Challenges for Manufacturers On the Horizon: the Paradox of Reducing Surplus vs Shortages

According to the recent State of Supply Chain 2022 report, nearly 75% of manufacturers feel pressured to digitally transform their supply chain operations. But why are there so many internal roadblocks and challenges to adopting new technologies, work processes, and business solutions?

In our latest State of Supply Chain 2022 webinar, hosted in tandem with The Association for Manufacturing Excellence (AME), industry leaders from LeanDNA, AME, and Deloitte participated in a roundtable discussion to answer this question and more. Below we’ll address different perspectives on the paradox of reducing surplus vs shortages, and why the implementation of new tech and new ideas, which manufacturers need to stay successful in today’s market, is easier said than done.

People, Technology, and Process Challenges

As mentioned earlier, companies want to improve. Being stuck in a cycle of surplus vs shortages is not fun for any company. But according to Richard Lebovitz, Founder and CEO of LeanDNA, their current technology is holding them back. Encouraging teams and individuals to work in silos and make critical decisions based on outdated and potentially inaccurate data, there is a lack of trust in their tech and processes. Specifically, a reliance on spreadsheets for data housing and analysis is holding manufacturers back. Spreadsheets make it difficult to achieve standardized processes that operate more efficiently and allow teams to drive their daily work in the way that they need to. Right now it’s difficult for teams to identify the right actions to take on a daily basis, and this directly prevents the company’s progress. Teams are stuck with costly, outdated tech that doesn’t empower their work, making it hard to trust new solutions’ efficacy.

But Lebovitz doesn’t think that gutting the current tech and processes in place at a given company is the way forward. Instead, leveraging technology that is complementary to the existing solutions, not replacing them, is the best step manufacturers can take right now.

“Ultimately, the goal is to to leverage technology to complement these existing solutions, not replace it, and then help people use these newer solutions to shift from kind of a reactive firefighting mode to one now that can be more proactive in the way that they work based on better prioritized actions and better and more accurate information.”

Richard Lebovitz
Founder and CEO, LeanDNA

Education of Leadership 

For Robert Martichenko, AME board member, a shortcoming preventing progress and the adopting of new technologies and systems comes down to the education of leadership. Not all executives understand that they’re managing a complex system that extends to their suppliers and customers. Many executives view their role as managing a function, but in reality they are managing an ecosystem. According to Martichenko, what’s needed is to teach organizations to be end-to-end thinkers and implement the right technology to support that.

“For us to truly see that as an ecosystem where a decision made in one part of the system will absolutely have an impact somewhere else in the system, we still need to continue to educate leaders and managers on systems thinking relative to end-to-end thinking inside our businesses, and our technologies are going to have to take us there”

Robert Martichenko
Board Member, AME

The first step towards educating leadership in systems thinking and reaping the benefits of that is establishing trust. As mentioned above, because of outdated technologies and solutions, there’s often a lack of trust that these tools will be able to deliver on what they’re promising. Establishing trust in new solutions will be key to successful, company-wide adoption.

Breaking the Cycle

According to Louis Librandi, Principal at Deloitte Consulting, what’s holding back manufacturers is a self-perpetuating cycle. Further than the cycle of surplus vs shortages, the actual data that companies are using to guide their daily work is bad, so people don’t trust it. They stop using their current systems, because they don’t trust what’s coming out of it. Because teams don’t trust the data, they revert back to spreadsheets and rely on guesswork to make critical decisions and create their own siloed workflows. That results in a lack of visibility into the decisions that are being made each day for inventory and production, permeating throughout multiple tiers of the supply chain.

I think it’s no surprise that a lot of times people’s data is not clean. And what then happens is a self-perpetuating cycle. People then stop using the system because they don’t trust what is coming out of the system.”

Louis Librandi
Principal, Deloitte

Manufacturers need to break these bad habits and get out of this negative cycle. Again, for Librandi, it all comes down to trust. Teams need to know that the new systems and solutions will produce data that’s accurate and timely so they don’t fall back on spreadsheets and guesswork by habit. Not only that, but also establishing more trust and collaboration with suppliers.

For all three speakers, the most effective way to diminish the roadblock facing the adoption of new technologies and solutions is to establish trust. Trust in the technology, data, and every tier of the organization and supply chain. Without trust, there’s no moving forward. Once teams feel that new solutions aren’t providing accurate information, they’ll ultimately revert back to that self-perpetuating cycle. That means that the companies providing the new technology need to clearly demonstrate their value and deliver on the results they promise.

WANT TO LEARN MORE ABOUT THE SHORTCOMINGS PREVENTING NEW TECH AND HOW MANUFACTURERS CAN BREAK OUT OF THE SELF-PERPETUATING CYCLE OF SILOED WORK AND DISTRUST?

Check out our recent webinar, “State of Supply Chain in the New Shortage Economy.”