The Change in Industry Operating Models
End-to-End Value Chain Network
End-to-end involves the entire process of the value chain from the end customer back to the upstream component materials and ingredients. In the 20th century paradigm, your enterprise was viewed as the center and you reached upstream to your immediate suppliers and downstream to immediate customers. In the 21st century the individual enterprise is an element of a holistic system. end-to-end system. Turning your attention to your suppliers’ suppliers and your customers’ customers—the extended supply chain. It’s a critical step, not just to identify more-ambitious structural changes that could generate even greater payoffs but also to better manage risks. The most important principle in end-to-end supply chain management is collaboration.
When companies managed operations for low cost and operations efficiency the metrics stayed within the walls of the production facility. With the dynamics of the 21st century strategic gains and competitive advantage accrue to companies that manage whole system metrics. These metrics include (1) Cash to Cash cycle time, (2) Supply chain cycle time of the longest lead times, (3) Customer order cycle time. Measuring these system factors gives a company access to competitive advantage and strategic financial performance.
Driven by the need for more responsive operations processes and the increasing complexity in product portfolios have led to significant developments in modular, distributed manufacturing systems. Modularity appeals to the concept of scaling down a producing process and then numbering it up. This changes the fundamentals of an operation. Modular systems are inherently more reliable, less costly to invest and operate, more flexible. This is contributing to new business models of the modern cottage industry. Examples: micro‐breweries, distributed electric power, conversion of agricultural waste to fuel oil, on-site chemical and air separation. This is contributing to new business models of the modern industrial cottage enterprise.
Technology is transforming the entire value chain. We have already seen the impact on the commercial side with eCommerce, social media, 1-day shipping. It is now transforming the supply side with chaining technology for track and trace, Industrial IoT and machine learning. Supply chains are moving towards end-to-end visibility and connectivity.
Along side transforming the business side of operations and production, technology is fundamentally altering the way goods and materials are made. Generative design enables the transformation of functional requirements into digital designs that can be virtually tested, simulated in operational environments and sent for 3-D printing.
Nanotechnology and other material sciences are enabling the development of materials with properties not found in nature and the development of bio-similar materials that mimic organic functionality.
Every operation has cadence. Walking around a producing facility, experienced staff can ‘feel’ when the operation is well-performing. There is a rhythm, a cadence. Disrupt that rhythm and problems happen. In the 21st century there is the expectation of higher and higher speed for fulfilling customer and consumer demand. Disrupting the rhythm is how operations had responded and this comes with higher costs and lower efficiency. In the new game we synchronize production flow to the cadence of customer demand.