The rise of new digital and advanced manufacturing technologies referred to collectively as Industry 4.0 is unleashing new opportunities across supply chain and manufacturing operations consulting, affecting both the nature of available client solutions as well as delivery of consulting services.
Greater end-to-end visibility enabled through digital connectivity is blurring traditional distinctions between functional activities along the supply chain prompting many consulting providers to consolidate once separate supply chain and manufacturing practices. For example, McKinsey & Company is one of the latest firms to announce it is combining these two practices. Among smaller specialist providers, the trend is driving partnership and acquisition activity for firms to amass capabilities across the value chain. The recent mergers of Crimson & Co., the UK-based supply chain specialist with US-based Progress Group and France-based Argon Consulting, two firms with strong logistics heritage, illustrate this trend.
Greater integration unleashes new opportunities to improve efficiency and reduce costs. For example, lean production methods, once traditionally concentrated on specific pain-points within the four walls of the shop floor, now focus on unearthing opportunities to streamline activities and eliminate non-value added activities at the interfaces between interrelated functions, business units and supplier ecosystems.
The result of greater cross dependencies is a need to reorganize what was once mostly a forward linear flow of information and materials through the supply chain to accommodate what is now becoming a digital web of real-time, two-way interactions and data feedback loops or what Deloitte Consulting LLP refers to as the digital supply network. This trend rewards providers with broad capabilities who can seamlessly access the full depth and breadth of their firm's expertise across customer strategy, finance, workforce, and operations as well as technology, risk and compliance and data analytics to put together the right teams to reconceive new operating and business models.
In this environment, competitive advantage comes not so much from the characteristics of the end products themselves but rather by how companies produce and deliver these products (or services) to customers. This advantage derives from how effectively companies can synchronize distinct but interrelated interactions and information flows (via IoT, big data management, and analytics) to enable greater responsiveness (via visual dashboards, artificial intelligence, and automated controls) to adapt to changing market requirements. In this respect, Camelot Management Consultants is notable for leading a movement toward demand-driven supply chains as the critical link to enable positive customer experiences and strong financial results.
Despite high expectations for Industry 4.0 technologies, actual applications are still mostly unproven or relegated to isolated pilot programs. Few in leadership positions have yet to truly grasp let alone take advantage of these technologies to improve results at scale. To capture this opportunity, many providers, most notably McKinsey, are building extensive libraries of use cases and live hands-on technology demonstrations at model factories and innovation centers that open clients' imaginations to both the operational and economic possibilities that these new technologies present. Others, like Bain & Company, take clients on digital treks to innovative start-up ventures to broaden their digital horizon.
Providers are being called upon by their clients for more than advice and education but instead to increasingly to partner and co-create innovative Industry 4.0 technology solutions to solve real operational or commercial problems. For this purpose, several firms are building dedicated workspaces (for example, EY's Wavespace or PwC's BxT innovation centers) designed to bring together relevant stakeholders supported by onsite access to industry and functional experts, data scientists, digital designers, and user interface experts who use design thinking and agile methods to prototype minimally-viable products. While many firms are building or coordinating these capabilities in-house, leading firms know their strengths and weaknesses and are open to partnering with third-party technology or solution vendors, system integrators and even competitor consulting firms to deliver impactful client outcomes.
Naima Hoque Essing is a Senior Analyst, Management Consulting Research and leads ALM's Intelligence's Strategic Risk and Supply Chain Consulting Research
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