Benefits of a Smart Supply Chain

In the animal kingdom, many animals store food to see them through the difficult winter period. Unfortunately, in the case of gray squirrels, it has been shown that 74 percent of their buried stores fail to be recovered.

Some manufacturers have taken a similar approach, stockpiling spare parts for their industrial automation systems in case of future equipment failures. Using more modern tactics can help streamline this process by maximizing factory space and minimizing waste.

Industry 4.0

When Siemens and the German government created the concept of Industry 4.0, they played heavily on the idea of the smart factory, in which the whole facility is integrated and connected with intelligent analytics focused on reducing downtime and waste.

The idea of lean manufacturing, which is a method for lessening production waste, has been around for much longer. It was developed by Toyota executive Taiichi Ohno and first implemented shortly after World War I.

A recent report by the Institution of Mechanical Engineers found that 92 percent of manufacturers in the United Kingdom do not understand Industry 4.0 processes even though 59 percent recognize the impact these processes can have on their sector.

This leaves manufacturers at risk of falling out of step with businesses that are embracing the factory of the future and the intelligent systems that are essential for competition on an international level.

So how can manufacturers fully embrace the smart factory concept? One of the key steps involves incorporating sensors into equipment to connect them to the internet of things (IoT).

However, communication alone is not enough for a plant to define itself as a fully intelligent factory if the communication is limited to the factory floor. Better decision-making at all stages of the manufacturing and distribution process, including the supply chain, can be achieved using complex analytics that don't require human intervention.

Predict Bottlenecks

The smart supply chain system is both self-organizing and self-optimizing. Data from connected sensors in the factory can be integrated with data on user preferences, weather and information on other variables that enter the system.

A smart system can predict a bottleneck arising from an abnormal weather event. Pre-empting this type of event can be used to streamline the system and prevent waste from excess production, leading to leaner manufacturing.

One example of the incorporation of the smart supply chain into a business model is the retail giant Gap, which uses seamless inventory management focused on having the right products available in the right quantity at a given time.

The company is able to monitor inventory and track goods down to each individual item, improving user experience and reducing the cost of the process in its very competitive environment.

Predictive Analytics

Manufacturers often stockpile replacement parts, particularly those parts seen as most at risk of failure. This large amount of extra stockpiled equipment is left to sit, gathering dust while taking up valuable factory space.

This is particularly relevant for companies running legacy systems, as the acceleration of industrial obsolescence may cause plant managers to believe that replacement parts for faulty equipment will be difficult to find.

Predictive analytics can be used to monitor the condition of all operating equipment in a factory. If equipment is not performing at an optimal level, an alert can be sent to a plant manager automatically. This means that in many cases a replacement part can be installed before the entire process breaks down.

Incorporating the smart supply chain into this process is a simple way to achieve even greater improvements. If equipment can detect and monitor an issue with the system and then adjust accordingly, the system's overall lifespan could be extended.

When adjusting the system is not an option, the smart factory could order a replacement part from a reputable supplier of obsolete industrial parts without any human involvement. This would eradicate the need for manufacturers to stock spare parts in their own plants, reducing waste and increasing available factory space.

Operating the smart supply chain in this way means you don't have to worry about seasonal availability. Your spare parts will be available year-round.

We all know winter is coming, but smart manufacturers using the most advanced strategies, techniques and technologies will make it through to spring without as much waste as the gray squirrel with its unrecovered stores.

About the Author

Jonathan Wilkins is the marketing director for EU Automation, an obsolete components supplier. Contact Jonathan via email at

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