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Preparing for

2015
The Top 10 Supply Chain
and Manufacturing Trend
Predictions

2015 will be an opportunistic year for manufacturers as emerging technologiesalready utilized


by somewill enable a continued focus on increasing revenue and productivity while tailoring
customer care. Ten clear trends offer opportunityor riskdepending on a manufacturers ability
to exploit them.

1. The Internet of Things (IoT) will enable extreme innovation


Innovative manufacturers will realize new forms of revenue, news ways of achieving manufacturing and product excellence, and new
ways of interacting with both businesses and consumers by embracing and understanding the possibilities enabled by the IoT. The extreme
precision and granularity made possible by embedded sensors will provide undiscovered levels of supply chain visibility, production support
and customer experience optimization.
The Industrial Internet will generate unthinkable amounts of data available for streaming analysis. This will provide manufacturers the
ability to: create new services, such as predictive maintenance; synchronize logistics operations to all but eliminate wait times, delays and
stoppages; and enable real-time granular quality control and production methods that are analyzed and acted upon at sub-second speeds.

2. Increased adoption of automation will help manufacturers create new


revenue streams and lower costs
This is partially a result of the reshoring trend or production shifts. But it is also a result of the increasing value of production and distribution
automation. Increased servicing will be required of specialized automated equipment, and the manufacturers utilizing that equipment will not
allow their operations support, services or maintenance costs to creep up. Manufacturers of this specialized equipment will find themselves
uniquely positioned to create new revenue streams by providing maintenance services, but theyll have to do this on a predictive basis. This will
require using advanced sensors (IoT) and new capabilities to understand and act on the streaming data.

3. Real-time demand fulfillment will require tight integration of supply


chain, production, logistics and marketing
The ability to sense demand in real-time and respond to changing demand levels (by manipulating prices or promotions and by
understanding segmented logistics, inventory and performance capacities) will allow for optimized integrated responses. This will become
more prevalent in industries that have exposure to real-time pricing and consumer insights, such as consumer products; however, this will
also become more of a focus in industries that do not, such as automotive, energy, aerospace and defense. The fundamental platform to
enable this synchronization will be one that continuously analyzes streaming data for specific events in the context of business process
execution and also dynamically manages exceptions through automated communication throughout multiple departments.

4. Reshoring will continue but supply chains will still be global, large and
complex
In specific regions, production will move closer to end-product consumption. But this will merely represent a shift rather than a net
production gain in the countries of end consumption. To capitalize on this phenomenon requires the ability to flexibly and seamlessly
manage and collaborate with both faraway partners and in-house production operations.
Because supply chains will still be complicated, and supply bases may shift, supply chain visibility will still be a key focus for many
manufacturers, even for manufacturers with high visibility that is driven by trading messages and/or files. A more granular level of visibility
will be pursued that can be provided by sensor data that is fueling the Industrial Internet or the IoT.

5. Emerging markets will innovate and improve to compete with the


reshoring trend
The 2013 Deloitte Global Manufacturing Competitiveness Index projected that in the next five years the three most competitive countries
will be China, India and Brazil. Vietnam will break into the top 10 for the first time. While labor and production has traditionally been very
appealing, improvements in innovation and product quality will keep production facilities running and entice new facilities to open. More
importantly, the manufacturing and supply chain talent in these countries is increasing, which will result in productivity and innovation
advances.

6. The Project Economy will thrive because of more exacting customer


requirements
Faster time-to-market with more specific products and shorter lifecycles (PLM) will result in short-term shifting outsourcing of logistics
facilities, production and suppliers. Third-party logistics providers, contract manufacturers and supply vendors will continue to develop
focused and niched attributes to differentiate themselves from their competitors. This will result in a large menu of capabilitiesgreater
choices, which will allow manufacturers to always obtain the right partner for the right project to exactly match project and customer
requirements. To capitalize on this trend, manufacturers will have to be able to quickly on-board suppliers and partners to support rapid
product development and to match the capabilities of those suppliers with the needs of the customers and the products created for them.

7. 3-D printing will become central to manufacturing strategy


Additive manufacturing adoption will provide additional flexibility for service parts or unique products with short life cycles. The ability to take a
prototype to production in short timeframes is already established, but supplementing production to meet specific customer demands is on the
next frontier. As the Project Economy continues to mature, capabilities that allow for flexibility and quick innovation, such as 3-D printing, will
flourish and adopted as a central part of a manufacturing strategy.

8. Supply chain and operational resiliency will be a continued focus to


drive certainty in the face of risk
Supply chain visibility, while always critical, is only a single enabler of this crucial outcome. Manufacturers will continue to focus on
maintaining cost and service certainty even in the face of adverse events and risks. This occurs when manufacturers have the ability to
continuously monitor events or risks, supply chain, production and business processes, and customer demand, or forecast variability and be
able to act in a consistent manner to enable operational certainty.
Scenario and response planning will be a critical focus of practitioners. But the actual decision-making and the accompanying responses will
be automated because the quantity of reactionary decisions and speed at which decisions need to be made will be larger and faster than
ever before. The creation of these responses will require companies to utilize processes that span multiple departments and can understand
forecasted outcomes, real-time deviations from planned outcomes, and how to manage these deviations.

