As we enter the new year, manufacturers are assertively focusing on how they optimize their business during uncertain economic conditions. The goal of most manufacturers is to do more with less, or at minimum optimize their ability to execute their mission for their customers. Working with many manufacturers, I am seeing a variety of ways that companies can leverage technology to do more with less year.
Part 1 of this series outlines the first five ways that manufacturers can do more with less.
#1. Understand and optimize supply chain processes
The supply chain has the most tangible impact on the operation of a business. It is represented by the relationship between sales/demand, inventory, supply, and ability to execute. To create a business operation that should run at a certain cadence and then not be able to achieve that cadence causes substantial business impact to machines, inventory, parts, and people.
The below is a supply chain example from a company with a $2 billion pipeline, a clear understanding of historical purchases, and AI models combined with machine learning that was able to gain a 40% improvement in supply chain accuracy and roughly $50 million in yearly savings.
The reason for this is because the supply chain is hard to predict and many opportunities for improvement exist at various stages of the cycle. The actual accuracy of a supply chain is the combination of MANY predictions, without which it is almost impossible to gain efficiencies above a certain level. This is something we don’t see ERP vendors doing reliably.
The image shows the datapoints that contribute to this, and the ways optimization can drive impact, resulting in tremendous downstream impacts for the business.
A few ways to attack this problem are with Microsoft Supply Chain Insights and using Microsoft’s AI/ML platform to create ML models of your supply chain processes. Each bring capabilities to the table, which I will further break down in our whitepaper coming soon on “Microsoft Supply Chain Insights or AI/ML Models, a look at both options”. In the meantime, make this “to do” on your optimization attack list this year as it is one of the greatest areas of waste in a business.
#2. Turn Processes into Tools by Making All Employees Creators
You’ve heard that teaching a person to fish catches two fish instead of one… teaching a person to “make” is a force multiplier in your business. The closest people to your business challenges are the people in the field, on the manufacturing floor, in the accounting department, etc. The most successful manufacturers are finding ways to empower those workers to become app & process “makers”, who create efficiencies from their knowledge of the business. The question to ask yourself is “how could I make our current process more efficient by using a tool instead of human effort?” The maturity curve below shows the path manufacturers travel as they bring this capability to their existing employees.
The curve brings a view of legacy application development, silos, and traditional dependency on IT to Emerging, Center of Excellence, Expansion, and Normative. The Emerging State is where a company picks its top power users and enables them to drive impact. The Center of Excellence creates a downstream impact surrounding scale, enablement, and security, leading to Expansion which drives usage across the entire business.
This is an area for process optimization via tools in the Power Platform, Service Now, and Teams as major components to driving a more robust workforce that makes each job more efficient. Don’t be satisfied with running inefficient processes. Leverage tools like these, through scaled team members across the company to create great outcomes.
#3. Reduce the footprint of on-premise datacenters and optimize in the cloud
This is a two-part conversation. The first part of the story is driving mid-to-long term cost optimization through the cloud. Those that say, “the cloud costs more” are missing the root of the story, which is that, in actuality, the cloud is largely parity, unless you take the opportunity to optimize your resources, eliminate servers, sunset apps, etc. These are the key activities that are done during cloud migrations and should be near the top of your list… “application rationalization”. The following shows a potential migration to the cloud. Notice that the right sized usage is lower than the cost of on-premise, when combined with reserved instances and Azure Hybrid Use Benefits, can create substantial savings. In this scenario we eliminated 20% of the servers because they will be using cloud-native tools going forward.
The second component is even at cost parity, you are “doing more with less” in the cloud because the company gets additional benefits. These include infrastructure-as-code, micro-segmentation of workloads, site redundancy, site security, replication/backup, monitoring, etc.
Finally, realize that even if a company is not migrating their existing workloads to the cloud, the opportunity for NEW application development based on cloud topologies brings substantial efficiencies in either SaaS or PaaS use cases. Many manufacturers are looking at how they can reinvent their application platform to bring cloud agility to their customer relationships.
The flip side of this story is that once resources have been migrated to the cloud, it is your business's DUTY to optimize those resources. For manufacturers already in the cloud there are always cost savings possibilities because the cloud makes it easy to waste resources if not managed. I find that on average there is 20 – 30% cost savings in any given cloud environment, with the following being the biggest opportunity areas:
- Playground resources left running, even after the person has left the company
- Test/QA resources left running all the time
- Lack of applying reserved instances
- Not re-sizing resources to actual usage needs
- Not structuring the landing zones to facilitate automation of cost
- Not applying tags to facilitate review of costs
#4. Optimize sales processes with bots and AI
The efficiency and customer service improvement of a well implemented bot sales & customer service channel is astounding. I’ve gotten to a point where I can see a great bot experience over legacy modes of interacting within manufacturers is preferred. The reason why is that asynchronous communication is more efficient than synchronous communication… IF it is done effectively. The opportunities here are vast because they are tied to both customer interactions and sales team optimization.
- Areas we’ve seen optimization through bots and AI include:
- Sales channels for new purchases from consumers
- Sales channels for new purchases from companies (think retailers)
- Quote optimization for internal sales professionals (IE quoting a SKU)
- Customer service (where’s my order?)
- Support scenarios (how do I?)
- Move/add/change (complex support)
All of these can use a bot to efficiently get information, provide data back to the customer, potentially resolve (first chat resolution), and/or a warm handoff to a human support professional.
In the case of customer service, the optimization could look like this:
The use case above maps the “picture of the elephant” to understand the dependencies so they could use a bot driven experience for the customer and customer support representatives. The goal was to simplify a complex scenario down to something meaningful. As you can see below, there are opportunities across the ecosystem that reconcile in simple interfaces.
Finally, integrating intelligence into customer service and sales processes via bot-based platforms enables intelligent playback and assistance on follow-up from platforms like Viva Sales. The goal is to enable every salesperson to be more effective with information and follow-through for customers.