MANUFACTURING EVOLUTION

LEARNING TO SURVIVE IN AN UNPREDICTABLE WORLD

The global market is changing rapidly at an unprecedented rate, coupled with the challenges of COVID. What does that mean for U.S. manufacturers? The answer: more than ever before, manufacturers need to access vital metrics to help run their operations. But the situation calls for a great deal more than just gathering data. For manufacturing companies that want to know what’s coming and what to do about it, the time has come to get systematic. This requires setting up a process for collect­ing the numbers, reviewing the data and acting on the results.

CHANGES IN THE GLOBAL MANUFACTURING MARKET

What kind of change is occurring in the global manufacturing market to warrant an investment in metrics? The simpler question is, ‘’What kind of change isn’t taking place?” For starters, the industry’s role is chang­ing. Not long ago, manufacturing and services were seen as two distinctly separate industries. By contrast, now a great deal of manufacturing’s active role centers around service inputs, for example, with customer service or logistics. Also, consider that half of the people working in manufacturing perform service roles, such as sup­port staff. Add the typical influence that industry uncertainty breeds to the picture, and it’s easy to see why words like change, volatility and technology are in everything written about manufacturing. Other changes manufacturers are tackling include newly introduced regulatory risks, an alarming deficiency of vastly skilled employees, and the reality of unstable resource prices. Add to that:

1. Increased competition — The manufacturing industry is seeing an onslaught of small businesses setting up shop — most of them well equipped with aggressive strategies and lower overhead costs. Regardless of their size, these newcomers are a threat. Defeating them means playing by some new rules, and those rules favor metrics.
2. Time-to-market Compression — “Time-to-market” refers to the time from a new product receiving the go-ahead to the time when the final product is shipped to a customer. The time gap be­tween those two momentous dates is filled with many complex steps that previously made predicting time-to-market almost impossi­ble. Thanks to metrics analysis, manufacturers are finding new methods to optimize time-to-mar­ket. As a result, there’s been a sig­nificant compression. Competing with that compressed time frame could mean the difference between success and failure in a manufac­turer’s new product rollout.
3. Appearance of next shoring --More manufacturers are shifting their strategies from outsourcing overseas to developing products closer to their point of sale. The trend is called next shoring, and ul­timately it increases the speed with which stores can restock their in­ventory. In America, multiple catalysts contributed to this shift. For example: wage hikes in Asia, shipping costs on the rise and a focus on compressing time to market.

KEYS TO GLOBAL MARKET SURVIVAL
Surviving in manufacturing’s global market means confronting hurdles, and the major one is technology. It has been (and will continue to be) the im­petus for what has changed and what will continue to change the look, the systems. and the processes that create America’s factories. The best bet for success in this new environment comes from accepting this reality and learning to understand it. In other words, work with the trend. For one, keep innovation a top priority, and let it drive opportunities. Other keys to a manufacturer’s global market surviv­al include:

1. Acknowledge data as the driv­er — As Peter Drucker said, “If you can’t measure it, you can’t manage it.” Tomorrow’s facto­ries will be data-driven, which requires manufacturers to live through the transition as they try to develop a new way of thinking. For example, break information into two branches of thinking: 1) infrastructure required to deliv­er the information and 2) ability to analyze and present findings. Every company eventually finds the best approach for gathering information and using intelli­gence to form the basis of deci­sions and operations.
2. Adopt new approaches and ca­pabilities — Manufacturers will need to develop new ways to keep up with industry trends and generate market insights. It will become essential for a manufac­turer’s data programs to be as rel­evant to the business as possible.
3. Increase agility — When applied to manufacturing, agility refers to a company’s ability to antic­ipate and become accustomed to market changes. Being able to foresee where market need re­sides and being ready to respond with whatever product or ser­vice constitute a manufacturer’s dream scenario. Unfortunately, it doesn’t always transpire so smoothly. Thus, agility is built into the scenario. For instance, one way a company stays agile is by keeping ERP solutions cur­rent. Agility also comes from having end-to-end visibility, a comprehensive view of business operations and the value chain. In addition, collecting and using accurate and meaningful data analytics are a must for staying agile. By using key performance indicators and staying on top of fluctuations, manufacturers can make decisions strategically about their next move forward.

MANUFACTURING METRICS MATTER

Numbers are a manufacturer’s best friend. Not surprisingly, the metrics they provide are getting the atten­tion of manufacturing budgets every­where. When a company makes the decision to start effectively measur­ing, analyzing and improving manu­facturing metrics, it is committing to an enormous job-one worth every bit of time, capital, and effort. The out­come aligns metrics to business goals systematically. Metrics eliminate some uncertainty, increase visibility and offer a real shot at gaining a com­petitive advantage. Here’s why:

1. Metrics help cope with uncertain­ty — The only apparent trend in manufacturing seems to be on­going volatility, which translates into uncertainty a condition from which all supply chains suffer. One approach manufacturers take to diminish uncertainty is to increase their agility. But, agility looks different to every manufac­turer, so it helps when they under­stand the nature of the uncertain­ties they anticipate. Remember, what can’t be measured, cannot be managed, so again it comes down to metrics. If a company plans to confront uncertainty by being more agile, then it’s time to estab­lish some agility metrics.
2. Metrics increase visibility--Analyt­ics (or metrics) are manufactur­ers’ window to what is possible, given their situation. For exam­ple, the increased visibility might tell a manufacturer which product lines will yield the lowest margins. Or, it might signal what can be done to help drive sales revenue, or highlight which supplier should be used to keep the supply chain flowing smoothly. The possibili­ties are endless -from improving product development to optimiz­ing the supply chain.
3. Metrics produce a competitive advantage — Manufacturers that invest in data collection reap a definitive advantage as long as they are equipped to use it wisely. Think of the companies out there currently collecting mounds of data, yet failing to use it for any­thing besides, perhaps, tracking the flow of production. In order for manufacturing metrics to offer a competitive advantage, choose the metrics carefully, know that the right system is in place, and hire the right individual to be there to interpret the data’s significance and relevance. Along with understanding numbers, it is important for data analytics professionals to have the skills to take the numbers and present them to others in a way that reveals mean­ingful truths.

JUMP ON THE METRICS BANDWAGON

One might ask, “Why doesn’t every manufacturer jump on the metrics bandwagon?” Those who are ready to let go of the reactive gut instinct that drives decisions are showing interest, but the real impact begins when there is a true commitment to the process. Regardless of market activity, in­dustry volatility, or even adapting to a new president’s platform, sound, accurate data are now an essential means for surviving in this world mar­ket. By drawing on this metrics-driven visibility, manufacturers have carte blanche to the ultimate tool — real time information.