9. Top supply chain and operations talent will continue to be highly


sought after and in short supply
The best talent will reside at manufacturers that provide the best support and a digital working environment. No, this isnt a BYOD
environment, which cant hurt, but an environment that removes paper pushing, leverages digital processes and technologies to minimize
firefighting and provides ambitious, top-tiered talent to scale their knowledge and make large, positive impacts. Competition for this talent
will reside on more than just a wage level but on a career development level, and manufacturers that become Digital Enterprises with
digital factories and digital supply chains will find themselves well positioned against manufacturers who are not leveraging the IoT as part
of their support and development system to improve their business while developing and retaining top talent.

10. Government funding will spur collaboration and standards creation,


even among competitors
Governments around the world have had the propensity to fund projects that result in specific areas of growth. China, Germany, Spain and
the U.S. have been subsidizing the development of alternative energy companies for years. Now with the rise of the IoT and the ability to
make the massive amount of data actionable through streaming analytics and dynamic, structured collaboration, governments will increase
funding for groups to create a new manufacturing revolution based on data. The U.S. government has already started collaborative groups
of this nature, such as the Digital Manufacturing and Design Innovation Institute that is focusing on creating standards for the new digital
manufacturer. This example of a government-subsidized working association is the beginning and not the end of governments aiding
industry advancement and collaboration.

Capitalizing on the Trends


When examining the Top 10 trends for 2015, a core set of capabilities emerges as the key to exploiting them and providing the flexibility to
anticipate additional future trends.
1. Secure, flexible on-boarding, off-boarding and maintenance of trading partners and suppliers
This sounds basicand it is. But the new Project Economy will require manufacturers to have the ability to quickly, easily and cost
effectively interact with a list of ever-changing suppliers. Manufacturers will always have their core suppliers, but the sporadically utilized
suppliers will require this capability.
2. The ability to take in extreme amounts of data at high speeds that may come from internal applications, partners or sensors (IoT and the
Industrial Internet)
Being limited by the speed and amount of data that can be obtained will directly constrain the amount of insights available. Manufacturers
will find that they will take sensor data from cloud apps, directly from production sensors or a variety of other sources, which will require this
capability.
3. Continuous streaming analysis at extreme speed and scale of sensor, event and process data
The ability to quickly monitor vast amounts of data will impact the cost effectiveness of the response. The earlier an exception or
opportunity is identified, the more options there are for resolution and at a lower cost point. However, while it is important to identify
exceptions and opportunities, it is equally important to understand when an event cannot be acted upon or when the time for action has
passed. This builds user trust and ensures decision-makers are focusing only on the actions that will actually yield value.
4. The creation and monitoring of responses to manage alerts combined with real-time information presented to all concerned parties
to spur collaboration: internal or external
This critical capability converts an opportunity to value. An alert to an exception or opportunity in and of itself is just that: a notification.
Having a flexible, designed response ensures maximum value is delivered consistently. Adding automatic handoffs and automated
monitoring of the exception management process ensure that nothing slips through the cracks when opportunity volume is extremely
high. By providing real-time visual information, decision-makers have the context needed to make the right decision every time. This
ensures consistency to both profitability and customer satisfaction.
5. The ability to understand and correlate segmented capacities to segmented customer requirements
Calculating Total Landed Costs (TLC) for customer requirements is not necessarily new but the ability to quickly correlate TLC with segmented
capacity for a specific customer provides manufacturers with the ability to understand how their segmented capacity, supply chain
production and logistics match their true service models.
Manufacturers who have these critical capabilities will not only be able to capitalize on the trends for 2015 but will also have a flexible
platform for innovation that will serve them well for years to come. Manufacturers will find that developing these capabilities is not an
endeavor that happens in a single moment but rather a journey where continuously incremental value is obtained. Manufacturers who start
small while thinking big will continually realize incremental value while building these specific capabilities.

Find out how to power up your Digital Enterprise at www.SoftwareAG.com


ABOUT SOFTWARE AG
Software AG helps organizations achieve their business objectives faster. The companys big data, integration and business
process technologies enable customers to drive operational efficiency, modernize their systems and optimize processes for
smarter decisions and better service. Building on over 40 years of customer-centric innovation, the company is ranked as a
leader in 14 market categories, fueled by core product families Adabas-Natural, Alfabet, Apama, ARIS, Terracotta and
webMethods. Learn more at www.SoftwareAG.com.
2015 Software AG All rights reserved. Software AG and all Software AG products are either trademarks or registered trademarks
of Software AG. Other product and company names mentioned herein may be the trademarks of their respective owners.
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