Manufacturing organisations have been forced to contend with various sector-specific and cross-industry challenges in recent years. Many have been impacted by labour shortages, driven by an ageing workforce and a lack of tech-savvy employees. Other challenges include global inflation, geopolitical tensions, natural disasters, cyberthreats and the lingering effects of the Covid pandemic, as well as supply chain disruptions caused by incidents like the Baltimore bridge collapse and the Red Sea shipping crisis.
Navigating these complexities requires strategic investments in technology, workforce development and agile planning. Consequently, manufacturers must invest in automation and digitalisation and adapt how they operate to comply with evolving regulations and develop the flexibility to handle economic uncertainties and overcome other obstacles.
“It’s crucial for manufacturers to develop a supply chain strategy to respond to changing customer demands and market forces,” says Indranil Sircar, chief technology officer of manufacturing and supply chain at Microsoft. “Maintaining relevance in a rapidly evolving market is essential – customer preferences can shift quickly, and a strategy that anticipates and responds to these changes helps manufacturers to stay relevant and meet customer expectations. Those that adapt their products and services to meet new demands are more likely to outperform those that are slower to react. For example, a proactive strategy allows manufacturers to identify potential risks and opportunities early, including supply chain disruptions, regulatory changes or technological advancements.”
Strategically aligning operations with market demands can lead to more efficient production processes, reducing waste and improving profitability, adds Sircar. “By understanding and addressing the needs of customers, manufacturers can build stronger relationships and increase customer loyalty,” he explains. “A strategy focused on market changes encourages innovation, leading to investments in R&D and new products that meet emerging needs. It also addresses the growing demand for sustainable practices, which can enhance brand reputation and meet the expectations of environmentally conscious consumers.”
To develop an effective supply chain strategy, manufacturing companies need to consider several key points.
“Deeply understanding customer needs and how they are influenced by external forces is essential,” says Sircar. “Keeping your fingers on the pulse of market trends and being prepared to pivot as needed is crucial. Embracing technology to improve operations and customer experiences, utilising data analytics to inform strategic decisions and building flexibility into operations to quickly adapt to changes are all important considerations for manufacturing companies. It is also vital to integrate sustainability into their core strategy and continuously assess risks and developing mitigation strategies.”
The cloud, digital twins and artificial intelligence are all crucial technologies for developing these supply chain management strategies.
“Generative AI is revolutionising supply chain management by introducing new levels of efficiency, resilience and sustainability,” says Sircar. “By enhancing demand forecasting through the analysis of historical data, market trends and external factors, generative AI enables companies to make more accurate predictions. This optimisation helps maintain ideal inventory levels, reducing the risk of product shortages and ensuring customer satisfaction.”
“Generative AI is revolutionising supply chain management by introducing new levels of efficiency, resilience and sustainability,” says Sircar
In addition, generative AI can be used to continuously generate optimised replenishment plans based on real-time demand signals, supplier lead times and current inventory levels. This helps to minimise costs and ensures that products are available when needed.
Microsoft Copilot is having the greatest impact for manufacturers in terms of supply chain management, says Sircar. “It provides actionable insights by analysing large volumes of data, enhancing visibility across the supply chain and automating routine tasks,” he explains. “This allows employees to focus on more strategic activities, improving overall productivity. By facilitating communication and collaboration, Microsoft Copilot ensures that all parts of the supply chain are aligned and working towards common goals.”
Microsoft Copilot’s ability to integrate with systems for enterprise resource planning (ERP), customer relationship management (CRM) and supply chain planning forms the backbone of its role in streamlining operations and enhancing customer satisfaction. For example, in Microsoft Dynamics 365 Supply Chain, Copilot helps to manage purchase order changes at scale, assess risks and optimise procurement. Meanwhile in Microsoft 365 Customer Service, Copilot delivers contextual responses and speeds up case resolutions.
The integration of Copilot provides manufacturers with real-time visibility into supply chain operations and enables proactive decision-making. “Microsoft 365 Copilot can be integrated into various supply chain processes to enhance productivity and visibility,” says Sircar. “For instance, it can be used for supplier collaboration, demand planning and supply chain logistics. By leveraging AI and machine learning, Microsoft 365 Copilot can help forecast demand, optimise inventory and simulate disruptions, thereby improving supply chain resiliency. It can also automate routine communications, allowing supply chain teams to focus on higher value activities.”
The latest Microsoft 365 Copilot updates introduce features that enhance supply chain management, such as advanced agent customisation in Copilot Studio. This allows integration with third-party data sources and enables automated actions, streamlining tasks like ordering parts and managing inventory.
