Q: Why is everyone talking about collaboration?

KD: New economic realities, the shortage of qualified personnel, new technologies, and ever-more sophisticated customer demands – these trends together are making everyone in the E&M value chain rethink ways to create value.

In discussions with our E&M customers, many referred to best practice in the automotive industry as an appropriate blueprint for the future of manufacturing. Some are already applying one successful automotive industry concept: the formation of manufacturing clusters. By concentrating the business activities of suppliers and other adjacent services along the value chain close to OEMs, all stakeholders will hope to improve efficiency, productivity, innovation, and flexibility.

This new cluster trend fits well with the changes happening in innovation. These days, we’re saying goodbye to ‘closed innovation’ and hello to collaboration, which requires more openness and interaction with different stakeholders such as suppliers, customers, and even competitors. Also we anticipate that cross-industry cooperation will facilitate complementary competences on the innovation stage of the future.

Q: What are the drivers for this change?

KD: Greater efficiency, productivity, and flexibility are mainly driven by increasing customer demand for customized and personalized products. We already see this megatrend in consumer industries and have learned from our E&M customers that this is a growing reality in the B2B environment.

The most influential driver for collaboration, though, is fast-paced developments in technology. Every department of every business in every industry can see the benefits of implementing advanced technologies such as big data analytics and additive production technologies. In several industries, especially in consumer-facing activities, these new technologies are already bringing companies closer to their end users, driving sales and market presence.

As the pace of hardware commoditization increases, there will be a significant price drop for easy-to-deploy electronic components such as sensors, actors, and controllers. Companies will embed these technologies into every physical object, and even people! Then it will be a simple matter of connecting all end points together via the internet to create an intelligent environment that feeds back data on every process, every movement, and every system status. Objects will be able to fix themselves and predict disruption, maintaining business continuity. To fully leverage this potential along the value chain, data will have to be shared by all stakeholders, and so we will have to find new collaborative ways to do this.

Q: How will this impact the supply chain?

KD: The digitalization of the value chain includes the digitalization of the supply chain! All steps of the future supply chain will be linked, from inbound-to-manufacturing to aftermarket logistics. Supply chain visibility will become critically important to track and control the end-to-end flow of materials between suppliers, into the factory, and out to customers. And the supply chain of the future will have to be designed to respond flexibly to any new piece of information provided by the digitized value chain. We believe that the future supply chain will be much more integrated across manufacturing clusters of suppliers, manufacturers, and aftermarket service providers.

Given all this, logistics service providers will play an active role in integrating supply chains and enabling collaboration.

For more information, download the recently published DHL Engineering & Manufacturing white paper here.

Published: September 2016

Image: DHL