively managing organizational change and preparing employees for new technologies and processes, many of which are led by AI tools and solutions, is also critical for better deployment.