Microsoft announces new tools to modernize supply chain and manufacturing

The pandemic has wreaked havoc on the world’s supply chains for a number of reasons — from a lack of raw material to labor shortages — but whatever the reason, the problems are persisting, and Microsoft has decided to bring to bear its considerable resources on modernizing supply chain and manufacturing.

To help address these issues, the company is announcing a new manufacturing solution called the Microsoft Cloud for Manufacturing, along with Dynamics 365 Supply Chain Insights, a tool designed to give customers more visibility into what’s happening along their supply chain routes and intelligence to deal with issues as they arise. Both products are being announced at Microsoft Ignite and are available in preview starting today.

Caglayan Arkan, VP of manufacturing and supply chain at Microsoft, says the company has been thinking about ways to help companies solve these issues, and at the same time evolve into more digitally-focused companies — something that has been a challenge for manufacturers.

Arkan says that Microsoft examined the state of things and saw brittle systems that, when faced with the pressure of the pandemic, didn’t hold up well. “Manufacturing and the supply chain has been very stable; very, very lean, perhaps too lean. They grew very comfortable in their very long cycles and manual siloed data state,” he said.

He added that manufacturers have been working this way for years and they had no real reason to change until the pandemic came along. “Everything stopped. The music stopped, and you couldn’t send employees to the shop floor anymore, supplies were not there. You couldn’t even see your supplier to know where your goods were, and that was a huge disruption,” Arkan explained.

The manufacturing cloud is designed to help digitize the factory floor, and provide a path to become fully digital by moving from traditional systems of record to what Arkan calls “systems of reality.”

That means that manufacturers need to be able to link what’s happening in the marketplace in terms of demand, what’s happening on their shop floor in terms of production and what’s happening in the world in terms of supplies to get a big picture view, so they won’t get caught flat-footed as they did when demand for toilet paper and PPE ballooned early in the pandemic.

The manufacturing cloud is designed to help collect these signals and warn manufacturers when they might need additional supplies. The Supply Chain Insights tool is specifically designed to map out supply chain routes and root out issues that could affect delivery of key raw materials before bottlenecks happen. Together they are designed to bring more agility and flexibility to manufacturing companies.

Microsoft Dynamics 365 Supply Chain Insights tool

Microsoft Dynamics 365 Supply Chain Insights tool. Image Credits: Microsoft

Unlike in the past, Microsoft recognizes that these kinds of companies, which have been traditionally modernized very slowly, don’t want to rip and replace existing systems and take on a huge project. As Arkan says, you need to start with one successful project and then move to the next one, and he says this solution is designed to be delivered in this way.

What’s more, he says that each project can build on one another and fund the next one through savings and innovation. “Every step of your digital transformation, every engagement with us creates economic headroom to add funds to the next one because we either give you more top-line revenue, capacity or provide savings or quality improvements in a matter of 8-12 weeks,” he said.

That’s a bold promise, but if Microsoft can deliver on that — and that’s a big if — it creates a comfortable path to modernization for companies that have traditionally rejected big kinds of changes like this.

If Microsoft and other large enterprise companies like SAP and Salesforce can begin to solve some of these fundamental problems, it could begin to loosen the supply chain issues we are seeing today. While software alone can’t magically produce scarce raw materials or hire enough people to build and deliver supplies and goods, it can be part of a solution to help mitigate these kinds of crises in the future.