How Digitalization is Transforming the Electronics Manufacturing Industry

By Neil Sharp, JJS Manufacturing

Originally published on JJS Manufacturing Blog.

Increasing global competition, rising consumer expectations and the increasingly complex patterns of consumer demand continue to present significant challenges (and opportunities) for electronics manufacturing.

The rise of the “digital” supply network – be it the Cloud, Big Data, 3D printing, augmented reality or the Internet of Things – promises to address these issues by providing a greater level of transparency, innovation and resiliency.

And there is a growing belief among business strategists that the more digitalized our manufacturing supply chains can become, the greater our efficiency will be.

There are certainly some compelling arguments for embracing digitalization.

Workplace management consultancy Price Waterhouse Coopers, for example, put forward a strong case for embracing the digital age in their report, ‘Industry 4.0’. And, as they explain, there are some significant benefits to be gained.

The evolving supply chain ecosystem

The report begins by providing a comparison of the pros and cons of the traditional linear supply chain model (in which each stage in the chain operates sequentially from the supplier through production, delivery and after-sales) – versus what it refers to as the ‘ecosystem’ of the digital supply chain (DSC).

As the report highlights, whenever each link in the chain is functioning essentially as its own separate entity, there is vastly reduced visibility and transparency across the entire chain.

This in turn can result in breakdowns in communication and fewer opportunities for meaningful collaboration.

Often too, there can be discrepancies in planning cycles, which can lead to unexpected delays and reduced synchronicity. And all of which increase the chance of supply chain disruption.

So how could shifting to a digital supply chain model solve some of these common problems?

The argument for a DSC

In a DSC, the supply chain can work as an integrated supply chain ‘ecosystem’ in which a central control ‘hub’ maintains a complete and real-time view of supply, production, distribution and customer.

With a DSC, information can be made available to all supply chain members simultaneously, which can help to foster a greater level of collaboration. And it provides the foundation for even better interconnectedness, resilience and innovation.

Whether it’s the sourcing of raw materials, parts or components; the transportation of those supplies or the final delivery of the product to the customer, a shift to a digital supply chain model offers the ability for electronics manufacturers to take even better control of their supply chain.

What’s more, it provides manufacturers with the ability to not just react to events but to anticipate potential disruptions, and to make adjustments in real-time, as conditions change.

Embracing the digital age

The efficiency of the supply chain network looks set to become increasingly dependent upon key digital technologies that support integrated planning, logistics, smart procurement, warehousing and analytics.

And there are clear signs that companies across multiple industries are committed to investing in their own versions of the DSC.

A recent study which explored the rise of Industry 4.0, for example, revealed that more than one third of the two-thousand businesses surveyed had already begun the process of digitizing their supply chains.

And nearly three quarters (72%) expected to have done so within the next five years.

Digitalization is also predicted to bring some significant economic benefits to both the top and bottom line – with predicted efficiency gains of 4.1 percent per year, and increases in revenue of 2.9 percent.

Perhaps not surprisingly, certain industries have taken to digitalization more readily than others.

And evidence suggests that electronics manufacturers are currently well ahead of the game – perhaps due in part to the fact that they have already honed their skills in building and developing their outsourced manufacturing networks.

Changing consumer tastes, and the accelerated pace of new product introduction (NPI) are placing even heavier demands on the electronics manufacturing supply chain then ever before.

The technological strengths of digitalization have the potential to revitalize every stage of the traditional supply chain model – from planning, sourcing and manufacturing to delivery, return and after-sales.

And as manufacturers continue to embrace the digital age it also leaves time for engineers to focus on what it is they do best – the innovation of new and better products.