“When integrated with Dynamics 365 Supply Chain Management, Microsoft 365 Copilot can optimise complex and labour-intensive processes,” says Sircar. “It combines data and AI to identify and mitigate risks in the supply chain, improve the accuracy of demand forecasting, and support autonomous and self-regulated supply chains. The latest capabilities enable supply chain teams to take actions based on insights with conversational help while in the flow of work, ensuring increased productivity and improved collaboration among employees across supply chain and other cross-functional teams.
“The 2024 release wave 2 for Dynamics 365 Supply Chain Management focuses on copilots in three key areas: planning, procurement and manufacturing traceability. This includes improvements in planning optimisation to calculate capable-to-promise for sales orders faster, and without waiting for the next master planning run.”
Microsoft Fabric Copilot enhances supply chain operations through advanced data management and analytics. “It transforms data into actionable insights with intelligent tools like Copilot for Data Factory, which generates and explains Mashup code and Copilot for Synapse Data Warehouse, streamlining Transact-SQL explorations,” says Sircar. “Paired with Microsoft Cloud for Manufacturing, it boosts supply chain resilience, security and sustainability by enabling visibility, risk management and improved forecasting using Azure-based partner solutions.”
Teams Copilot further strengthens supply chains by enhancing collaboration and decision-making, says Sircar. “It enables seamless communication and data sharing across supply chain ecosystems, optimising processes in real time and handling complex tasks with AI-driven insights. Teams Copilot can help in optimising and reinventing business processes by handling highly variable situations in real time, using judgment to plan steps and perform specialised tasks required to complete the job. Additionally, it can support supply chain teams by providing intelligent insights and recommendations based on data from ERP, CRM and other systems.
Integrated with Dynamics 365 Supply Chain Management, Teams Copilot also helps inventory managers by providing forecasts, alerts and recommendations based on demand and supply constraints.”
Two software companies leveraging Microsoft Copilot to enhance their supply chain planning solutions are Blue Yonder and o9 Solutions. “They are using Copilot Studio to build custom workflows and industry-specific copilots tailored to address unique business processes and challenges,” says Sircar. “Blue Yonder is developing a copilot on Azure OpenAI for demand planning, which helps forecast demand accurately by analysing historical data and market trends. Meanwhile, o9 Solutions is empowering supply chain operations by integrating generative AI capabilities for faster decision-making and optimised planning. This includes enhancing digital assistant workflows through an agent framework utilising Azure OpenAI Service’s chat-completion and code-generation features to enable intelligent automation within ERP operations.
“Additionally, o9’s supply chain management software solution automates decisions at scale to shape demand and supply, driving operations with real-time integration to transaction data from ERPs, IoT, digital sensors and third-party supply chain logistics providers.”
Tredence, a data science and AI solutions company specialising in delivering analytics-driven insights and decision-making tools for businesses, is another company making strides in this space. “The company has made significant progress with food and beverage company Nestlé by developing copilots that enhance supply chain processes,” says Sircar. “These copilots integrate with existing systems and provide real-time analytics and recommendations, helping Nestlé optimise its supply chain operations. The collaboration focuses on leveraging AI and machine learning to improve demand planning, inventory management and overall supply chain efficiency.”
Meanwhile, global consumer goods company Unilever has leveraged AI and cloud technology to enhance real-time risk sensing and mitigation across its supply chain. By integrating data across procurement, R&D, manufacturing and logistics, Unilever can predict and respond to risks proactively. A resilience framework prioritises material risks, using predictive analytics and scorecards to focus on high-demand products. This approach shifts investment from reactive problem-solving to prevention, improving supply chain resilience while reducing costs and enhancing efficiency.
“Unilever has developed a resilience framework to prioritise material risk based on the volume of the specific materials used,” says Sircar. “Higher demand products warrant future-oriented risk assessments and risk scorecards to drive proactive actions for high-risk materials. Instead of spending time and money to respond to a problem, the investment is to predict and avoid the problem making the supply chain more resilient and save costs.”
Unilever has improved its supply chain resilience by leveraging AI and cloud technology in its manufacturing operations
In addition to generative AI and Microsoft Copilots, manufacturers are using digital twin technology to enhance supply chain operations. “Digital twins and control towers are transformative tools for ensuring seamless and sustainable supply chain operations in manufacturing,” says Sircar. “Digital twins create virtual replicas of supply chains, enabling real-time simulations to predict disruptions, optimise processes and reduce waste. This helps in understanding the impact of various factors on the supply chain and in making informed decisions. By leveraging predictive analytics, they help manufacturers to forecast potential issues and make informed decisions, enhancing efficiency and sustainability. This proactive approach helps in maintaining a smooth flow of materials and goods.”
