Two concepts known as vertical integration and horizontal integration are key to moving your manufacturing facility closer to an optimised Industry 4.0 operation. We discussed the benefits of Industry 4.0 vertical integration in another blog. Here, we’ll look at the advantages and benefits of Industry 4.0 horizontal integration.
Let’s start with a recap – what is Industry 4.0 horizontal integration?
Horizontal integration is about integrating all aspects of your supply chain. This includes internal functions and processes on the factory floor, i.e. equipment systems integration across your entire manufacturing operation. This can be within a single facility or if you have a multi-site operation.
It also includes integrating with third parties in your supply chain:
- Upstream with raw material and part suppliers
- Downstream with your distribution chain all the way to the end-user, customer, or patient
As a pharmaceutical or medical device manufacturer, you may already have achieved an element of horizontal integration to meet your regulatory obligations. An example would be a serialisation or track and trace solution.
Full horizontal integration moves this strategy beyond compliance to deliver benefits for your business. It involves integrating equipment, systems, and processes to ensure real-time access to data, and to automate processes and decision-making.
The Benefits of Horizontal Integration
Streamlined Regulatory Compliance
One recent regulatory trend in both the pharmaceutical and medical device industries is the extension of compliance responsibilities across the supply chain. Track and trace, as mentioned above, is a good example, as are new requirements under the EU MDR.
Industry 4.0 horizontal integration streamlines compliance in relation to your operations and the operations of third parties in your supply chain.
End to End Visibility
Delays in production processes and workflows occur where there is a lack of information and collaboration. Industry 4.0 horizontal integration breaks down data silos to make information more accessible at each point in the supply chain. It also significantly improves collaboration.
From your perspective, you will have end-to-end visibility of your supply chain, so you know what is going on and can react to unpredicted situations quickly and effectively.
Improved Decision Making and Planning
With end-to-end visibility, you will have access to real-time intelligence that will give you more detailed and accurate information to make better decisions and improve planning.
Adaptability
With Industry 4.0 horizontal integration, your supply chain will be better equipped to deal with change and unpredictability. For example, if there is a problem with a production line, machine, or material, you will have the information you need to adjust the production workflow to minimise the impact overall.
Flexibility
You will also have flexibility with Industry 4.0 horizontal integration to react to external factors. Examples include changed regulatory requirements, as well as the impact of new technologies, competitor actions, and customer demand.
Improved Efficiency
With end-to-end visibility, all parts of your supply chain can work together more productively and effectively. The result will be the identification of efficiency savings, such as reducing inventory levels, warehouse space, or distribution costs.
Digital simulations can then drive efficiency savings beyond what was previously possible. In other words, you can run predictive algorithms and digital simulations to find new and more efficient workflows, processes, and ways of working.
Meet Customer Demand
Several of the points above culminate in making your organisation better equipped to meet customer demand. Enhanced visibility and decision making, for example, means you can react to problems that previously would have resulted in issues with product availability.
Industry 4.0 horizontal integration also makes it possible for you to react more effectively to changing market conditions as well as changing consumer, patient, and end-user expectations.
Improved Quality Control
Your quality control processes will also improve with Industry 4.0 horizontal integration as you will have enhanced visibility across the entire supply chain. This makes it easier to monitor everything from raw materials to storage processes to transportation.
Better Understanding of Customers, Patients, and End Users
Industry 4.0 horizontal integration creates a closer link between your manufacturing operation and the end-user or patient, improving your understanding. You will also learn more about how your product is used in real-world conditions.
This information can be beneficial in various areas, including business planning, marketing, and product development.
Improved Profitability
All the points above contribute to improved levels of profitability in your business. This includes ensuring your operation remains competitive as Industry 4.0 technologies continue to disrupt manufacturing sectors.
Horizontal integration also helps you maintain value when the unexpected happens or when change occurs. Examples include adapting to deal with problems in the supply chain, being flexible enough to react to changing market demands, or better planning due to enhanced supply chain visibility.
You can also reduce costs through Industry 4.0 horizontal integration as you can run a leaner supply chain. Examples here include reduced warehouse costs and avoiding the costs involved with late shipments, overages, and shortages. You will also benefit from cost savings as a result of automating processes.
Adding Value Through Horizontal Integration
Further horizontal integration is the natural direction of travel for manufacturers in most industries, particularly in highly regulated sectors. Taking a strategic approach and staying ahead of the curve will improve your competitiveness, reduce macro-level risks, and ensure you are in a position to take advantage of new opportunities.