DX from a supply chain management viewpoint

In this article, Murata employees Koyama, Kishino and Umeda explain the transformation of the company’s supply chain and benefits of DX

The term supply chain covers everything from the procurement of materials and components used to manufacture products to the delivery of finished products to customers. In a manufacturing business that handles enormous quantities of products and materials every day, working to improve efficiency is essential. Murata’s supply chain moves enormous quantities of goods—around 13,000 tons monthly.

What does Murata’s supply chain look like?

Koyama: “Murata operates 50 production facilities and 57 sales bases globally. Our factories across the world ship a total of 25,000 items per day. In addition to the route from factory to customer via a commercial warehouse, goods flow through other routes, such as those bringing raw materials from suppliers to factories and routes between factories. This involves many logistics companies implementing transport by air, sea and truck. Total monthly distribution volume is around 13,000 tons.”

Kishino: “In the Monozukuri Group, Koyama handles distribution operations such as exports and imports, while I work on business improvement in the supply chain area by promoting the planning, building and deployment of necessary systems.”

Umeda: “My job involves company-wide DX promotion, building organizations and training personnel to build a next-generation digital infrastructure. I work with my two colleagues on the common goal of creating a next-generation supply chain infrastructure. Moving forward, while engaging in ongoing discussions with business divisions, function divisions and local staff, we hope to promote efforts to boost competitive value through supply chain transformation.”

What sorts of issues affect Murata’s supply chain?

Koyama: “One distribution related issue is that data is divided among various processes and is not linked together. Even when processes were linked, each location maintained its own database. This meant we had to obtain information from separate logistics companies to check the status of outgoing shipments. Getting an overall situational view and tracing progress required obtaining and consolidating data from multiple computing environments, so the work was time-consuming. These issues were brought into sharp relief by the typhoon in September 2018.”

Typhoon Jebi caused widespread power outages in the Kinki and Tokai regions, plus flooding of the runways at Kansai International Airport.

Koyama: “Kansai International Airport was Murata’s main export/import hub and we were scrambling to find alternative routes. Customers were asking ‘where is my shipment?’ and ‘when will my order arrive?’ It took us quite some time to assess the situation and provide answers. This really made us aware of the importance of linking up dispersed and divided data to manage the supply chain overall.”

Kishino: “Because of that typhoon I started thinking that building a system to keep track of where shipments were in a timely manner would also strengthen our ability to deal with events such as natural disasters and pandemics.”

So, supply chain transformation was necessary for business continuity planning in case of emergencies?

Koyama: “Business continuity planning was only one trigger. Recent years have seen a growing need for business improvement in distribution and enhanced flexibility due to geopolitical risks affecting exports/imports such as pandemics, regional conflicts, increase in electronic commerce and difficulty retaining personnel. More than anything, I really feel we must transform distribution data management to supply products to customers stably and reliably.”

Kishino: “Regarding managing data as Monozukuri becomes more globalized, we are seeing more customers wanting to trace products at the individual package (reel, etc) level. To meet these needs, it is essential to accumulate data across the distribution process—from shipment from the factory, to transport and shipment from the commercial warehouse—and build an end-to-end system that links this data and allows us to utilize it.”

What does the system for the tracking database and shipment trackers involve?

Kishino: “The tracking database (for future release) accumulates and utilizes data at individual package level for all distribution stages, from factory shipment to commercial warehouse shipment. Shipment trackers manage data while goods are being transported by logistics companies and, by linking these systems with tracking databases, we can achieve end-to-end traceability.”

What advantages will the system bring when fully implemented?

Kishino: “First, we will be able to boost response speed to quality issues/complaints, plus improve service for regular customers. Also, by linking data for various packaging levels—outer packing boxes, assembly packing boxes, pallets—data can be utilized and tracing performed at any packaging level. This will boost productivity by reducing the reception and stocking workload at commercial warehouse and regular customers’ facilities.

Were any difficulties encountered building the system?

Kishino: “We had to impose additional tasks on the commercial warehouses to implement tracing at individual package level. We gained understanding of the commercial warehouses by painstakingly explaining the goals and value of our efforts to strengthen traceability. When promoting these efforts, I really felt the importance of shared goals and gaining understanding and cooperation through extensive discussions. Many times during discussions I thought ‘maybe linking this data will also make it possible to do such and such’. I became aware of insights that might be useful in solving other issues and realized there is much hidden potential for providing value.”

Umeda: “As Kishino says, linking a wide variety of data has a lot of hidden potential. On the other hand, as digitization proceeds, some processes and tasks may become harder to visualize, and the problem of some tasks becoming specific to a limited number of people is emerging. To combat this, we first need to visualize processes and tasks. I think it is important our digital society makes possible stronger communication and ties between individuals.”

Koyama: “Through this project, I have come to realize that improvements arise from connections between people. I hope we can disseminate a wide variety of information to build a new supply chain and, at the same time, a chain linking people with other people.”

Umeda: “As what we can achieve by creating links between data in different places broadens, we must make judgments covering a wider area. In response, I think it is important we establish clear judgment criteria—setting guidelines, for example—and train personnel capable of making sound judgments.”

What developments do you anticipate moving forward? 

Kishino: “We are currently working with the MLCC and Battery Divisions to build and deploy a new production plan creation system. Under this system, production plans that individual factories located across the world previously created using their own individual methods will be replaced by optimized production plans created in a timely manner for related factories, linked by business unit, to enable rapid decision-making. Moving forward, the flow of goods and materials as part of the manufacturing process, procurement activities and provision of distribution resources will be linked in production plans. By linking all aspects of Murata’s supply chain, the aim is to achieve advances through an enhanced ability to adapt to changes alongside better integration of activities.”

Umeda: “Bottlenecks in the value chain can have a negative impact on the process of planning, developing and designing products. For this reason, I think it is important to maintain close coordination between the supply chain and engineering chain. Furthermore, I want to create and provide value through Murata’s value chain activities, including the demand chain, which is the customers’ product development process.”

Kishino: “If we can create links with customers’ data and processes, Murata can keep track of product consumption and inventory volumes. We may eventually find a point where product provision is arranged automatically, based on customers’ inventory and consumption status. If this becomes reality, we may see big changes in tasks that presently take considerable time, such as coordinating delivery schedules with customers and coordination between commercial warehouses and factories. The hurdles we must cross are high, but supply chain transformation has enormous hidden potential for innovation.”