Francesco Grillo and Diane de Beaudrap from Steel Available discuss digitalization in the supply chain.
The main challenge facing the oil and gas industry today is managing costs of exploration and operations. Operating a business during the low oil and gas price environment means struggling to find the right balance between keeping costs under control while maintaining expertise, which will be strategic when the market recovers.
Most times the first step would be to reduce investment, which is not always beneficial. Being more selective on where to invest would definitely help to reduce financial stress, but that shouldn’t stop companies from investing in emerging technologies.
Innovation is key to maintain leadership, and this is a basic principle for any industry. We are not only addressing product and manufacturing innovation, but also the application of technologies that can reduce structural inefficiencies in the supply chain.
Digitalization in the supply chain can improve asset integrity and availability with predictive maintenance; manage processes through automated planning and manufacturing; increase visibility of demand-driven supply chain; guarantee personnel safety through wearables and mobiles; reduce downtime with real-time analytics; and monitor and optimize energy consumption.
In fact, organizations are already investing in business-to-business electronic integration (B2Bi) to cut costs and increase business flow efficiency, according to a new study by the University of Tennessee. The survey, which involved over 200 companies across a wide range of industries, examined supply chain operations.
The respondents were asked to weigh in on issues like inventory visibility, supply chain costs, new enterprise resource planning integration, and responsiveness to customer demands. Of those surveyed, almost 95% saw strong improvements in their electronic connectivity capabilities and 68% reported that their clients found it easier to do business after using cloud based B2Bi tools.
On the other hand, another survey by Accenture showed that 72%of supply chain executives considered uncertainty a threat to their business, while 52% believed that the obsolescence of their existing information technology systems were impacting their operations.
Big data, industrial IoT
Sometimes, even the simplest solution can bring great results. Applying readily available technologies can help in the areas of sourcing, logistics, international money transfer, and last but not least people management.
For instance, on the supply chain management of industrial equipment, cost of prequalification of suppliers can be easily reduced. Through the implementation of data analytics it is also possible to implement suppliers’ scorecards and add transparency. Moreover, on a daily basis, the focus would be to achieve end-to-end integration and optimization, speeding up the flow of information among companies.
Managing a project from bidding to construction phase generates hundreds of emails, with inefficient flow, risk of losing key information and lack of security. Big data, for example, provides better logistics. Companies using systematic data can develop smarter strategies, and achieve effective decision-making.
Fast return on investment can also be seen by employing data analytics to transform from a traditionally fragmented sector to a more organized, consolidated and transparent one.
Currently, only the largest corporations are able to understand what value data driven analytics can provide, but solutions for smaller companies are already there and easily accessible.
The Internet of Things (IoT) technology can improve supply chain visibility as well. Whether clients are buying expensive equipment, they want to know the location and status of their assets from manufacturing to shipping. Supply chain managers today use solutions that do more than simply track a shipment’s location.
They want to examine the conditions of their cargo along with the supply chain to make better decisions. Companies across industries can benefit from tracking high-value cargoes with IoT technology. Using an asset-tracking solution can help protect expensive goods while in transit and eventually reduce costs of insurance.
IoT is also strongly required to ensure that each link of the supply chain, from raw materials suppliers, to equipment manufacturers and end-users, can respond quickly to the needs of a project in a common language. This consistency and reliability can boost efficiency, maintain quality and safety, while decreasing risks along the value chain.
Startups can bridge digital gaps
In many industries, new technologies are reshaping the business environment. More studies are proving that 75% of the S&P 500 companies will be replaced by 2027. In fact, the average tenure of a company in the S&P 500 list has shrunk from 61 years in 1958 to 18 years. Many corporate leaders are beginning to understand that innovation comes from both inside and outside an organization.
That is why open dialogues between big companies and startups have become a trend. There are several examples in Asia of how working with and investing in startups is proving to help bigger firms strengthen market position.
A study by Census Bureau Data demonstrated that virtually all new job creation over the past 30 years has come from new businesses less than a year old. According to the research, new businesses create an average of three million new jobs each year, compared to one million jobs created by existing businesses in aggregate.
As mature businesses start to identify issues within their operations, they are approaching startup entrepreneurs to mimic their problem-solving strategies. Corporate leaders today are not only seeking to acquire innovative, high-potential startups, but are also trying to boost in-house innovation through these acquisitions.
In fact, the Organization for Economic Co-operation and Development once noted that the traditional research and development model of labs of large corporations is leaving space for new concepts involving other divisions and new partners.
The challenge with the startup-corporate collaboration is that it requires businesses to carefully examine key performance indicators and incentives for internal innovators. In order for startup engagements to translate into actual cultural change and internal learning, a long-term strategy that promotes mindset change is also key.
A successful startup-corporate relationship delivers new solutions and technological advancements in a shorter time period at lower cost. Startups can invent solutions and improve productivity, but lack the financial capital, which mature companies can provide, to refine the concept and mass-produce to reach larger markets.
Francesco Grillois CEO and founder of Steel Available. For the last 10 years in Asia, Grillo has been managing industrial companies like Landi Renzo Pakistan, Cavagna Group China and M&M Forgings Beijing, focused on delivering technologies for clean energy both downstream and upstream.
Diane de Beaudrap, co-founder of Steel Available is an engineer by trade. She worked on energy projects in the nuclear industry in France before moving to Asia. Beaudrap’s expertise lies in project management and team coaching, and she has interest in delivering innovation and team development to global organizations.
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