Turning supply chain chaos into profitable business

LAKE BUENA VISTA, Fla.  —Manufacturers have generally weathered the past two years of disruption and now are shifting into future-proofing their businesses, incorporating better visibility and supply chain control.

That is one of the takeaways from Fictiv’s seventh annual State of Manufacturing report. Released Monday at the Gartner Supply Chain Sumposium/XPO at Walt Disney World’s Dolphin Resort, the report found a majority (59%) of companies said improving supply chain visibility is their top priority. Nearly two-thirds of respondents (65%) also are looking to increase onshoring to protect against future global supply chain shocks.

“What stood out to me in this year’s report was the progress that has been made over the last three years,” said Dave Evans, Fictiv CEO and co-founder. “2020 was about seeing the problems, 2021 was about finding the solutions, and now in 2022, we see companies are making progress towards a future-proofed industry. Leaders are demanding major changes from the ground up in order to gain much-needed control and predictability. Fictiv was founded due to the very issues companies are still facing today, and I’m excited to see momentum toward technology-powered transformation.”

Supply chain disruption drives growth

In an interview with FreightWaves, Evans said the 10-year-old company saw tremendous growth in the past few years as manufacturers looked for flexibility to the global supply chain disruptions. Fictiv matches firms with manufacturers that have capacity to handle custom and on-demand jobs. Evans pointed to the recent shutdown of Shenzen, China, due to a COVID case spike.

“In our model, we had 249 [manufacturing] orders in flight that were affected,” Evans said. “In hours, we were able to shift all of those orders [to other locations].”

It is that kind of flexibility that Fictiv thrives on, although the company started as a conduit between businesses building new products and those with manufacturing capacity to handle the limited runs. That remains a primary focus of the business today, but the past few years have opened eyes among supply chain leaders about the need to be more agile, Evans said.

“We’ve taken a road map that might have taken five years and been doing it in 18 months,” Evans noted, saying that employee headcount has been almost doubling year-over-year, and the company recently closed a new $100 million financing round. “Supply chain has never been as sexy as it is now.”

Manufacturers want fewer suppliers

The Fictiv report had several other interesting findings, including that 88% of manufacturers want to streamline production by reducing the number of suppliers, and 93% are looking for technology solutions to increase operational efficiency for new product development.

While reducing suppliers might seem counterintuitive to managing disruptions, Evans said many companies simply have too many suppliers. And at a cost of between $40,000 and $60,000 to manage each one, there is money to be saved.

“I don’t think you can meet a supply chain officer that thinks they have the right number of vendors,” he said.

The report surveyed 234 senior decision-makers in supply chain, engineering, research and development, and technology or business leadership roles at companies that produce medical devices, robotics, automotive, aerospace or consumer electronics. Evans said over the past three years of the report, there was a definite trend of leaders recognizing there is a supply chain problem in 2020, shifting into solution mode in 2021, and finally transitioning into executive mode this year.

“That road map would have taken a decade [to accomplish],” he said.

Digital manufacturing growing

Among the top themes identified is the increased use of digital manufacturing technology and analytics and on-demand manufacturing platforms. Over 90% of companies are now using or implementing digital manufacturing tech, and 61% are using supply chain analytics, while 58% have adopted on-demand manufacturing platforms.

Leaders said they facing fewer barriers to innovation overall, but 97% are concerned about security in a more digitized environment.

The report also found that 73% of manufacturing leaders view outsourcing positively and 48% increased outsourcing to deal with the effects of the pandemic. Also, customer demand continued to shift, with more emphasis on sustainability, quality and advanced features among the top asks. However, while increased agility (49% of respondents) and more efficient team coordination (48%) were cited as ways manufacturers are responding to this, 75% said engineering and supply chain teams need to collaborate more.

Evans also pointed to security and productivity as big concerns among supply chain leaders. More companies are focused on improving productivity, which reached a decadeslong low in Q1, Evans said.

Fictiv is unique in that its solutions are product-agnostic, but the companies must be willing to change.

“If you are fine with the status quo, it’s probably not a good fit,” Evans said. “But if you are looking for agility [Fictiv can help].”

He noted that Fictiv has helped companies of all sizes, from a 20-person robotics company that it helped save $600,000, to Honeywell, where Fictiv worked to address an issue in its $6 billion aerospace division.

Click for more articles by Brian Straight.

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Source: freightwaves - Turning supply chain chaos into profitable business
Editor: Brian Straight