IndustriesAutomotive & Manufacturing

Building resilient digital supply chains in Japanese auto and manufacturing

Some of the lessons we’ve learned during COVID-19

For decades, the Japanese automotive and manufacturing industries have been the envy of the world. They have exported production models that companies globally have copied. But things are changing. Even before the COVID-19 pandemic, the cracks were beginning to appear. Japanese automakers’ dominance was being eroded by competitors from Germany and elsewhere. In 2019, Japan’s manufacturers feared recession as exports tumbled. Then came the pandemic. Can a resilient digital supply chain help Japanese automakers and manufacturers become more competitive in the new global trading environment?

Upcoming webinars: Two dates for your diary

  1. Global Automotive Trends and Solutions – September 17 2020 (16:00-16:45 (Japan Time) /8:00-8:45 (UK Time). Register now. (Available simultaneously in English and Japanese).
  2. Supply chain disaster preparedness and recovery summit  – September 23 2020 & On-demand. Register here. (Available simultaneously in English and Japanese).

Even as Japan’s state of emergency is lifted, the post-COVID-19 outlook remains gloomy. Factory output fell 8.4% in May from April, although it has risen since. Japan’s new vehicle market continued to decline sharply in July, down almost 14% from a year earlier. Factories can return to full production but weak internal and global market demand suggests that any recovery will be slow and shallow.

Cost and efficiency will be the watchwords as manufacturers look to steer a path through the evolving economic climate.

Towards the resilient digital supply chain

Manufacturers and automakers worldwide have been extending breadth and depth of their production facilities and supply chains. Japan is no exception. This is creating complex, new digital ecosystems as manufacturing companies work with more traditional and non-traditional suppliers. Innovation and collaboration are encouraged through supply chains that increasingly connect not just suppliers but customers, 3PLs and other value chain partners.

Companies have used these developing digital supply chains to chase the goals of agility, flexibility and responsiveness to customers. But the size and complexity has created structural weakness that the pandemic fully exposed. However, if we were to be honest, most manufacturers were already aware those problems existed.

Prior to the pandemic, OpenText worked with IDC on a market report entitled ‘How information management supports the digital transformation needs of tomorrow’s Automotive industry’ [Email me to request a copy of the report]. In it, the analysts stated: “Supply chain disruption caused by climate change, geopolitical friction, and public health concerns is biting hard, forcing companies to reconsider the fitness of their tightly-tuned processes in this new world, moving away from a focus on “mere” efficiency to the creation of fulfillment-driven value networks. These networks will operate more with a ”just-in-case” approach rather than “just-in-time”. This balancing act will require global value networks to operate differently, blending flexibility and efficiency and deploying new information systems.”

As automotive supply chains suffered the disruptive effects of COVID-19, IDC’s words have proven particularly prescient. Resilience is now a foundational element for every supply chain.

Supply chain resilience as business enabler

In its ‘Covid-19: What’s next for manufacturing?’ survey, the Manufacturing Leadership Council (MLC), of which OpenText is a member, found that two thirds of respondents said that digitization was either partially or entirely essential for their ability to respond rapidly to the pandemic. More than half felt that what they’d learned during COVID-19 would lead them to accelerating their drive towards more digitization through Manufacturing 4.0.

A major area of concern for the MLC respondents is the supply chain. Over 60% said they will increase their focus on supply chain resilience, with significant minorities reporting that they will increase near-shoring and local production strategies (43%) and increase the focus on local supply chain partners (36%). It’s clear that many companies feel that their global supply chains have become over-extended and wish to look to new methods to build resilience into both production and supply chain operations.

Information management: The foundation of the resilient digital supply chain

Enterprise information management lies at the heart of digital supply chain resilience. To respond quickly and effectively regardless of the circumstance, information must flow without any friction in many directions: top-down, bottom-up, from inside out and outside in, between employees, business departments and across the business network.

To enable that, companies in Japan and around the world must integrate data analytics, transactional content and content-related activities, and provide strong reporting on activities, creating/receiving content and dashboards. It requires a single enterprise platform that allows companies to communicate and collaborate with partners anywhere in the world with complete visibility and control over supply chain activities and transactions.

We’ll be discussing the role of the resilient digital supply chain for the Japanese automotive and manufacturing sectors at our ‘Global Automotive Trends and Solutions’ Webinar on September 17 (available simultaneously in Japanese and English). Register your place today.

Don’t forget our Supply chain disaster preparedness and recovery summit. Register here.

If you’d like to comment or discuss this blog, please join me on LinkedIn.

If you’d like to find out more about OpenText™ solutions for the automotive sector, please visit our website.

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Tom Leeson

Tom is Industry Marketing Strategist for the Manufacturing Sector globally. An Engineer by Trade, and Mathematician by Education, Tom’s entire career has been spent in Engineering, Manufacturing and IT helping customers digitally transform their business and their manufacturing sector. With Industry 4.0 and the Industrial Internet of Things, Manufacturing lives in exciting times, so there is much to talk about.

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