How supply chain management impacts plant productivity

Eric Whitley, the Director of Smart Manufacturing at L2L, shares how efficient supply chain management can support manufacturing plant productivity

In today's fast-paced manufacturing landscape, the success of a manufacturing plant hinges on its ability to achieve high levels of productivity. While several factors contribute to productivity, one critical aspect that demands attention is supply chain management. 

As the industry learned during the COVID-19 pandemic, having a robust supply chain can be the difference between stopping production and outpacing the competition. Moreover, efficient supply chain management can empower manufacturers to optimise operations, minimise costs and ensure customer satisfaction. 

Effectively managing a supply chain to increase productivity requires streamlining material flow, upgrading technologies and improving communication between different parts of the supply chain. 

Keep reading to find out how your supply chain can implement these changes.

Streamlined material flow

Efficient material flow is crucial for a manufacturing plant's productivity. By streamlining the flow of materials from suppliers to the manufacturing plant, manufacturers can reduce delays and disruptions in production. This involves accurate demand forecasting, effective inventory management and coordination with suppliers to ensure the availability of raw materials when needed.

Streamlining material flow has to start by enhancing the visibility of material flow in the supply chain. Supply chain visibility (SCV) is simply how well information flows through the supply chain and is analysed to make decisions regarding demand, production, lead time and other inventory variables. SCV can be improved using technologies like artificial intelligence (AI) and IIoT. AI helps make manufacturers quick, fact-based decisions based on the large amount of data gathered from different parts of the supply chain.

AI can also forecast demand and manage inventory. This helps in optimising order quantities and minimising stock-outs, which play a pivotal role in maintaining uninterrupted production. According to a report by McKinsey, companies that effectively manage their supply chains can reduce lead times by 50 to 90% and achieve inventory reductions of 15 to 35%. These improvements lead to increased productivity and cost savings.

Eric Whitley, Director of Smart Manufacturing at L2L

Efficient communications

Effective and efficient communication is essential for seamless supply chain management. Implementing communication systems and channels such as Enterprise Resource Planning (ERP) and Manufacturing Execution Systems (MES) allows real-time information exchange, enabling better visibility and coordination among stakeholders.

ERP systems integrate various functions into centralised software solutions, including inventory management, production planning and order tracking, to provide a holistic view of the supply chain. MES systems help monitor and control production activities, ensuring efficient utilisation of resources. These two technologies can work in tandem with IIoT and integrate the rest of the supply chain with production, allowing teams on the floor to plan production better.

Solutions like ERP and MES are already becoming common in the industry. By 2023, it is projected that 50% of global product-centric enterprises will have invested in real-time transportation visibility platforms, enhancing supply chain performance and responsiveness. Ultimately, a faster and effective information exchange leads to productivity improvement.

Collaboration and coordination

Collaboration and coordination among supply chain partners are key to driving productivity improvements. By fostering strong relationships and aligning goals and strategies, manufacturers can optimise the flow of goods and information. Collaborative forecasting, where suppliers and manufacturers share information and work together to predict demand, leads to improved demand forecasting accuracy.

Vendor-managed inventory (VMI) is another collaborative approach that allows suppliers to monitor and manage inventory levels at the manufacturer's facility, reducing stockouts and minimising holding costs. Supply chain collaboration with its new approaches is a recent trend that has interested many researchers and manufacturers alike. The aim of better coordination between different parts of the supply chain is a promising productivity improvement step.

Technology and automation

Leveraging technology and automation solutions can revolutionise supply chain management and drive manufacturing plant productivity. IoT, AI, and automation are transforming the way supply chains operate:

  • IoT sensors can monitor equipment performance, enabling proactive maintenance and reducing downtime
  • AI algorithms analyse vast amounts of data to optimise production schedules, inventory levels and quality control
  • Robotic Process Automation (RPA) automates repetitive tasks, freeing up human resources for more value-added activities.

According to a report by MHI and Deloitte, 74% of manufacturers are increasing their investment in supply chain technology and innovation, with 38% investing over US$10mn. These investments in technology and automation are bound to be critical for improving efficiency, reducing costs and enhancing productivity. 

Data analysis for continuous improvement

Data analysis plays a vital role in identifying areas for improvement and driving continuous enhancement in supply chain operations. By leveraging data analytics tools, manufacturers can gain insights into key performance indicators (KPIs) such as on-time delivery, order cycle time and overall equipment effectiveness (OEE). These metrics provide actionable information to optimise processes, eliminate bottlenecks and enhance overall productivity.

According to IBM, 54% CSCOs are choosing to invest resources in cutting edge data solutions — including predictive models — and implementing tech-infused workflows. Data analysis enables manufacturers to make informed decisions and drive continuous improvement throughout the supply chain, and it helps improve the productivity of the plant.

Effective supply chain management is vital for enhancing manufacturing plant productivity. Using the solutions from this article, manufacturers can optimise their processes, reduce costs and meet customer demands efficiently. In today's market, a proactive approach towards supply chain management is essential to thrive and gain a competitive edge. 

By embracing these strategies and staying ahead of the curve, manufacturers can enhance their productivity, drive growth, and ensure long-term success. 


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