Control towers provide end-to-end visibility across the supply chain, which is crucial for identifying bottlenecks and ensuring timely delivery of materials and goods, adds Sircar. “With real-time data, control towers allow manufacturers to quickly respond to changes in demand or supply, enhancing the agility of the supply chain. They also facilitate better collaboration among stakeholders by providing a single source of truth, which helps in aligning goals and improving overall supply chain performance.
To drive productivity across the supply chain, it is also vital for manufacturing organisations to foster a culture of continuous learning and collaboration for their employees. “By doing this, organisations can leverage the knowledge and skills of their workforce to adapt to changing market conditions,” explains Sircar. “Effective management systems and motivation strategies are essential to mobilise and align efforts towards common goals. This holistic approach ensures that both human and technological resources are optimised, leading to sustainable growth and long-term success.”
Sircar predicts this will drive the growth of Industry 5.0, which is focused on integrating human creativity and expertise with advanced technologies like AI and robotics to create sustainable, personalised and human-centric solutions.
“This approach shifts the focus from merely improving efficiency to enhancing the overall wellbeing and empowerment of workers,” says Sircar. “By investing in people and networks, organisations can create a more resilient and adaptable workforce that can respond to changing market conditions and customer demands.
“In Industry 5.0, the integration of advanced technologies such as AI and robotics with human skills and creativity leads to a symbiotic relationship that drives productivity and innovation. This human-centric innovation aligns with the goals of sustainable and inclusive growth, ensuring that the benefits of technological advancements are equitably distributed. By focusing on human economic drivers, manufacturers can build a more flexible and responsive supply chain, ultimately leading to long-term success and sustainability.”
Sircar adds: “The EU is taking a lead in Industry 5.0, which reimagines supply chains to be more resilient, sustainable and human-centric by emphasising collaboration between humans and machines, creating supply chains that can withstand disruptions, and focusing on sustainability through waste and carbon emission reduction. Advanced technologies like AI, IoT and blockchain provide real-time visibility and enhance decision-making, while digital twins allow for the simulation and optimisation of supply chain processes. The approach also includes personalisation, flexibility to adapt to changing demands and blockchain for transparency and ethical sourcing.”
“Together, these technologies improve resource utilisation, track and reduce carbon footprints, and ensure ethical sourcing. By adopting them, manufacturers can build resilient, adaptable, and sustainable supply chains that meet modern demands effectively.”
Partner perspectives
We asked selected partners how Microsoft’s tools and technologies are helping manufacturers to develop resilient and sustainable supply chains in a time of changing customer demands and market forces
“Manufacturers can develop resilient and sustainable supply chains using Ansys Access on Microsoft Azure, a cloud engineering solution designed to meet evolving customer demands and market forces,” says Hank Norris, Microsoft Strategic Partnership Director at Ansys.
“At Avalara, we empower manufacturers using Dynamics 365 to build resilient, sustainable supply chains by simplifying tax compliance,” says Greg Chapman, senior vice president of general manager AvaTax at Avalara. “Our automated solutions ensure accurate tax calculations, exemption certificate management and seamless tax filing, helping businesses adapt quickly to changing market demands and regulatory shifts.”
“Real-time visibility in industrial operations can be viewed in two maturity stages,” says Sree Hameed, consumer products industry strategist at AVEVA. “The first basic stage reacts to ‘when things go wrong’, using real-time monitoring to resolve issues immediately and minimise latency in addressing process deviations.”
“Supply chains represent one of the greatest opportunities for improvement,” says David Whelan, senior strategy and enablement consulting lead at Hexagon. “Hexagon’s Asset Lifecycle Intelligence division offers solutions powered by Azure that provide a secure, scalable platform for building resilient supply chains in dynamic markets.”
“Modern supply chain solutions drive operational resilience and agility, allowing businesses to swiftly adapt to market shifts,” says Rakesh Sancheti, chief growth officer at Tredence. “A supply chain control tower (SCCT) offers end-to-end visibility, using AI and machine learning to predict disruptions, optimise inventory and streamline production.”
This article is the extended version of the industrials and manufacturing feature from the Winter 2024 issue of Technology Record. Don’t miss out – subscribe for free today and get future issues delivered straight to your inbox.